Ikea: India capex to exceed planned ₹10,500 cr
Swedish furniture maker Ikea’s investment in India will exceed its original capital expenditure plan, a top executive said.
The company is looking to expand its footprint in the country more aggressively with small format stores, as it expects India to become one of its most important markets.
“We are talking about 1.2 billion people and for sure our view on India is that it will be one of the top markets. I cannot say when that will be, but we see that the market is growing strong and the need for home furnishing is also growing. That is why we have a very optimistic view on the opportunities in the Indian market and it will be one of the most important markets for us, down the road,” Peter Betzel, Ikea’s new India chief executive officer said in an interview.
In 2014, Ikea had said it would invest ₹10,500 crore to set up 25 stores across India over a 10-year period. So far it has invested just around ₹800 crore to set up its first store in Hyderabad. However, the company declined to put a number to the additional investment.
India’s furniture market has largely been unorganised. However, the organised market, which has been growing at a compounded annual rate of 10.9% in the five-year period since 2012, witnessed sales of ₹45,470.06 crore in 2017, according to Euromonitor International. Betzel had taken over from Juvencio Maetzu in March, at a crucial point in the company’s India journey, after it spent nearly six years to study the Indian market.
Ikea’s Hyderabad store, which will open its doors next month, has been constructed in the popular blue box format, which are typically suburban set ups sprawling 25,000 square meters, or more. But in order to expand faster and to be more accessible to customers, Ikea is also looking at setting up small-format stores in Mumbai, Bengaluru and Delhi.
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