NEW DELHI: IKEA may take another three years to open its first store in India, because the world’s largest furniture retailer is yet to sign up real estate for its usually sprawling facilities.
And, the Swedish company will adopt a cluster approach when it rolls out the stores by opening multiple outlets in places like the National Capital Region of Delhi, Maharashtra, Karnataka and Telangana in the first phase, said IKEA India chief executive Juvencio Maeztu.
“We plan to open several stores around the same time because we need to have volume. Why we need volume? As we want to give a good price and in order to give good price we need volume,” he told ET in an interview at IKEA’s office at Gurgaon.
“We are targeting these bubbles and plan to develop around these bubbles our sourcing abilities and we want to have better distribution around them … from there we want to move to the rest of India.”
Maeztu said since the company is yet to sign any land deals, he doesn’t know where the first store would come up.
IKEA was under spotlight for making the previous UPA government to change contentious conditions in India’s single-brand retail policy involving foreign investments.
It got approval in May 2013 to invest around Rs 10,500 crore to build a chain of stores.
The company is working on understanding the country’s market and building its suppliers base, besides looking for land. IKEA is scouting for 5-10 acres in each of the locations. It wants to set up stores in places that are close to highways and are connected by metro or other mass public transports.
IKEA considers the longterm potential of each store and, therefore, purchases land only after heavy deliberations, Maeztu said. Since the land prices are high in India, each of stores on average will cost Rs 800-1,000 crore, including the construction cost. Depending on land availability, IKEA wants to set up outlets on 300,000-400,000 sq ft.
“We are hopefully closing some (land) agreements and the construction in itself would take around two years.
Location is very important for us as we cannot move the stores,” Maeztu said. IKEA will initially focus on its famed brick-and-mortar sprawling stores, and look at selling online whenever India allows foreign retailers to do so. “We will be happy to add e-commerce as well but our primary mandate is to build our physical stores here,” he said. “Initially, Indian consumers want the real IKEA that we are famous for and we will be loyal to our concept.
This is important to build the brand. It is the best way for us to secure the IKEA concept and it is the best way for us to offer low prices,” he said. “Today we have six stores in London. Look at NCR (the national capital region) and over the time NCR would need more IKEA stores then London, New York, Paris or any other city in the world,” Maeztu said.