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IKEA India, the Swedish furniture giant is considering its next phase of investment in India after devoting its whole Rs 10,500 crore pledge when it first entered the market ten years ago.
The firm is now putting up projects in Delhi-NCR that are slated to open in 2025. It will finish its pledged investment for ten years. The company began its retail operations in India in August 2018 with the launch of its first shop in Hyderabad.
“We booked this initial investment we made with the NCR projects. After using up all of the Rs 10,500 crore, we are now considering our options for the next round of funding to strengthen IKEA’s position in India and boost sourcing and volume.
That is still being planned, and further information will be released when it is available. As soon as the preparations are finalized, we will make announcements,” Pulverer told PTI.
IKEA’s Ambitious Expansion Plans In Delhi-NCR With 70000 Crore Investment
Ikea requested an investment of Rs 10,500 crore from the government in 2013 with the goal of opening 10 shops with related infrastructure within a decade. It then intended to establish fifteen more shops.
At the moment, single-brand retail trade via automated channel is allowed to accept 100% foreign direct investment.
Ikea is now running locations in Bengaluru, Hyderabad, and Mumbai. The company is investing around Rs 7,000 crore to open two stores in Gurugram and Noida as part of its entry into the National Capital Region.
In response to a question about whether the next investment tranche would be of a similar size or maybe larger, Pulverer stated that its parent firm, Ingka Group, would make that determination.
There is “a great deal of optimism regarding India as it enters its next decade of growth.” It’s a really dynamic market. A large number of young people are investing in their houses and improving their lives.
Thus, Pulverer continued, “It is a huge opportunity market for Ikea.” Ikea is leveraging its omnichannel approach to target areas in the South and West as part of its plan.
A Decade Of Commitment: Completing Rs 10,500 Crore Investment
Nonetheless, it is considering growing to other North Indian towns like Lucknow and Chandigarh, which also have excellent prospects, in light of its planned outlets in Delhi NCR. She did note that it would be premature to reveal any intentions beyond the Delhi NCR at this time.
“Pune and Chennai are interesting cities outside of the National Capital Region (NCR). We are also considering Kolkata, but we will do it step by step,” she continued.
Additionally, Ikea is attempting to source more goods for its international retail operations from Indian marketplaces. It provides the opportunity to expand into other industries, including furniture.
“India’s present furniture exports are still rather modest, despite the country’s ability to increase its production capacity. IKEA’s continuous strategy includes looking into prospects for regionalized and global sourcing from India,” she continued.
Ikea is now sourcing around 33% of its retailed items in India in compliance with rules, and it intends to grow this percentage even higher.
IKEA Strategic Funding Considerations For Future Growth
We plan to keep rising this percentage because it makes sense to rise local production and explore India’s potential as a supplier to other IKEA markets. The next level of local sourcing will be made possible by rising volumes in the nation, more outlets, and online marketplaces, she continued.
She stated that it is crucial for affordability and sustainability for Indian customers and that particular categories need to be the emphasis.
“Textiles, plastics, metals, stainless steel, mixed materials, handicrafts, bulky furniture like mattresses and sofas, and local production of wood-based furniture are areas where we see the potential for growth,” said Pulverer.
Local Sourcing Revolution: IKEA’s Vision For Sustainable Growth
A minimum of 30% of the value of items acquired domestically, ideally from MSME, village and cottage industries, artisans and craftsmen, in all sectors, is required of foreign merchants with more than 51% FDI in this sector.
Currently, Ikea’s own channels, including its app and e-commerce web, account for one-fourth of its sales in India. It also expanded doorstep delivery options in 62 additional Indian markets and launched the Shop by Phone help service.
RoC filings show that Ikea India’s sales for the fiscal year that concluded on March 31, 2023, increased by 61% to Rs 1,768 crore. Nevertheless, because of its expenditures in infrastructure and development into new markets, it suffered a loss of Rs 1,134 crore.
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Source-ET
