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Will double sourcing, suppliers from India by 2020: Ikea

Closing Bell

Excerpts from Closing Bell on CNBC-TV18 Watch the full show »

Furniture major Ikea is looking to expand its footprint in India. Patrik Antoni, spokesperson for Ikea India in Sweden, says the company is looking to set up 20-25 stores in India, including six stores in the NCR region, 3-4 stores in Bangaluru and 2-3 stores in Hyderabad.

He says Ikea is starting its third product development centre in India. It already has similar product development centres in Shanghai and Sweden. 

Antoni says Indian price points will be lower than other Ikea markets. It also plans to double sourcing and suppliers from India by 2020.

Below is the transcript of Patrick Antoni’s interview with CNBC-TV18’s Rituparna Bhuyan.

Q: What are the company’s expansion plans?

A: Our plan, in the medium term, is to open around 25 stores in India until 2025 and the first four prioritised cities are Delhi NCR, Mumbai, Bangalore and Hyderabad. As you pointed out, we have bought the first piece of land in Hyderabad and it is because we are working on a number of projects parallelly. The first land being bought in Hyderabad doesn’t necessarily mean that the first store will open there but most likely if things go as it should it will be the first store.

Q: We understand that you have big plans for the NCR region as well. If you can just briefly tell us about how many stores do you plan to open in these initial four cities, what kind of strategies do you have as far as having the first rollout plan as far as Indian market is concerned?

A: We follow the Indian market as it develops. So, over time we will have many stores in the mega markets, don’t know how many today but may be 5 or 6 could be in the Delhi setup.

However, we will start with a few. As far as our strategy now, it is these chosen four cities. We will try to open as many stores as possible in the coming few years.

Q: As far as the Ikea stores across the globe are concerned, it follows a certain pattern. You have a store, you build it in a certain way, it needs certain requirements as far as Ikea’s overall strategy is concerned. However in India the real estate costs are very high. We understand that you have adopted and adapted your plans according to ground realities in India. So, if you can tell us about how you plan to carry forward as far as the initial setup is concerned? How you are going to go about setting up stores so we understand that for example parking lots – in Europe they are outside in huge – huge portion of land is allocated for that but in India it may not be the case.

A: We have only bought one piece of land. We don’t know really how the land prices will affect us. Of course, it is very expensive. The example I can bring up is may be Hyderabad; we always want to be next to a highway because we want to be accessible to people so that it is easy for them to come the Ikea store.

We also want to be near public transport, so we have the metro line that will pass by the store in near future. In this case, we have decided to put all the parking under the store.

So, there will be more levels of the store so that cars can park under and this will save land price. So, in a situation where the land price is low, we can put the parking other side but in place like Hyderabad we have to put it under.

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