Mar 06, 2016, 11.42 AM | Source: PTI
Swedish furniture retailing giant IKEA will open its first store in India at Hyderabad in the second half of 2017 even as it scouts for more sites in Delhi-NCR, Mumbai and Bengaluru.
Bullish on the Indian market, Palmquist said IKEA expects its stores in the country to be among "the most visited stores in the world" and hence the company has prepared for it by planning bigger restaurants and more seating capacity to suit high visitation stores. Elaborating on IKEA's expansion plans in India, he said: "After Hyderabad, in the first phase of growth, we plan to open stores in Delhi, Mumbai and Bangalore. We are searching for land in these cities.
We want to open more than one stores in locations where our stores come up." The company said that it will showcase its products from its global portfolio in India based on the taste and requirements of the regions where its stores are located. On the pace of expansion in India, Palmquist said compared to China where it has been there for 15 years and opening at a rate of 3 stores a year only now, here IKEA will be looking at a much faster growth. "In India I want us to be there earlier, within five years, we should have capability to open three stores a year to hit the 25 (stores)," he added.
When asked about the concerns IKEA had with respect to sourcing norms, Palmquist said: "Start date has changed from first investment from date of store opening." In November last year IKEA had sought relaxation from the government for five years over mandatory 30 percent local sourcing norms from opening of its first store in India rather than first investment. The company said it needs some time "to build a sustainable and long-term sourcing solutions" to source raw material, find local entrepreneurs and to create industrial set ups. "If we were to open our first store today, our sourcing from India would be less than 5 percent.
Main challenges in meeting sourcing norms is availability of raw material and identifying right entrepreneurs we can work with." At present, IKEA sources products worth Euro 300 million for its global operations from India. Palmquist said there is a need for harmonisation of laws related to composition of raw materials in India with Europe so that more exports can happen from here.