Ikea, the world’s largest furniture retailer from Sweden, expects its restaurant business to attract customers and boost market performance at its stores in India.
This is unlike its other markets where customers flock in to buy its popular do-it-yourself (DIY) products.
Patrick Antoni, the deputy country manager at Ikea India said in a report by The Economic Times, that food will be the first contact point for people who visit the store and that most customers will be eating rather than buying furniture.
Ikea India will have a 1,000-seater restaurant right in the centre of its upcoming 400,000 square foot store in Hyderabad - Ikea’s biggest restaurant globally.
India’s food-service market is estimated to be worth around Rs 4 lakh crore and most retailers depend on restaurants, cafes and bars to attract customers.
Antoni said that food accounts for nearly 5-10 percent of the company’s global sales and it could be even higher in India. In 2016, Ikea’s global food sales were worth USD 1.8 billion out of its total revenue of USD 36.5 billion in the same year.
In India, its restaurant menu will be half vegetarian sourced from about 25 vendors, mainly women-led social enterprises, while the other half will be non-vegetarian; Ikea’s pork and beef products will be replaced with chicken.
Antoni said, as per the report, that the company’s food business is what helps sell the most as it usually takes time to buy furniture.
Ikea has invested about Rs 800 crore to acquire land, invest in capital goods and in construction for its first unit in Hyderabad. The company had initially planned to open 25 stores – each spanning about 350,000-400,000 square feet – in India by 2025.
But with steep real estate prices and space constraints in major cities like Delhi and Mumbai, it is considering opening small format stores to complement its larger ones.
The company’s strategy is to enter Mumbai, Delhi, Bangalore, Kolkata, Pune, Chennai and other major cities respectively.
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