IKEA to invest Rs 2,000 crore in Karnataka

IKEA, the Swedish home furnishings retailer, on Thursday said it will invest Rs 2,000 crore in Karnataka on a long-term basis and to begin with around Rs 1,000 crore in Bengaluru to set up its store. The company will employ 800-1,000 direct coworkers and engage another 1,500 indirectly in services.

The company celebrated the ground-breaking ceremony of its third India store in Nagasandra. Following the grand opening of its first IKEA India store in Hyderabad two months ago, this is yet another step to its long term commitment to India. The ceremony took place in the presence of the Deputy Chief Minister of Karnataka, G Parameshwara, Peter Betzel, CEO, IKEA India, IKEA suppliers, coworkers and many others.

The second store will come up in Mumbai soon.

The 5,00,000 sq feet store, planned to open in 2020 is connected to the Nagasandra Metro Station. IKEA store is expected to attract more than 7 million visitors per year. The store will offer a wide range of home furnishing solutions. The IKEA store will have around 2,000 car parking space and a 1,000 seater restaurant serving Swedish and Indian delicacies. It will also house a supervised children’s play area called “Småland”. Around 7,500 products will be on offer including unique products for the Indian market like Chapati maker and Masala boxes.

In India, IKEA has more than 55 suppliers and 45,000 direct employees. It will launch ecommerce in Mumbai next year and aims to be present in 49 cities by 2030.

Peter Betzel, CEO, IKEA India, said, “Bengaluru is a very special city for us as we have active participation from our total value chain - IKEA Foundation, IKEA suppliers, IKEA social entrepreneurs and now IKEA retail. We have visited around 1,000 houses in India and will continue to visit houses as we learn from people and understand their needs. We are expecting to reach 200 milion peole in India in three years and our total commitment to the Indian market is €1.5 billion."

Betzel added that at present they are locally sourcing 20% of the products and they will increase it to 40-50% in a few years. "We are also planning to have meeting touch points where we can interact with customers and make them experience our products," he said.

IKEA stores will have solar panels, LED lights, rain water harvesting, water treatment plants and modern waste management systems. IKEA will use EV for deliveries and even co-worker transportation in the future. IKEA aims is to reach out to the many people with thin wallets by offering products with everyday low prices. In the Hyderabad store, there are 1000 products priced below Rs 200. Besides its big format stores, IKEA will create a multichannel experience for its customers in India.

IKEA has been sourcing from India for close to 35 years for its global stores. IKEA Purchasing organisation works with 7 suppliers and are looking to sign up many more suppliers with a strategic and value fit. In India, IKEA aims to maximise local sourcing in the long term to make the products more affordable.

IKEA Foundation, its philanthropic arm has been working with the community for 18 years and currently has 7 running projects centered around livelihood and resources. IKEA Foundation is also working on DISHA, a skill development programme to train 1 million women to join the workforce. The Hyderabad store has employed around 100 women from this programme so far. IKEA also works with 1,500 women artisans through two social entrepreneurs, one of who is based in Karnataka.

There are currently 423 stores in 50 countries with a sales volume of 38.3 billion euros. Around 936 million customers visited IKEA stores in FY17 and more than 2.3 billion people visited IKEA online.

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