HYDERABAD (Reuters) - IKEA will do things differently in India after it opens its first store in the nation on Thursday, as it deals with higher taxes on imported goods and looks to woo cost-conscious shoppers unaccustomed to the company’s DIY furniture assembly style.
FILE PHOTO: The logo of IKEA is seen above a store in Voesendorf, Austria, April 24, 2017. REUTERS/Heinz-Peter Bader/File Photo
The Swedish furniture retailer is pushing into new countries in South America and Asia as growth slows in its traditional strongholds, including Europe. It is betting on India with its growing middle class, likely aiming to avoid a repeat of the high pricing that initially hit sales in China and Australia.
The company, which has flagged import duties in India as a big challenge as it tries to keep prices low, has to source at least 30 percent of its raw materials locally within five years of operations in the country as per Indian regulation. IKEA already sources about a fifth of its global supplies from India.
Nevertheless, IKEA still needed to tweak its playbook.
The 400,000 square feet (37,160 square meter) store in the southern Indian city of Hyderabad will offer 1,000 products including cutlery, stuffed toys, hangers and container boxes priced under 200 Indian rupees ($2.91) - cheaper than in most countries.
A quick check on IKEA’s newly launched India website showed popular products looked cheaper than in the United States. For instance, in India, the white variation of the company’s best-selling Billy bookcase is cheaper by a fifth than in the United States and the dark-grey Ektorp sofa is priced 30 percent lower.
“IKEA seems to have managed to understand the Indian consumer and price its products accordingly,” said Sowmya Adiraju, an analyst at research firm
