HYDERABAD (Reuters) - IKEA will set some prices even lower in India than elsewhere when it opens its first store in the country on Thursday, as it woos cost-conscious shoppers unaccustomed to DIY furniture.
The logo of IKEA is seen outside its under construction store in Hyderabad, India, July 18, 2018. REUTERS/Danish Siddiqui
Over a decade since floating the idea of Indian expansion, the Swedish retailer will finally mark its entry with a 400,000 square foot (37,160 square metre) store in the southern city of Hyderabad, where 1,000 of the items, including some cutlery and stuffed toys, will be priced at less than 200 rupees ($2.91).
IKEA is pushing into Asia and South America as growth slows in Europe and North America. It is betting on India with its growing middle class, but mindful of the relatively high pricing that hit sales when entering China and Australia.
The company has said it could take years to reach major profits in India. Raising the proportion of locally sourced goods will help in mitigating high import costs.
Known for its giant out-of-town warehouse stores, IKEA is in the early stages globally of moving towards smaller inner-city showrooms as it adapts to the rise of online retailing. While the initial plan in India was for 25 traditional stores by 2025, the country will now get some of the smaller outlets.
IKEA India finance chief Preet Dhupar told Reuters that in Mumbai, where the next traditional store is planned for summer 2019, a city-centre format could open in the same year. And in third-out town Bangalore, the first traditional store, planned for 2020, could even be preceded by a city-centre format.
Regulation dictates IKEA must source at least 30 percent of materials locally within five years of starting
