Ikea India may look at opening smaller format stores in future in cities like Mumbai and Delhi due to space constraints and higher realty costs, Patrik Antoni, deputy country manager, Ikea India, told FE’s Jharna Mazumdar. The company would like to own the land and the building of its stores or go for long-term leases of around 60 years to 90 years. Excerpts from the interview:
What are your future expansion and investment plans?
We plan to invest more than Rs 10,500 crore in India. In Maharashtra alone, we want to invest over Rs 3,000 to Rs 4,000 crore over the next five years, and our investments will surpass the earlier announced amount of Rs 10,500 crore by 2022. It is difficult to say how much more, but it will definitely be higher than our previous estimation. Now that we have been working to open a few stores, we could increase the investments here going forward. Delhi-NCR would be another key market for us. The first Ikea store will be operational in Hyderabad by mid-2018, while the second one scheduled in Navi Mumbai will be operational by mid-2019. Soon after that, we plan to enter Delhi and Bengaluru, where we have already purchased land. After these four cities, we plan to expand to Pune, Kolkata, Chennai and Ahmedabad.
It seems your store opening in Hyderabad has got delayed. Why?
Our India operations should start by mid or little late 2018. We want to ensure good construction and safety of workers, and don’t want to rush and finish off in a hurry, as maintaining quality and safety are very important.
Will all your stores be company-owned?
We usually own the stores. If at all we look at leases it will be very long-term lease of more than 60 years, as we are here in the country for the long-term. We are very serious about the Indian market and are not here with a short-term goal.
Given the lesser availability of space in big cities, are you looking at opening smaller size stores?
We may look at opening smaller size stores or multi-format stores in the future in cities like Mumbai and Delhi, as space is scarce and real estate is expensive in the cities. However, at present we are focusing on opening the stores we have already announced.
When do you plan to go online?
In 2018, we will open our first store in India, and in 2019, we plan to roll-out our online store by launching our own website.
Do you plan to increase sourcing from India?
Globally, India accounts for about 3% of Ikea’s total sourcing. The company is already working with suppliers in the areas of textiles and plastics. Ikea currently sources from 11 suppliers in Maharashtra across categories such as textiles, plastics and metals, including carbon steel. Ikea is also looking to partner with the state governments to source local sustainable raw materials, including jute, bamboo, coir, rubber wood and banana barks, among others. Last year, Ikea India had committed to double its local sourcing from 318 million euros to 600 million euros by 2020.