Swedish furniture giant Ikea is considering a production facility in India as part of its plans to target the mass market in India.
The planned local production facility will help it cut down on logistics costs – which are a big part of what would make Ikea furniture an affordable bet for the Indian market.
Ikea, which plans to open its first store in Hyderabad next year, has also purchased land in Hyderabad and Mumbai, and is reportedly still hunting for sites in Delhi and Bengaluru. It plans to open 25 stores in nine Indian cities by 2025. Delhi is likely to see three to five stores because of its vastness.
Ikea has said could invest up to €1.5 billion in stores and distribution as part of its growth efforts, according to media reports. Each store is expected to receive an investment of ₹500 crore.
Peter Agnefjall, CEO, IKEA told The Hindu BusinessLine that it plans to double its sourcing efforts once it secures a retail footprint. The company’s sourcing efforts could go beyond textile to include bulk products like mattress and sofas.
“IKEA is for the many people. There is an appeal to the brand both in terms of price and functionality,” Agnefjall said. “We are not trying to compete with the local carpenter and neither are we looking to drive in the premium market.”
Ikea reportedly sources about a third of its global cotton requirements from India; it works with about four lakh farmers in India through local partners.