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Ikea explores giving India touch to different products and designs

The Economic Times

Mumbai, October 11, 2012

Swedish furniture retailer IKEA is playing "a local carpenter" by taking cues from Indian consumers on product design and function as it waits for the government nod to open stores in the country.

"We have found that maybe we need to do things differently in India," Juvencio Maeztu, country manager of IKEA Retail India, said. "Maybe, we need to have different product function and quality in India that we don’t have globally," he said on the sidelines of the Indian Retail Forum on Wednesday.

A few months ago, a team from IKEA visited Indian homes across various income groups to understand what kind of design and products could work in India.

The world’s largest single-brand retailer has proposed to invest up to Euro 1.5 billion (more than Rs 10,000 crore) in two phases to open 25 stores in the country.

Experts say such a localisation strategy will help IKEA connect with Indian consumers.

"Food and home category require huge localisation and consumers can provide insights on what kind of products could sell," Devangshu Dutta, chief executive of retail consultancy Third Eyesight, said.

IKEA had faced initial hiccups in China when it entered the market with global products and ideas.

Maeztu, who worked for IKEA in Europe for 12 years before moving India, said the company will retain its global strategy of large-size store formats and build long-term partnership with its suppliers in the country.

"The beauty of India is that we have been working with the whole pipeline since the beginning," he said. IKEA sources goods from India for its global stores and many of its partnerships here were made more than 25 years ago.

India could be the 45th country to have IKEA stores.

Known for its affordable and modern furniture and home products, IKEA has 336 outlets with annual income of more than Rs 1.7 lakh crore in 2011.

After nearly four months of negotiations with the Indian government over a mandatory 30% local sourcing norm, IKEA Group this week said it will comply with the country’s newly diluted single-brand retailing regulations.

Once the government clears its proposal, it will take three years for IKEA to build a supply chain to roll out its first store in India. The company plans to invest Euro 600 million (about Rs 4,100 crore) in the first stage spanning over ten years to set up a chain of ten stores and its allied infrastructure. In the second phase, IKEA plans to bring in another about Rs 6,150 crore to open 15 outlets.

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