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IKEA India Scenario Essay Sample

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IKEA India Scenario Essay Sample

IKEA – Swedish furniture retailer proposal to invest 105 billion rupees ($1.95 billion) in the country to open 25 stores The company’s planned investment is the largest by a foreign retailer in India since the country amended its laws in late 2011 to allow 100% foreign ownership in single-brand retail ventures.

IKEA has already outlined its long-term approach in India by proposing to open 10 stores in the country in the next 10 years of operation followed by 15 additional outlets in the second phase with a total investment of `10,500 crore, according to its application with the Foreign Investment Promotion Board (FIPB).

IKEA plans to open its globalsized stores ranging about 300,000 sq ft. That would make it the largest store by size in India. The company generally stocks about 9,500 different home and office furnishing products in its stores.

IKEA India CEO Juvencio Maeztu said this is “a big step in our journey to open IKEA stores in India.” IKEA’s entry could help transform the country’s largely unorganized $500 billion retail sector and provide some relief for policymakers who have been eager to attract foreign investment In addition to selling furniture, IKEA has secured approval to operate cafes and restaurants in its stores.

An Ideal location for us would be 10 acres space (it could be between 5-15 acres), close to a highway with good visibility so it is not three kilometers inside and with public transport infrastructure,” Juvencio Maeztu, IKEA’s India chief executive

IKEA has already outlined its long-term approach in India by proposing to open 10 stores in the country in the next 10 years of operation followed by 15 additional outlets in the second phase with a total investment of `10,500 crore, according to its application with the Foreign Investment Promotion Board (FIPB). Meanwhile, Maeztu, 45, is busy understanding the Indian culture to introduce the best possible and workable IKEA model in the country. Since his arrival in India a year ago, he has visited about 20 families in Delhi region, Mumbai and Bangalore to study the family lives here. And he found that the living room is the nerve centre of families here. “Living room in India is different from any other country — a place for socialising and every activity is around the food. In some countries it is the kitchen and in some countries living room is used for sleeping,” he says.

IKEA plans to invest around Rs 500 crore per store in India with up to 800 staff each including carpenters and other skilled people who can go to consumers’ home to fit IKEA products. In the foreseeable future, the world’s largest furniture and homeware retailer plans to focus only on tier 1 cities in India including the NCR, Mumbai, Bangalore, Hyderabad, Chennai, Pune, Kolkata, Surat and Ahmedabad. “Big growth will be concentrated in the big cities,” Maeztu says.

“We will never compromise on a good location,” Juvencio Maeztu, Ikea’s India chief executive, told The Economic Times newspaper.

“So even if it takes five years to locate a place, it is no problem. The future is much more important for us than one to two years,” he said.

Ikea plans to hire up to 800 staff for each store including carpenters and other skilled people who can go to consumers’ homes to fit IKEA products.

“Big growth will be concentrated in the big cities” such as New Delhi, Mumbai, Bangalore and Hyderabad, Maeztu added.

Ikea’s stores span around 28,000 square metres which would make it the largest store by size in India. The company generally stocks 9,500 different home and office furnishing products in its stores.

“We are looking to cater to the real middle-class in India,” aiming to offer “good quality home furnishing products and solutions at affordable prices,” Maeztu said.

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