 "Ikea")
The Swedish furniture major IKEA reaffirmed the central role of brick and mortar stores to its business even while planning to launch online operations in many countries including India as it conducted ground-breaking for the first furniture store project in Hyderabad on Thursday.
The company is investing a whopping Rs 700 crore on the store after it had bought 13 acres of land at the rate of little over Rs 19 crore per acre for this maiden project in close proximity to the city's IT hub an year ago.
"It is in the store that we build our brand. The store is important for people to have touch and feel experience and for us to understand the needs of consumers. Based on that feedback we want to have our online activities,"Juvencio Maeztu, chief executive officer of IKEA India said after the ground breaking ceremony.
This 4 lakh square feet store in Hyderabad, which is expected to be ready in an year's time, will be followed by a much larger store in Navi Mumbai while the company was currently in the process of acquiring land parcels for similar facilities in Bengaluru and Delhi NCR , according to Juvencio.
In September 2014, Juvencio said the company would invest Rs 10,500 crore to set up a chain of 25 retail furniture stores in India each costing around Rs 500 crore. The company will expand its operations to other cities after setting up these four stores in the initial phase.
As customers go for buying online after undergoing the touch and feel experience at its stores, IKEA is now activating online activities in many countries and it will have the online business in India as well perhaps in a bigger scale, Juvencio said.
Responding to a question on the impact of GST roll out in India, the IKEA India CEO said it has been a fantastic news as the new tax regime will improve the efficiency levels of companies in general besides building trust and confidence among all the stake holders.
On the expected revenues during the initial years, he said more than the revenues the company was looking at building the brand and establishing the relationship with sourcing partners in the beginning.
"Hyderabad store is going to play a massive role not just in brand building but also in respect of the company's commitment to gender equality, sourcing,"he said adding that they would be doubling the local sourcing to Euro 600 million in the next 3-4 years.
The company has established sourcing network with 4 lakh people representing 50 suppliers and these numbers will grow bigger in the coming years, according to him.
