The world’s largest furniture retailer since 2008 namely IKEA store is finally in India. IKEA’s 400,000-square feet Hyderabad facility recently opened will offer its signature do-it-yourself furniture, besides an assortment of other experiences as usual. Let us take some time to understand the Retail Giant.
What is IKEA?
Starting from its inception, it was started by 17-year old Ingvar Kamprad in 1943. Mr. Kamprad was listed by Forbes in 2015 as one of the ten richest people in the world. IKEA – the Swedish-founded multinational group that designs and sells ready-to-assemble furniture, kitchen appliances, and home accessories. The company’s name is a short form for Ingvar Kamprad (name of the founder), Elmtaryd (the farm where he grew up) and Agunnaryd (his hometown in Småland, southern Sweden).
One of the interesting attractions of the company is the ‘IKEA perspective’ which motivates every part of the organisation to work harder to achieve bigger goals. IKEA has created a unique perspective – the Democratic Design which focuses on the idea that ‘everyone has the right to a better everyday life.’ So, all the products created by IKEA strives to meet all five dimensions of Democratic Design – form, function, low price, sustainability, and quality. Eco-friendly production, cost control, operational details, continuous product development and corporate attributes keep it under the scrutiny of many. All good said IKEA has it’s share of controversies too when it was alleged to have been involved in one billion euro tax evasion by European Parliament during the years 2009 to 2014. Having an ownership of over 415 stores in 49 countries and consuming around 1% of commercial-product wood makes it the most powerful and largest retail sector users of wood in the world.
What is in the IKEA store?
Apart from furniture, IKEA stores include restaurants serving food of cross-cultural tastes and ‘Småland’ (space for children to play). Traditional Swedish food including potato with meatballs is one of the main attractions among visitors. IKEA’s Hyderabad store has more than 1000 employees or co-workers, with 50:50 male-to-female ratio. It can accommodate 1300 cars in basement, external parking for 4000 more cars. Free shuttle services from store to external parking s also available.
IKEA’s India connection
IKEA’s history with India can be traced back to 1972 when IKEA signed up Travancore Mats and Matting Company, over a 100-year-old firm based in the small town of Cherthala, Kerala, to supply coir mats. Since 2006, IKEA was keen on entering Indian soil but government policy to only allow 51% of foreign ownership was being a hurdle in its way. It was in 2012 that the Indian Government said it would do away with the rule against foreign single-brand retailers operating stores without a local partner that IKEA got its first chance. IKEA’s proposal was approved by India’s Foreign Investment Promotion Board on 12 November 2012 and subsequently purchased lands and started construction.
IKEA has been working with Indian artisans for more than 30 years now. Local sourcing of goods is mandatory for overseas retailers setting up shop in India. India’s contribution to IKEA has over the period been accumulated to worth approximately €315 million (Rs2,506 crore) annually. This is realised by over 50 local suppliers and 45,000-plus direct co-workers and approximately 400,000 co-workers in their extended supply chain.
India is the first market where IKEA will roll out a multi-channel retail strategy from Day One. It is exploring renewable, recyclable raw materials like bamboo, coconut waste, water hyacinth and recycled PET. It is working with over 80,000 farmers to boost cotton production. It is also employing or improving skills of 1,200 women artisans. In association with UNDP, it has rolled out a retail skill-building programme called ‘Disha’ to help women from underprivileged communities get employed.
Having the experience of working with textile and carpet makers and local artisans for over four decades and research including visiting around 1,000 Indian homes IKEA India has raised the Indian expectation levels.