For the first time, Swedish furniture retailer IKEA is exploring ecommerce in India, confirming the launch of its online delivery in Mumbai before opening a physical store.
The reason – it already has a distribution hub in the state. IKEA has set up a 270,000-square-feet distribution centre in Pune in partnership with IndoSpace Industrial Park, which is leased, at a cost of Rs 20 crore per year.
It has also earmarked a Rs-750-crore expansion plan, and will employ 600 people in the Mumbai centre. The company plans a further investment of Rs 100 crore in Pune to add another 2.5 lakh square feet of space.
In fact, IKEA has already partnered with UrbanClap to install and assemble furniture as initial research showed Indians are not do-it-yourself aficionados. It plans to set up 40 centres across India in less than a decade, and is banking on building a strong distribution network.
The Swedish company not only employs 1,000 people per store and 1,500 people indirectly, but it also sources 1,000 products locally, pricing them at less than Rs 200 apiece.
It sources from 50 local manufactures and its annual exports from India are worth over $350 million.
With its 40 stores planned across 10 Indian cities, the Indian government is sure to see the company’s contribution to job creation in the country.
The retail giant expects to create opportunities in areas such as merchandising, store operations, supply chain and allied assembly services. The first big format store will open in Turbhe, Navi Mumbai and will employ 1,000 direct workers and 1,500 indirect workers across services.
IKEA’s distribution centre will be located at Chakan in Pune. At present, the company has invested Rs 10,500 crore in India and has spent half that amount. This is one of the single biggest investments in the country since Future Group, Reliance Retail, and Aditya Birla More announced similar investments in 2006.
IKEA’s Hyderabad store itself involved an investment of Rs 1,000 crore.