Despite approvals, your wait for an Ikea store may get longer

In just over 10 months, Swedish furniture major Ikea got the go ahead to set up stores across India with a phased investment of Rs 10,500 crore. While the process was delayed, its entry has been closely watched as an acid test for how a large foreign corporation might negotiate India's notorious red tape.

However, despite the approvals finally being in place, you may have to wait longer for an Ikea store as the company is prepared to wait for at least three to four years to to find the right locations with metro connectivity and highway as preconditions to roll out its global standard stores in India.

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We need to find the right locations and on the other side we need to develop the suppliers' capacity and we will not take any short cut for the sake of opening in a quick way an IKEA store,"Ikea's India CEO Juvencio Maeztu said in an iterview with CNBC-TV18.

Maeztu has a long-term view on India and will never compromise on a good location despite land hurdles. The company has been patiently waiting to start its retail outlets in the country for the last six years.

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.

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On 2 May, the Cabinet Committee on Economic Affairs (CCEA) allowed Ikea to set up stores in India, clearing the last hurdle in the way of the biggest foreign investment proposal in the retail sector so far.

Maeztu said that despite the regulatory hurdles, Ikea has so far been satisfied with its journey in India. Not bound by deadlines, he noted the company will concentrate on opening stores in big cities with the right infrastructure. Good access, cost of land, public transport and metro connectivity are key to store locations, he added.

"We will not take any short cuts to open stores. If needed we will wait for as long as three to four years," he said.

Reiterating that Ikea will not just open stores for the sake of it, Maeztu sounded confident of the store's success in India. According to a report in the Economic Times, Ikea's stores would range about 300,000 square feet. Ikea will 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 the products.

On store specifics, Maeztu said Ikea will only open big format stores with about 9,000 items. However, the company has still not finalised the specific product range for India, although "top of the pyramid" products will only be introduced later.

"A long term approach in India means an affordable range."

Ikea had previously told the government the company must be allowed to retain its "global model" in India, retailing all of its products and running its in-store restaurants as it does in every country in which it operates.

Ikea can set up furniture stores in India, along with restaurants and cafs, in line with its global concept.