For John Achillea, who used to manage a footfall of 1.6 million visitors a year at an Ikea store in St. Louis, Missouri, moving to India has changed in entire perspective.
Achillea, who has bene working with Ikea since 1996, will now open up the company’s first location in India. the first store expected to come up in Hyderabad is expected to get a footfall of 7 million a year which is the same as the population of Hong Kong.
“In India, because of the sheer size of the population … the potential numbers are much, much higher,” he told CNNMoney.
The new store is 400,000-square foot in size and has been so designed to be able to hold large crowds.
“We have bigger door frames, we have wider entrances,” said Achillea.
Since the last three decades, products from India has been sourced by the Swedish furniture firm for its global operations. But government restrictions on foreign investment had prevented it from opening stores in the country.
But with the relaxation of the rules a couple of years ago, the company now has access to a market of over a billion people.
With a vision of setting up stores in 25 locations across the country by 2025, the company wants to include Mumbai, Bangalore and New Delhi in the list very soon.
“The exciting thing about India is it is brand new to us, so we are going to learn so much about our customers — how they shop, what they want,” Achillea said. and as a part of its preparation of opening stores in India, teams of the company have already visited hundreds of Indian families over the last two years.
But the greatest challenge is the setting the right pricing strategy for an economy that has an annual average wage of about $2,000.
“In terms of affordability, India is probably one of the toughest markets we have,” Achillea said. The Hyderabad store will have thousands of products that cost less than 300 rupees ($4.50) — including many that cost less than $1.
“You see the store with its very large building and with that come some thoughts that we’re a very expensive brand,” he added. “But very quickly they will realize that we have products for everybody.”
And the fast-growing Indian e-commerce market, which according to Morgan Stanley would be around $200 billion by 2026, is also something that the company is targeting.
But that market segment is getting crowded by the day with US retail giant Walmart has entered the market with the acquisition of Indian e-commerce player Flipkart for $16 billion and Amazon committing to expend over $5 billion in its Indian operations.
Achillea said that while the brand is known by many Indians – especially the country’s growing middle class, it would be a completely new brand for most Indians.
“The people that know Ikea can’t wait for us to come here,” he said. “They’re so excited.”
(Adapted from Money.CNN.com)