01 Sep 2020
IKEA slashes prices to boost affordability
IKEA, the Swedish home furnishings retailer, has lowered prices, without an end date, for some of its products as part of long-term strategic plans for the Indian market. This initiative is not a short-term discounting activity but aims to increase affordability, especially during this pandemic when there is reduced spending on home furnishings, claimed retailer.
The company announced a price drop for products such as chairs, toys, mattresses, bookshelves, sofas, and many more. Also, items for the bedroom, living room, kitchen and outdoors. They will be available in IKEA’s Hyderabad store and its online stores in Hyderabad, Mumbai and Pune.
Lowering prices without compromising on quality is a step towards improving affordability. The changing customer mindset with the pandemic has made affordability more relevant. And this situation makes it even more important for us to be able to live up to meet today’s reality, informed Kavitha Rao, Country Commercial Manager, IKEA India.
Flat packaging, strong service offer, transparent pricing, sourcing quality materials in a sustainable way are some of the ways that help IKEA keep a competitive price point. The company is always looking at new ways to keep product costs low. Local sourcing remains a key driver of affordability and over a third of the products under new lower prices are made in India. Out of the 7,500 products that IKEA sells in India, about 1,000 are priced less than Rs 200 and 500 cost under Rs 100.
With the work-from-home (WFH) concept gaining acceptance from all segments, the company is bullish on online sales, which has grown significantly, as the uptake in WFH furniture range has increased substantially. The company recently introduced its online home furnishing and remote planning services in Hyderabad and Mumbai. Mumbai is the first IKEA market to launch online without physical stores. While e-commerce and omni-channel are seeing good traction both in terms of number of orders and value, the inventory management system has helped the company manage the stock efficiently in a way that suppliers send products only after orders are placed, leaving no room for stocks to pile up.
In 2013, IKEA received approval from the government to invest Rs 10,500 crore in single-brand retail. Out of the total outlay of Rs 10,500 crore, the company has invested over Rs 4,500 crore in Hyderabad and a few other land parcels in the country. IKEA India, part of Ingka group opened its first retail store in Hyderabad in August 2018, followed by online stores in Mumbai, Hyderabad and Pune in 2019. It has been sourcing from India for over 35 years and there are over 60-odd suppliers with 45,000 direct employees and 400,000 people in the extended supply chain in India producing for IKEA stores worldwide.
The Hyderabad store, set up with an investment of about Rs 1,000 crore, has a range of around 7,500 products. The store is spread over 13 acres of land and has a built-up area of 4 lakh sq ft along with a 1,000-seater restaurant. The store employs 950 co-workers in Hyderabad directly and 1,500 indirectly in services and expects to host close to seven million visitors each year.
The Hyderabad store, set up with an investment of about Rs 1,000 crore, has a range of around 7,500 products. The store is spread over 13 acres of land and has a built-up area of 4 lakh sq ft along with a 1,000-seater restaurant.