With its first store in India set to open next year, Swedish furniture retailer IKEA is considering to set up a production unit in the country in order to fully tap the potential of ‘big middle class’ consumers in the market.
The company, which has already purchased land in Hyderabad and Mumbai to start retail operations, is also looking to double sourcing of products for its global operations from India by 2020. Explaining the reasons for the need to have production facilities in India, he said: “We do is that we sell products which are inexpensive. You cannot distribute these inexpensive products over long distances because if you do, you would ruin the margin of the product.” Agnefjäll further said: “So, it’s important to go for local production. If we have the right technology, right raw materials which exist there, we can combine with the knowledge of IKEA and turn into a fantastic product.” Asked about the total investments IKEA is planning, he said: “We are estimating we need to invest more than euro 1.5 billion in the coming period in stores and distribution, etc.”