Corporate Nov 22, 2012
In Sweden, the meat balls and hotdogs served at Ikea's outlets is a major hit. Those expecting that to happen in India are in for a disappointment.
While Swedish major Ikea's India play will certainly shake up the furniture sector in India, the former will not be able to take advantage of India's rising appetite for branded food items as the foreign investment promotion board has barred it from opening cafes and food markets in India.
Ikea plans to set up 25 stores in India and would be selling office and home furnishing. It had also expressed interest in setting up restaurants and food mart, nursing home and publications under its brand name as it does in other countries, but the single brand retail policy under which the application was made disallowed retailing of food.
A report in the Economic Times says the company will not be allowed to mail newsletters to customers and will also also be prohibited from selling old furniture.
In addition it has also disallowed Ikea from offering financing to suppliers and customers.
Meanwhile, as Ikea's investment proposal awaits clearance from the Cabinet Committee on Economic Affairs, many local furniture players are gearing up to increase their presence in the premium range for better margins and to enhance quality and finesse in order to offset the competition from Ikea, which is known for fashionable, quality products at a good price.
India's Godrej & Boyce-owned furniture unit Godrej Interio has tied up with several young designers to focus on design enhancement to position its brand as aspirational, while Future Group-owned Home Town is looking to consolidate its business by resizing stores and revising store counts and Durian is looking for markets in the tier II and tier III towns, a Times of India report said yesterday.
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