Swedish home furnishing giant Ikea is in advanced stages of finalising land parcels for its destination stores in two more Indian cities, said a top company executive in Mumbai. "We are very close to signing some land deals in Bengaluru and Delhi / National Capita Region (NCR)," said Juvencio Maeztu, chief executive officer, Ikea India in response to a DNA Money query.

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The company on Thursday said it will invest Rs 1,000 crore in setting up its first store in Mumbai, second in India, the groundbreaking for which was done by Maharashtra chief minister Devendra Fadnavis. The 4.3-lakh square feet store being set up at Turbhe, Navi Mumbai, will employ 2,000 people, directly and indirectly, when operational by 2019.

When enquired, Maeztu did not comment on the status of the company's negotiations for a land parcel at Goregaon with the BSE-listed real estate firm Oberoi Realty for its second store in Mumbai. "I will not be able to discuss specific deals here," he said.

Ikea's first India store in Hyderabad, involving another Rs 1,000 crore investment is currently underway and is likely to open within the next 12 months. It has already got on board CIMIC Group company's Leighton Asia to construct this retail outlet. The company will soon float a tender or invite bids to award a contract for the construction of its Turbhe outlet.

Focusing primarily on the brick-and-mortar approach, the company will also launch its e-commerce portal to facilitate customers looking to buy Ikea products online. "We are establishing a process to activate online but that will only happen after the physical stores get operational. We don't have a set timeline for launching the e-commerce option as the focus is on touch-and-feel approach for selling our products in India," said Maeztu.       

While a distribution centre (DC) in Pune is being set up on a lease basis, the company will be adding more DCs to the portfolio in the coming years. These will be done using a mix of owned and leased DCs that will compliment 25 stores Ikea is targeting to open by 2025. "We will have DCs not only for Maharashtra but also for the rest of the country. And as we grow, more DCs will come across the country," said Maeztu.

Ikea is also working aggressively on increasing its supplier base in India by adding more categories to the existing list of products being sourced from the country. According to Sandeep Sanan, new business manager, purchasing and logistics area – South Asia, Ikea Services India Pvt Ltd, the company is working on expanding its partnerships and creating new supplier base for the future.

"Apart from textiles, we source 20% of global requirement from India, we are starting a lot of new categories in India like mattresses, sofa, board material furniture, wood furniture and bamboo is a big focus area as well. We will be doing a lot of roadshows with potential suppliers. In fact, a meeting has been planned at Worli in Mumbai on Friday in partnership with the Confederation of Indian Industries (CII)," said Sanan.

The company already has partnered with Kurl-on for foam mattresses manufactured from its facility in the western region of India and sofas coming from Bengaluru. These products with a 'Made in India' tag are already being sold at Ikea stores in Dubai. Another company, Shree Malani in Hyderabad, is manufacturing spring mattresses for the retailer. In Aurangabad, the company is working with some players in the metal industry for its Adde chair priced at $12.50 a piece and there are plans to expand this relationship and manufacture beds and other things.

"We are gradually building up new categories and are very positive about the 30% local sourcing criteria. We will very easily meet the norms set by the regulatory framework here. Our setup has to be created step-by-step and while the momentum has started, volumes will kick-in by the time our stores start coming in the next 1-2 years," said Sanan.