Global furniture giant IKEA has rented 100,000 sq ft in Bengaluru to set up its first store in the city, in what is being seen as the largest retail leasing deal this year.
The store coming up in VR Mall in Whitefield is expected to be operational next year. The deal has a lock-in period of 15-20 years.
“The firm will be paying rent of Rs 70 per sq ft excluding common area charges,” said a person privy to the deal. “IKEA will occupy the entire ground floor of VR Mall. The store is currently in the fit out stage.”
In 2017, the company had acquired 14 acres in Nagasandra on Tumkur Road in Bengaluru from the Bangalore Metro Rail Corporation for its big box store, which is still to be operational.
The IKEA store in Bengaluru is planned to be spread around 450,000 sq ft and is expected to handle more than 5 million visitors per year.
“India is a long-term commitment for IKEA. Our ambition is to reach 100 million people in India in next few years,” IKEA said in an email response to ET. “We are working towards establishing a strong omni channel presence in Mumbai, Hyderabad, Bengaluruand Delhi/NCR and are also exploring other cities in India. The work on IKEA’s first store in Bengaluru is under construction at Nagasandra and we will meet many people soon through our omni channel approach and different store formats. ”
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.
Mumbai was the first IKEA market to launch online without physical stores till the company opened NaviMumbai store last year.
The company plans to open two more city centre IKEA Stores in 2021 to reach more people in Mumbai.
As part of its long-term growth strategy, the Swedish furniture retailer is set to enter top Indian cities with its multi channel presence with ecommerce and physical stores.
IKEA Purchasing has been sourcing from India for over 35 years and has over 60 suppliers with 45,000 direct employees and 400,000 people in the extended supply chain in India producing for IKEA stores worldwide.
Indian retail segment witnessed significant impact on revenues during FY21 on account of closure of operations for two to five months and consequent rental waivers offered by mall operators.
However, sales recovered to over 80% of pre-pandemic levels in the third quarter and are expected to recover almost fully by the close of the current quarter.
