India seals Ikea’s emerging-market push

The Indian government on Thursday approved a plan worth almost $2 billion by Swedish furniture giant Ikea to open stores in India for the first time, officials said.

India seals Ikea's emerging-market push

Ikea’s plan to invest in India was approved in a cabinet meeting headed by Prime Minister Manmohan Singh, according to officials.

The Swedish firm, which submitted its application last June, hopes to open 25 stores in India through a 100-percent owned unit called Ingka Holding. It comes as part of a wider push into emerging markets such as China and Russia.

“The Cabinet Committee on Economic Affairs today gave its approval to the proposal of Ingka Holding as recommended by the Foreign Investment Promotion Board (FIPB),” a government statement said.

“The approval would result in foreign direct investment inflows amounting to 105 billion rupees ($1.95 billion) approximately into the country,” it added.

Ikea’s entry into India is being closely watched as a test case for how a large foreign corporation might negotiate India’s notorious red tape.

Ikea in a statement described the cabinet decision as a “big step in our journey to open Ikea stores in India”, according to the Press Trust of India.

“We feel very confident that the people of India will love to visit and to shop at Ikea,” the company’s Indian chief executive officer Juvencio Maeztu said in the statement after the government’s final nod.

The company will offer “good quality home furnishing products and solutions at affordable prices”, Maeztu added.

The FIPB gave the plan the green light in January, two months after it had rejected 15 of Ikea’s 30 product lines, including food and textiles.

Ikea says it sees a huge potential in India’s ready-to-splurge burgeoning middle class.

It was not clear on Thursday whether the original FIPB limitations on food and products remained in place as part of the new deal.

Ikea had previously told New Delhi the company must be allowed to retain its “global model” in India, retailing all of its products and running its in-store restaurants as it does in every country in which it operates.

The new deal comes after Ikea scrapped plans to enter the market in 2009 due to regulatory concerns.

Singh’s government announced a string of pro-market and investor-friendly reforms that relaxed or removed barriers to foreign retailers in September 2012.

AFP/The Local/at

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Ikea will buy back your used furniture at up to half the price

In the run-up to what would in normal times be the festive season sales rush, Ikea has vowed to buy back used furniture from customers to resell – and pay up to 50 percent of the original price.

Ikea will buy back your used furniture at up to half the price
Got any pieces of Ikea furniture at home? You may be able to get rid of it and get money back. Photo: Fredrik Sandberg/TT

Ikea, the world's largest furniture chain, said Tuesday it would begin buying back used furniture from customers to resell – and pay up to 50 percent of the original price.

The “Buy Back Friday” scheme, timed to coincide with the “Black Friday” pre-Christmas retail frenzy, will run from November 24th and until December 3rd in 27 countries.

“Rather than buy things you don't need this Black Friday, we want to help customers give their furniture a second life instead of making an impulse buy,” said Stefan Vanoverbeke, deputy retail operations manager at Ingka Group, Ikea's parent company.

To address concerns its affordable, flat-pack products encourage overconsumption and waste, the Swedish company had previously said it would start renting and recycling furniture as part of an eco-drive.

Under its buyback scheme, the group said that “anything that can't be resold will be recycled or donated to community projects to help those most affected by the Covid-19 pandemic”.

“Some countries like Australia and Canada for example are currently testing different buyback services, but BuyBack Friday will be the first time that 27 countries do this together,” the statement added.

The Swedish giant employs over 217,000 people and has more than 50 outlets. Its annual turnover is around 40 billion euros ($46 billion).

The group did not specify how it would determine the price paid for second-hand furniture and customers will receive a voucher, not cash, for their products.  

As part of efforts to reduce waste, Ikea has already begun repairing and re-packaging products in every store that have been damaged in transit, as well as allowing customers to return products – including furniture – for resale or donation to charities.