Ikea plans to double product sourcing from India by 2020

Almhult (Sweden): Ikea is sharpening India focus as it plans to double sourcing from the Indian market to €600 million by 2020 and will start work on its second store in the country in Navi Mumbai next month.

Ikea’s first store in India will come up in Hyderabad later this year.

The global home furnishing giant from Sweden sources products worth €318 million from India.

Ikea working on lower pricing for India stores

“Ikea works on the principle of optimal sourcing for our global markets. Where it makes sense, we will source locally as well. We currently source products worth €318 million from India and will almost double this by 2020 to around €600 million,” Henrik Gunnerling, purchase development manager, Ikea range and supply, told PTI in Sweden.

On Indian operations, Ikea said it will begin work on its second store in Navi Mumbai next month with an investment of about Rs700 crore. The ground-breaking ceremony will be held next month and the store is expected to be operational by the middle of 2018, according to the company executives, who spoke of plans to open a large distribution centre in Pune.

“Maharashtra will be one of the key markets for us, and we have plans to open 5-6 stores across the state, going forward,” Patrik Antoni, deputy country manager for Ikea India, told PTI in Sweden at the headquarters of the world’s largest furniture retailer.

“We are also planning to open a large distribution centre in Pune,” he added. Ikea had purchased 23 acres in Mumbai last year to set up its store. With a built-up space of about 4.3 lakh sq ft, the Navi Mumbai store will have over 9,500 home furnishing products as well as an in-store restaurant. Ikea’s first store will come up in Hyderabad later this year, and it is in the process of identifying sites in Delhi- NCR, Bengaluru, Tamil Nadu and Gujarat, Antoni said.

Ikea has a target of opening 25 stores in India by 2025 at an investment of Rs10,500 crore. Every Ikea store will hire 500-700 direct co-workers and another 1,500 will be engaged in providing services around the store. It has also committed that 50% of its workforce will be women.

India’s modern retail policy requires 30% local sourcing, preferably from small enterprises. “India has a lot of potential. We have about 50 suppliers at present and have added 15 last year,” Sandeep Sanan, new business manager, purchasing operations for Ikea South Asia, said.

Sanan added: “We are looking for new suppliers and also to give them assistance to grow their business. Many new suppliers will come from other segments who are looking to diversify their business.” Ikea is adding suppliers to existing categories like textiles and rugs as well as new home furnishing like furniture and mattresses. It is also honing suppliers for categories like metals, plastics, and lighting.

About 70% of its export from India is textiles while the rest includes items like sofas, mattresses, and kitchen accessories. Ikea is also looking at sourcing different kinds of wood for its furniture, including sustainable materials like bamboos and acacia, Sanan said. PTI