IKEA is planning to raise local sourcing in India to 50%: Susanne Pulverer

Ikea is planning to increase its sourcing from India and take it to 50 per cent in the long term for its Indian stores.

“We are continuously increasing local sourcing and intend to have more products made in India,” Susanne Pulverer, chief executive officer of IKEA India, told Business Standard, adding, the retailer would take it to 50 per cent in the long term.

Ikea also intends to add more stores in Mumbai as it calls out Maharashtra as an important market.

Currently, the Swedish furniture major has two stores in the state, one on the outskirts of Mumbai and the other in the city. “It will be a mix (of large formats and small format stores). We need to be close to the customer. So, we want to have big stores and the full experience of all the rage. But we also need to be in the city closer to people. And we need to have all the digital capabilities to serve customers the way they want and when they want. You will see a mix of it,” Pulverer said. “We are working on the expansion plan (for Maharashtra). Now, we have one big store, one city store, and there is one more (city store) to come and we are building further on that.”

While IKEA is still utilising the Rs 10,500 crore investment, it intends to pump more money into the Indian market at a later stage. However, Pulverer did not comment on when the additional investment was expected. “India is a very important market for IKEA, and we see there are many possibilities here.”

IKEA is also expected to start its Bengaluru store, a large format one, in 2022. But the company did not elaborate on its timeline. On the demand front, Pulverer said customers were coming back and online continued to grow. “There is a wish to come and experience things physically. I still see online going strong. The pandemic accelerated the online business and I think this will continue. But customers seek to feel and touch and we will continue to build on both in the future,” Pulverer said.

In India, IKEA has e-commerce operations and its app in Bengaluru, Mumbai, Pune, Ahmedabad, Vadodara, and Surat. However, Mumbai, Delhi NCR, and Bengaluru are prioritised omnichannel markets for India.

Despite the footfall increasing at stores on account of greater mobility due to fewer Covid-19 cases, IKEA continues to see 30 per cent of its revenue from online.

Contribution from online sales increased during the pandemic because stores were shut and people shopped online, which caused the retailer to see almost one-third of its sales online.