Working on local sourcing ramp-up: IKEA India CEO

IKEA India chief executive Susanne Pulverer said it could slash product prices and increase local sourcing to save costs, in an attempt to attract Indian consumers facing inflationary pressures and resultant squeezed household budgets.

“No one is not impacted by inflation and by the crisis that COVID and the war has had an impact on the whole world, supply chains and prices and inflation. We see some positive signs that it might be possible to rollback some of the prices going forward but it’s still to be seen. We are moving on with our affordability ambitions that we have,” Pulverer told ET.

The world’s biggest consumer also said it plans to accelerate local sourcing to gradually reach 50% of all products sold within India, nearly double than 25-27% now.

“We are working to see how fast we can increase our local sourcing because that has all the benefits of creating lower prices, taking away so much transport, sustainability, job opportunities and creating new production capabilities,” added Pulverer.

IKEA has been sourcing from India for nearly four decades with around 65 suppliers in the supply chain in India producing for global stores.

With a planned investment of Rs6000 crores in Maharashtra, IKEA will open its third store in Mumbai this week and also a second small format store in the city. In fact, the Swedish retailer, known to have stores as big as ten football fields, is planning several small format or city stores in India, to reach more than 200 million consumers. The company, known for its ready-to-assemble products, said the need for accessibility has been driving its small store expansion strategy globally as well as in India.

“We need to be closer to where customers live. And that’s why we are exploring more formats than the standard big store that we have used to see for many, many decades. Even more so in India,” said Pulverer adding that nearly 30% of its sales are from online channels.

About three-fourths of India’s furniture industry is controlled by standalone stores and neighbourhood carpenters, although about half a dozen ecommerce players, including Flipkart and Amazon, have entered the market in the past few years.

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