Ikea
India outlook: Ikea is known for its flat pack furniture

IKEA is sharpening its India focus as it plans to double sourcing products from the Indian market to €600 million by 2020, the home furnishing giant from Sweden said.

The company is set to start work on its second Indian store in Navi Mumbai next month.

“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 euro from India and will almost double this by 2020 to around €600 million,” Henrik Gunnerling, purchase development manager, Ikea range and supply, said in Almhult, Sweden, at the company headquarters.

Ikea’s first store will come up in Hyderabad later this year, and it is identifying sites in Delhi-National Capital Region (NCR), Bengaluru, Tamil Nadu and Gujarat, Antoni said.

Ikea has a target of opening 25 stores in India by 2025 at an investment of Rs 10,500 crore. Work on its second store in Navi Mumbai will begin next month with an investment of about Rs 7 billion.

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 five-six stores across the state, going forward,” Patrik Antoni, deputy country manager for Ikea India, said.

“We are also planning to open a large distribution centre in Pune,” he added.

Ikea purchased 23 acres in Mumbai last year to set up its store.

India’s modern retail policy requires 30 per cent 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.

About 70 per cent 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.

Every Ikea store in India 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 per cent of its workforce will be women.