Swedish furniture maker IKEA’s India arm hopes to increase its local sourcing from 25 per cent to 50 per cent in the next few years. Speaking with BusinessLine, Susanne Pulverer, who has recently been appointed as the CEO & CSO of IKEA India, said that she focusses on sustainability and establishes IKEA’s footprint in India as a strong player. Pulverer, who has worked for 25 years in IKEA in 10 different roles, further added that the company is in talks with local manufacturers for bamboo and using electric vehicles for delivery.
You say you have joined IKEA at a very interesting time. Could you shed light on that?
We are starting to get established. We are not known to many, but we focus on getting ourselves established. We have two big physical stores, third is coming up in Bangalore. We have a few city stores, and we are developing our online capabilities. We have come to a volume where we can see an impact now, so to say, we have entered the second phase of IKEA in India.
What are the timelines for the ongoing projects in Gurgaon, Noida and Bangalore?
The projects in Delhi are long term because they are large scale, but Bangalore and other projects are near term.
What is the current status of smaller city stores? Are there other cities besides Mumbai and Bangalore that IKEA is looking at?
We have smaller projects in other cities besides Mumbai and Bangalore shortly . We are focusing and progressing on Hyderabad, Mumbai and Delhi markets currently.
Speaking about the online presence?
We are in eight cities, and the cities where we have a physical presence. Our focus is to first establish ourselves in these markets, both physical and online. In the next phase, we will expand to other cities. Today we have 30 per cent of our sales coming from online. We think that despite people coming to stores, this won’t change.
How has the impact on production in China impacted India?
Even before the pandemic, we were working on local sourcing in India. However, the pandemic created a lot of disturbances in sourcing from China. The pandemic only accelerated the local sourcing push from India for us.
Do you see IKEA expanding the local sourcing?
IKEA India has been steadily increasing its local sourcing footprint, and the ambition is to reach about 50 per cent in the long term and not just meet the mandatory requirements. IKEA India is in dialogue with the government and authorities to enable domestic manufacturing capabilities, bring in global best practices, availability of certified raw materials such as wood, and enable sourcing of sustainable raw materials available in India like bamboo. This, however, needs the collaboration of many partners, including the proactive involvement of relevant government and stakeholders.
How has the pandemic, followed by the current inflation, impacted IKEA in India?
No one is immune to the macroeconomic crisis, we have also been impacted by increased costs and prices, but we have tried to absorb as much as we can. We have also had to make a few price adjustments in a few categories.
What is your current ask from the Indian government?
There has been good cooperation and collaboration with the government, and we will continue to contribute to the growth of the retail sector.
Retail is a sector that would be a catalyst for India’s economic growth. Around 8 per cent -10 per cent of the total employment generated in the country is contributed by the retail sector. The retail industry is creating a diverse and inclusive workforce. Organized retail brings in investments and improved infrastructure. Retail is a significant driver for logistic sector growth as well as a faster adopter of technology and driving the digital economy. Giving retail industry status and more prominence will enhance the sector’s impact on India’s economy, giving it a positive direction and bringing it at par with other industries. This will make India an even more attractive investment destination for global companies.
Policy responses to revive the economy need to be based on openness – removing tariff barriers such as customs duty hikes as well as non-tariff barriers such as testing documentation/import restrictions. An open economy will promote competition and increase the competitiveness of the local industry.
Kindly shed some light on the company’s sustainability goals?
We have a focus on sustainability. We will have a section in the stores which will promote sustainable living in the future. We are looking at partnerships with like-minded companies that can help move the agenda forward and bring about sustainable actions – EV, Renewable energy, waste management, and circularity. IKEA welcomes dialogue and discussions and participates in this movement