The easier norms for local sourcing by global single-brand retailers Peter Betzel, CEO, IKEA India, tells Asmita Dey could see it sourcing much more than merely textiles. IKea is aiming to reach 100 million Indian customers in the coming three years with a multi-channel approach, Betzel said. Excerpts:
How does IKEA benefit from the liberalised local sourcing norms which have been a pain point for many global retailers.
IKEA has been sourcing from India for close to 35 years and we welcome the relaxation of local sourcing norms for single-brand retailers. The government’s efforts to enhance ease of doing business for single-brand retailers is encouraging. We have ambitious and optimistic plans to work with affordability and offer everyday low prices for the many people in India. IKEA currently has more than 55 suppliers with 45,000 direct employees and 4,00,000 people in the extended supply chain.
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Typically, IKEA has been sourcing textiles from India. Are you looking to source new materials?
For IKEA, local sourcing is one of the main drivers to cut costs in the supply chain and the long-term goal would be to maximise local sourcing from India.
We want to make more in India, for India and the world. We are 100% committed to increase local sourcing from India.
For long-term growth, we must expand beyond the traditionally strong textiles and look at sourcing sustainable raw materials like bamboo, natural fibres and wood. With its rich natural resources, India really has the potential to be the home furnishings hub for the world.
Your India strategy is based on a multi-channel approach with emphasis on small format stores. Will the ability to open online stores before physical ones mean that you will set up more online stores first as leasing space in malls can be expensive?
Our ambition is to create a more digitally-enabled IKEA to be able to reach the many customers where they are and when they want to shop. India’s dynamic and vibrant ecosystem enables IKEA to make it amongst the first markets where we are bringing alive this transformation. The growth in business is helped by increasing urbanisation, new technology and digitisation, and nowhere else is it more exciting than in India today. We aim to reach 100 million Indian customers in the coming three years with a multi-channel approach.
You have already announced an online store for Mumbai. Where are you going next?
We have opened Mumbai with a one market approach starting with e-commerce and to be followed by big and small format stores. Customers will also be able to shop online soon in Hyderabad and Pune, followed by other cities like Bengaluru and Delhi-NCR. The ambition is to be present in as many Indian cities as possible through different channels.
Will IKEA increase its investment in the country?
We are committed to the initial investment of Rs 10,500 crore. As we grow our expansion plans in India, this may increase in the future.