IKEA plans to double local sourcing; national manufacture not on the cards

Swedish furniture company IKEA plans to increase local sourcing to 50% from the current 27%, its new chief financial officer Murali Iyer told FE. However, he did not give a time frame for the same. Although locally sourced raw materials are exported to its manufacturing centers around the world, the company has no immediate plans to establish a manufacturing base in India, Iyer said.

He said IKEA has so far invested around 60% of the Rs 3,000 crore it has earmarked for Karnataka. The balance will be invested over the next 12 to 18 months. The company, which on Tuesday opened its second largest store in the country so far at Nagasandra in Bengaluru, plans to open another in the state under its urban store model. These are basically smaller format stores in the urban area. IKEA will focus on the second store location soon, Iyer said.
The Nagasandra store is the company’s third large format store, after Hyderabad and Navi Mumbai.

In 2013, when the government approved IKEA’s investment proposal, the company announced that it would invest Rs 10,500 crore in the country. The company declined to say how much of those funds have been invested so far. Iyer said IKEA plans to launch a multi-brand store in Delhi-NCR, but did not say when. Earlier this month, the company announced plans to open a second store in Mumbai.

Apart from physical stores, IKEA will also expand its online presence and then target Chennai, Iyer said. The company currently has an online presence in Pune and Gujarat.

Iyer said IKEA plans to have 10,000 employees on its payroll by the end of 2030. Currently, it employs around 1,000 people in Bengaluru and around 3,000 across the country.

The IKEA store in Navi Mumbai spans 500,000 square feet and is the largest in the country, while the one in Bengaluru spans 460,000 square feet. The Hyderabad store has an area of ​​approximately 400,000 square feet. The company also has an urban format store in Mumbai.
Overall, 63% of IKEA’s revenue in India comes from its offline stores, while online sales account for the remaining 37%, Iyer added.

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