IKEA plans to double local sourcing; domestic manufacturing not on cards

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

Though locally sourced raw material will be exported to its manufacturing hubs across the world, the company has no immediate plans to set up a manufacturing base in India, Iyer said.
Though locally sourced raw material will be exported to its manufacturing hubs across the world, the company has no immediate plans to set up a manufacturing base in India, Iyer said.

Swedish home furnishing company IKEA plans to increase local sourcing to 50% from the current 27%, its newly appointed chief financial officer Murali Iyer told FE. However, he did not give a time frame for the same. Though locally sourced raw material will be exported to its manufacturing hubs across the world, the company has no immediate plans to set up a manufacturing base in India, Iyer said.

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

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

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

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

The IKEA store in Navi Mumbai is spread over 500,000 square feet and is its biggest in the country, while that in Bengaluru is spread over 460,000 square feet. The Hyderabad store has an area of about 400,000 square feet. The company also has a city format store in Mumbai.
Broadly, 63% of IKEA’s India revenue comes from its offline stores while online sales account for the rest 37%, Iyer added.

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