India Crucial Sourcing Market, Says IKEA, Seeks Policy Support, Sustainable Raw Materials

Leading furniture retailer IKEA is looking to increase its sourcing from India for its global operations. According to Susanne Waidzunas, Inter IKEA Group's Global Supply Manager, the company aims to source core product furniture from India to support both its worldwide expansion and local retail activities.

However, a key challenge is the need for sustainably sourced wood, which is "critical" for growing exports from India, Waidzunas told news agency PTI. The company is seeking government policy support to secure raw materials that meet international standards.

India is already among IKEA's top 10 sourcing markets. Now with its retail network expanding in India, the country is "becoming even more important," she added.

"Historically, we have been sourcing a lot of textiles, plastic products and metal products. But now, we also want to grow into other types of industries in India where we have not been present before," she said, adding the areas where "we are now looking into and where we want to grow even further are in the furniture areas."

IKEA is now in the second phase of expansion in India, where it plans to open a slew of small-format stores along with its traditional large (Blue Box) stores, besides expanding its online sales in the country, which contributes around 30% of sales here.

For this, she said, the company needs to be supported by textiles, metal and plastic products, which are important, along with its furniture range that is the core of the Swedish retailer.

So for that kind of expansion, the company will "need to have support with the harmonised international standards and regulations and also the access to certified forest and wood," as securing them also from "responsibly managed forests is important for us in order to get that growth and to really establish a good industrial footprint in India," she said.

"We have ambitions to really grow our sourcing footprint, first to support the domestic expansion when it comes to our retail and the plans we have to sell also in India. But of course, we also want to increase the export," she added.

Waidzunas said, in order to do that, the company needs to work together with the government on the policy side, as IKEA is globally sourcing and selling.

"... we need to have the legislations in India that support this, both from a material point of view, but also from a production and technique point of view, that it is more harmonised also with the international standards," she said adding "that will be a critical key for us to really grow our sourcing footprint in India, also in those other segments than where we are today."

IKEA now aims to increase overall local sourcing for the Indian market to 50% by 2030, with a focus on a resilient and sustainable supply chain.

According to reports, IKEA currently sources approximately 400 million euros worth of products annually from India for its global retail operations.

"We have an ambition to substantially increase our growth in India. But then, as I said, there are some critical elements connected to that, where we need to work together as well to really secure the access to affordable and responsible source material… will also be one of the keys to make this happen," She said.

Waidzunas also said trade agreements such as the India-UK FTA and ongoing negotiations with the European Union for a free trade agreement will support the "competitiveness of the Indian supply."

IKEA, which recently opened a city store in Delhi, began retail operations in India in 2018 with its Hyderabad store, followed by Navi Mumbai and Bengaluru, among others.

Besides, IKEA is adding four to six customer touchpoints every year, which will be more convenient and accessible.

According to Waidzunas, India has been a very important market for IKEA globally, where it has been 'sourcing and procuring' for more than 50 years. The company has a network of around 40 different 'good and strong partners' who are engaged in production and service.

"The average year of our relationship with our space is 11 years in India. So many have been with us for a very long time and have been very important in developing the range for IKEA," she said.

(With inputs from PTI)