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Ikea to double sourcing from India

The company sourced euro 318 million worth of goods from India in fiscal 2016, about 70% of which was textiles

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Swedish furniture major Ikea is looking to double sourcing from India by 2020 as it opens its first store in the country later this year.

The company sourced euro 318 million worth of goods from India in fiscal 2016, about 70% of which was textiles.

It has about 50 suppliers in India and is looking at adding suppliers, raw materials and categories.

Jesper Brodin, range and supply manager, Ikea of Sweden, told DNA Money, "In Ikea, today we have more than 12 years of average relationship with our suppliers, and if you see it we have been growing. There are two suppliers who have been with us for 40-plus years."

The company has nine suppliers in Uttar Pradesh, seven each in Maharashtra and Tamil Nadu, six each in Gujarat and Karnataka, five in Haryana, three each in Rajasthan, Kerala and Punjab, and one in Madhya Pradesh.

Henrik Gunnerling, purchase development manager, Ikea Range & Supply, said, "A year ago, we had around 35 suppliers in India; so we are growing in India both in terms of volumes and the number of suppliers."

Its existing suppliers are ramping up, too.

"The number of suppliers is increasing but our existing suppliers are also expanding capacities and adding the number of categories as well," said Sandeep Sanan, new business head, Ikea purchasing operations.

The company said its first distribution centre in India will come up in Pune and the work on Navi Mumbai store will start in May 2017.

It will initially focus on six states – Delhi NCR, Maharashtra, Karnataka, Telangana, Tamil Nadu and Gujarat.

The retailer plans to open 25 stores in India by 2025 and employ 14,000 co-workers by the same time.

The retailer said its planned Rs 10,500 crore investment in India may translate into a big opportunity for local manufacturers as well, it said.

"The home furnishing industry is still in the early stages. We are inspiring companies which are into different areas to come into furniture production. So, for certain products we are going to the home furnishing and white good industry and collaborating with them. As of now we are working with a lot of companies which were producing automobile components, and they are producing for us. One of the chairs made by us is being produced by Savera, which used to be a sub-supplier to Bajaj in Aurangabad," Sanan told DNA Money.

Maharashtra may benefit a lot as it is 'key prioritised state and has a potential of 5-6 stores in a multi-channel environment, an Ikea presentation said. The company is also exploring new formats to reach customers keeping in mind distances, land price and availability. Ikea sources textiles, carbon steel and plastic main products from the state.

Ike has around 978 home furnishing suppliers in 50 countries and does 35% sourcing from Asia. The company spends around euro 16 billion annually on purchases.

The correspondent was in Sweden at the invitation of Ikea

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