Ikea looks to deepen sourcing from India, eyes global export push

IKEA home furnishings AFP photo

Amid growing geopolitical and trade uncertainties, Swedish furniture giant Ikea is stepping up its commitment to India as a key hub for both its local and international operations.

The company, which works with nearly 40 home furnishing suppliers across India, is exploring ways to expand its supplier network and ramp up procurement from the country. Christina Niemela Strom, global head of sustainability for supply at Inter Ikea Group, told The Times of India that Ikea aims to source more from India "wherever possible."

Strom said that the retailer's goal of increasing local sourcing from 30% to 50% by 2030 is not just about boosting domestic presence, but also opening up wider potential for growing India's role in Ikea's global supply chain. “Our supply footprint has to be resilient for what happens, and we see that India has to play a big role in that as well. We are here for the long term. The goal spoken (50% target) is for local produce, but that will for sure also bring in opportunities for going global," she said.

Currently, Ikea's annual procurement from India is valued at around 400 million euros, with global exports forming a large share of that, given its relatively recent retail debut in the country in 2018. India is already one of Ikea’s top 10 global sourcing markets, a position built over nearly five decades of purchasing from the region.

The company predominantly exports finished products from India, such as rugs, bed linen, and curtains, and is actively watching developments around a potential India-US Free Trade Agreement. “Trade dynamics do influence strategy, and we aim to leverage them optimally,” Strom noted.

Similalrly, Ikea is also open to using India as a base to launch new product categories that could eventually make their way to international shelves. "Made in India has global appeal," Strom said, underscoring the quality perception of Indian-made goods.

Since opening its first store in Hyderabad in 2018, Ikea has expanded to over 10 cities in India via a mix of physical outlets and e-commerce. Globally, Europe remains Ikea’s largest supply base, followed by Asia and the Americas. In the US, most Ikea products continue to be sourced from outside the country, including China.

Despite inflationary pressures in India in recent quarters, Ikea has kept product prices steady. “With the overall slowdown, home furnishings aren’t always a priority for consumers. So, maintaining affordability is essential. We’ve even rolled back some of the price hikes taken during the pandemic,” Strom said.