Davos 2024: IKEA plans 20% price cut in India, says Deputy CEO Juvencio Maeztu

Home furnishing brand IKEA is planning to bring down prices in India for its products, a top company official said. The furniture retailer is cutting product prices across the world, including India.

"We are now going to cut prices and up to 20 percent price reduction in more than 250 articles (products). It will be implemented in the coming weeks. We have a long term vision to create a better life for the people. So, we have a long term approach at everything we do and the time is ready with high inflation with high interest rate," Juvencio Maeztu, Deputy CEO and CFO, Ingka Group, the company that runs IKEA, told Moneycontrol on the sidelines of the World Economic Forum 2024.

He said that the company has delivered in India what it had promised. "We planned to invest Rs 10,500 crore which we have done already. We have achieved 50 percent gender equality. So, we had promised to source 30 percent locally which we have achieved. So, up to now, the step number one has been achieved which is to prove that India loves IKEA and IKEA loves India. And we are now moving to the next phase where we really want to expand."

Maeztu said that the company is opening additional IKEA stores and enhancing its online presence in India.

"We will develop more sourcing capabilities not only to produce in India but also to export somewhere else. So, for the next phase we need to partner with the states. We welcome the government really increasing quality standards so it's a good opportunity to produce."

In India, IKEA has now been producing mattresses, bookcases, sofas and other accessories and that there is already a supplier base that is connected with thousands of farmers, the CEO said.

"In the next phase, we need harmonization with international standard so we can produce in India, both for local consumption but also extra because the volume will help us to lower the costs for the consumers and also to build the technology that is needed to support further sustainability," Maeztu said.

The company is building both online and offline base in India.

"The plan is to go deep and increase the physical presence in the metros. More stores in Bengaluru, Mumbai, Delhi. We are opening next year in Gurugram and then there is also another upgrade in Noida. At the same time we will develop more online. We are now opening online in Pune, Surat, Vadodara. We need to grow online with the physical presence. It's important for us to keep opening more stores because it is the backbone of this omni-channel idea."

He added that globally too the company has a combination of online and offline.

Maeztu said that the company is also embracing artificial intelligence (AI).

"We are embracing AI in two dimensions. On one side it is of course to help the business. We are now applying how can we bring AI to IKEA where we have to apply AI from some kind of moral compass to do things. So AI is an opportunity for lowering the prices and be more efficient as a company. But also it's an opportunity to really have a moral compass when working with AI," Maeztu said.