IKEA India to source more local products amid rising inflation

June 21 (Reuters) – (This June 21 story corrects the spelling of Fargrik mugs in the third paragraph. The company misspelled the mug’s name in its post. Additionally, the company’s name has been changed to IKEA , not Ikea.)

IKEA India plans to source more local products to combat rising inflation as the Swedish furniture group seeks to better connect with the country’s burgeoning middle class, a senior executive said on Tuesday.

The company’s fourth and largest Indian store opens in India’s Bangalore technology hub in Karnataka on Wednesday, four years after IKEA entered the Indian market.

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The store spans 460,000 square feet and features a wide selection of the brand’s home furnishings and products, including the popular Billy bookcase and Fargrik mugs.

The furniture maker is betting big on furnishings in Bangalore, where rental space is more affordable and larger than Mumbai, where IKEA has two stores.

As prices soar, the average Indian is becoming more aware of spending on non-essentials.

Retail price inflation in India eased slightly in May, after hitting an eight-year high of 7.79% in April, but remained above the central bank’s tolerance band for a fifth month. consecutive. Read more

“We have to work on local sourcing, which will help us lower prices even more. We work with our own costs to reduce them as much as possible, this is how we navigate with an affordable price”, Susanne Pulverer, CEO & Chief Sustainability Officer at IKEA India, told Reuters in an interview on Tuesday.

IKEA sources around 25-27% of its products locally from five suppliers in Karnataka and aims to have at least half of its sourcing locally in the long term.

Yet high import duties have always been a sore point for global companies operating in India, with a furniture import tax of 25%.

“Import duties impact pricing and competition and it’s not a fully open market, but it’s part of doing business,” Pulverer added.

“Last year had an impact on pricing and we absorbed a lot of that and adjusted where we could.”

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Reporting by Tanvi Mehta in Bangalore; Editing by Ed Osmond

Our standards: The Thomson Reuters Trust Principles.

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