The multinational furniture retailer is intending to scale local sourcing from India as part of its expansion plans in view of the increasing demand. For toys, IKEA works with a single-sourcing partner from where it procures soft toys.
March 01, 2021
Swedish furniture retailer IKEA is planning to scale sourcing of toys and its children’s range from India amid strong demand for the category.
Currently, IKEA works with more than 50 suppliers in the country. For toys, it works with a single-sourcing partner from where it procures soft toys. The retailer has been looking to scale local sourcing from the market as part of India’s rules that govern foreign retail investments and ensure affordability in the market. The company, which currently sources only cotton-based soft toys from India, is also exploring to expand in some other categories such as wooden toys.
“We are in the process of expanding the range of soft toys that we can source from the supplier. But we are also looking for suppliers who can do much more. Two important elements there—one is the supplier’s ability to scale up to large volumes. And the second, the supplier’s ability to meet global quality standards. So, these are two important criteria that we are looking at in order to be able to scale up local sourcing in this space,” said Kavitha Rao, Country Commercial Manager, IKEA India said.
Close to 20% of the retailer’s children’s range sold in India is locally sourced. At present, IKEA India has two stores in the country and also sells its range online in select cities.
Furnishings and furniture for children contribute 6-8% of the retailer’s sales across the world. In India, Rao said the contribution is slightly higher with the retailer eyeing a greater share from the segment given the sheer number of households with children. “Our own ambition is, it should be in the 10% to 12% range (in India), considering the size of the households and the number of households living with children,” she said.
Given the retailer’s plans to grow the category, local sourcing will be the key. When it comes to sourcing for toys, IKEA is “just scratching the surface”, she said. “We can do a lot more provided that we are able to connect with the right set of suppliers,” she said.
The government’s efforts towards creating eight toy clusters with Rs 2,300 crore in investments will go a long way in boosting manufacturing in the sector, she added.