IKEA GROUP, the seller of sofas, bookshelves and cutlery, will consider entering India after policy clarity, and open stores faster in China as it boosts sales outside Europe.
The company is watching legislative developments in India to weigh a potential entry, CEO Mikael Ohlsson said in an interview in Shanghai.
In China, where Ikea is increasing store openings to three annually from one, sales are expected to rise by at least 20 per cent this year, he said.
Expanding in Asia would allow the furniture retailer to reduce its reliance on Europe, where the company gets about 80 per cent of revenue. Sales at Ikea have risen every year since 2001, and climbed 6.9 per cent to €25.2 billion ($31.4 billion) in the fiscal 12 months ended August 31st.
“Cautiously we are adding new markets,” Ohlsson said today.
India’s government in January removed a 51 per cent limit on foreign ownership of stores selling a single brand, a decision that was seen benefiting firms such as Ikea.
Overseas companies selling one brand have been still slow to enter because of rules that mandate them to procure at least 30 per cent of their requirements locally.
The Indian government is drawing up plans to ease the foreign investment norms for single-brand retail, including the sourcing conditions, the Hindustan Times reported this month citing government officials it didn’t name.
“We are following very closely positive movement of legislation in India and try to understand the consequences,” Ohlsson said without providing a timeline. Unlike Ikea, Wal-Mart Stores, Carrefour and other foreign chains selling multiple brands are still not allowed to retail directly to Indian consumers. The global economic slowdown hasn’t affected expansion, Ohlsson said.
In January the furniture company, founded in Sweden, said it plans to spend €3 billion on expanding in the coming year to add stores, factories and retail centres.
In China, Ohlsson said he plans to keep lowering prices after bringing them down 50 per cent over the last decade. The furniture retailer is expanding in China amid slowing economic growth in the country. – (Bloomberg)
