India is going to be about less planning, more learning: Peter Betzel, CEO, Ikea India

Peter Betzel took charge as the CEO of Ikea India in March. In his previous role, he was the head of the Swedish multinational’s best performing market — Germany, for six years. Betzel’s appointment comes at a crucial juncture as Ikea will open its first India store in July, in Hyderabad. The company is making an initial investment of Rs 10,500 crore. Its Hyderabad store, spread over 400,000 sq ft, stocks 7,500 products and has more than 1,000 products priced under Rs 200. In his first interview after taking over the Ikea reins in India, Betzel speaks to Malini Goyal on a range of issues. Edited excerpts:On his first impression of IndiaBy nature, I am quite open to new ideas, challenges and experiences. But this assignment was not on my to-do list. What strikes you is the size, diversity and friendliness in the country, which is also the world’s youngest. We have been in Germany for over 40 years, and it is a very established operation. India is new and a very exciting and challenging market. In contrast to Germany, where people are a lot mature, in India, the openness of people to move and create a new life strikes you. The traffic, of course, is a disaster here.64809645 On Ikea’s plansWe have big plans for India. Telangana is one of our first identified priority markets, besides Delhi NCR, Maharashtra and Karnataka. We will open a store in Mumbai in 2019, with a multichannel multi-format approach, followed by Bengaluru and Gurgaon. In the next phase, we will expand to Ahmedabad, Surat, Pune, Chennai and Kolkata. We have about 1,500 co-workers (or employees) today. We will have 50 per cent women in the workforce at all levels. In the coming years, we will have close to 15,000 co-workers.On sourcing from IndiaIkea works with close to 60 suppliers and sources several products such as textiles, rugs and mattresses, lighting and metal products for our stores worldwide. Our suppliers have 45,000 direct employees. We would like to expand to new categories. We have already signed up sofa and mattress suppliers for export. We will maximise local sourcing to be more affordable and reduce carbon footprint by importing less. Our long-term goal would be to source more than 50 per cent of our products locally. FDI norms in India mandate 30 per cent value of all products to be locally sourced within five years of operations. We are on our way to around 19 per cent .64809650 On the product and supplier landscape in IndiaIndira bedspreads, made in Tamil Nadu, have been part of our range for more than 50 years. We have been making coir rugs in Kerala for many decades. Today, we have a recycled plastic supplier in west India. We now have a mattress supplier in Telangana and a sofa supplier in Karnataka. We work with 300,000 farmers producing better cotton in India. We work with two social entrepreneurs engaging 1,500 women artisans to make special collections for India. We have made a special Indian textile collection called Ursprungllig, a tribute to the Indian textiles industry.On Ikea India’s key challengesI see many opportunities. Retail deserves to have an industry status. Look at its potential — growing the economy, increasing manufacturing and sourcing from the country, creating jobs, developing skills, transferring knowledge and increasing participation of women in the workforce.On how India shaped IkeaIndia has been good for Ikea in multiple ways. Affordability (finding new solutions and new materials) and quality (meeting tough everyday environment in India) are two. Improving quality in India means improving quality for the world.64809664 On India debut and the Hyderabad storeWe did more than 1,000 home visits in Mumbai, Hyderabad, Bengaluru and Delhi to know more about their problems, needs, dreams and aspirations. All over the world, people do roughly the same things: eat, sleep, store, etc. But what differs is where and how they do it. For Indians, a home holds a special place in their heart. So, localisation will be visible in the solutions we showcase. For example, the 24-hour bedroom is an interesting challenge. People sleep, store, do make up, watch TV and eat in the bedroom. Every decision about the house is a collective one. Indians love colour. The most important part of every Indian home is its children. Our products will be affordable. There will be something for everyone.On smaller format stores in MumbaiWe have to get closer to customers. People have less time, they don’t want to spend a whole day going to a far-off Ikea store. When we open in Mumbai next year, we will open with an online option, a big Ikea store in Navi Mumbai, followed by other touch points in the city.On his expectations from the Hyderabad storeFor us, India is a new country. The only thing that I am sure of is that once the store opens, we will learn a lot. Learn and adapt, learn and adapt… less planning and more learning — that’s what I can foresee us doing.Sourcing, The Secret SauceWith its high-quality, sleek designs and hard-to-beat prices, Ikea is expected to consolidate and grow India’s unorganised home furnishing industry. Multiple factors help the world’s largest home furnishing retailer make compelling offer to its customers. One is its sheer size and scale — the $42 bn giant has 415 stores spread across 49 countries. Another is its sophisticated global suppler network combined with local sourcing. India is one of the last big bastions for Ikea to win. Its experience in tough markets like China should help. Expect Ikea, already working with 60 Indian suppliers & sourcing $370 mn worth of products, to put all its learnings and might to woo Indian buyers.

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