Most CEOs usually give a five or even a 10 year outlook for their respective businesses. But Ikea India CEO, Juvenico Maetzu, has a 100-year outlook for his business in India. "Why should I talk about what I am going to do in the next one year, when we are there for the long-term." Maetzu says the retailer would invest Rs 10,500 crore in India and open 25 stores, but he is not sure when the first store would open. In an interview with Ajita Shashidhar and Arpita Mukherjee on the sidelines of the India Retail Forum, Maetzu talks about Ikea's India plans.
Q- It been a while since you launched your operations in India, what's your perception of the Indian market?
A- I was positive about India even when I came here two years ago and I have an even more positive view now. Ikea is in India is here for the long-term, and can we agree that in the coming 100 years India is going to be better, safer and richer? And, we agree on that, don't you? I agree on that. We have a long-term view for India.
Q- The Indian retail policies haven't been too friendly. Doesn't that bother you?
A- We have got approval now. So, we are developing our front-end and supply chain on one side, acquiring land. So we are on the right path, and with time I think things are going to be right. After the elections I feel that there is an even more positive feeling in the society of India. This is good news for us.
Q- Home solutions as a category in organised retail hasn't been successful in India. What is going to be your approach?
A- The good thing about our business is that we help to expand the home furnishing category. We help to have a better and deeper understanding of life at home, so it is good for you, your home, for your daily life and for the home furnishing business as a whole. This has been our approach across the world. We create an interest in home furnishing and attract consumers. Across the world there is a higher interest in home furnishing, than what it was when I was living in my parents home.
We Indians are very fond of custom-made stuff, especially when it comes to furniture. I think one of the reasons most home solutions stores failed was due to competition from the custom-made market. Ikea will also have to deal with a similar challenge.
In my home 50 per cent of the furniture is from Ikea, the remaining 50 per cent is not from Ikea. In my living room I have a fantastic chest of drawers from Jaipur. In my bedroom I have a fantastic head board made of solid wood which has a Ganesha carved on it. This fits perfectly well with the Ikea furniture. So, I don't see custom made as a challenge, but a fantastic opportunity of how we can connect both and your home is more beautiful. So, on one side you keep some identity of your roots and the same time benefit of what we call in Ikea, beauty outside and brain inside, as all the solutions we give in furniture at the end of the day makes your life easier. When I open my Ikea wardrobe, I have everything organised, my trousers, shirts and even my shoes. So I don't see any problem. I can see a fantastic opportunity.
Q- So, are you looking at localising your offerings in India?
A- From a range point of view, yes, of course. It will be all about taking the core Ikea range that we are good at, we are also visiting consumers' homes to understand their needs. If we can't fulfil their needs with Ikea products, then we have to develop new products. For instance food habits in India are different, so we have to understand that and develop a range in that category. So, we are going to look at the best of local needs as well as the fantastic solutions that Ikea is known to be offering.
Q- So what percentage of your merchandise would be localised?
A- We are in that process, we have people working now and doing lot of research in that area.
Q- You have been sourcing from India for a while now, so will that go up in the years to come?
A- In the coming 100 years, I know we will not be here, but there will be many Ikea stores and customers in India. So, we have to always secure the five dimensions, what we call in Ikea, function, beauty, quality, sustainable products and price. In order to secure that, especially the price, we have to develop production in India.
Q- Have you localised Ikea in any of geographies that you are present in?
A- We have Ikea in many countries across the world and we produce in US, in Asia Pacific and in Europe. We call ourselves a production-oriented retail company, as we can not only secure affordable pricing, we also connect with the local communities and benefit their lives by involving them in production.
Q- Can you tell us about your launch and expansion plans?
A- To begin with, we are going to look at the big cities such as Delhi, Mumbai, Bangalore and Hyderabad. Thereafter, we will go to more cities.
Q- So, will the format in India be similar to your global formats? Big Box stores haven't been too successful in India.
A- We will retain the Ikea concept, because of which we are loved all over. Most our stores are around 3.5 lakh sq.ft and we have to connect our stores with metros and highways. As I told you, we are here for the next 100 years and we have to secure our customers by giving them the customer experience.