WEF 2024: India is the most exciting market for IKEA CEO

In an exclusive interview with CNBC-TV18 Managing Editor Shereen Bhan on the sidelines of the World Economic Forum Summit in Davos, IKEA Global CEO Jesper Brodin highlighted the Indian market as the most exciting growth opportunity for the global furniture giant.

Brodin began talking about the outlook for 2024 for his company, acknowledging global challenges, and noting the dual forces of inflation and higher interest rates alongside deflation in the extreme value chain. In response to these dynamics, he revealed IKEA's commitment to making significant investments in permanent pricing adjustments.

"We have decided to cut prices on 20% of our range, making ourselves accessible for people in a time when they have the same needs but less money," said Brodin.

When asked about the impact of these price cuts on sales, Brodin stressed IKEA's focus on accessibility rather than maximising profits. He highlighted the importance of helping people in their lives at home and ensuring sustainability.

"We see quantities and the number of customers as an important KPI for us. And of course, being IKEA, it's not about earning big margins for us. It's about making sure we help people live life in an accessible and sustainable manner. We've never been the most ambitious at having the highest profits, but we need to make sure we have a decent profit because 15% of what we make goes to our foundation, which is our owner, and 85% we like to invest in expansion. For instance, in India, which is at the moment the most ambitious expansion market," Brodin said.

He hinted at the company's plans to open stores in Delhi by the end of next year and launch e-commerce services this year. Brodin acknowledged the potential challenges but affirmed that India represents the most exciting growth opportunity due to its "large population and abundant resources".

"India is the world's biggest country from a population point of view. It's going to take some time for us before we get up to the type of market shares that we see in Europe and other places, because of the physical expansion, building the operations to a certain extent. We could easily make ourselves accessible digitally, to supply goods and, importantly, in a climate-friendly way. It will take a couple of years. But it is the most exciting growth opportunity we have," Brodin added.

On digitisation, Brodin revealed IKEA's efforts to incorporate artificial intelligence (AI) into its operations. He outlined plans to use AI for home planning, kitchen design, and space planning, leveraging the vast data the company has collected on life at home.

Supply chain diversification, particularly in India, was another crucial topic. Brodin mentioned IKEA's aim to increase local sourcing in India to around 30% and emphasised the importance of harmonising quality standards with international norms for successful export.

Brodin also addressed IKEA's commitment to environmental sustainability.

"We are deeply concerned about the climate crisis. On that front, our target is 50% absolute carbon reduction by 2030. and 90% by 2050. It is the ethical thing to do — we need to do this and not pass it on for our children to deal with," Brodin said.

Expressing concern about global uncertainties, Brodin highlighted the importance of hope and trust, particularly for the younger generation. He stressed the need for leaders to take responsibility for the future and address the concerns of youth.

As the interview wrapped up, Brodin shared his priorities, focusing on transforming IKEA into a future-resilient company that is resource-smart, nature-smart, and eco-smart while respecting human rights and advocating for responsible business practices.

"The priority is to make sure that we transform the company to be future resilient in a way that is kind of smart —  resource-smart, nature-smart and thereby, eco-smart. But at the same time, we must ensure that we are at the forefront of respecting human rights, respecting people's integrity," he said.