MRP label on every product is a policy hurdle for Ikea: Mikael Palmquist

Mikael Palmquist
Mikael Palmquist, retail president (Asia Pacific), Ikea, has been busy visiting households across Indian cities last week to understand the kind of furniture they need, from bedroom to living room and kitchen. The company wants to get it just right before rolling out the first store in Hyderabad end of 2017 and then in Mumbai within a few months. But there are challenges too and MRP labeling on each product is one such. Palmquist speaks to Nivedita Mookerji on the India plans. Edited excerpts:  

How does India compare with other countries in Asia?

Normally we do not compare with other countries. Ikea India is for India. But then if you push me to a corner, India is super big, its 1.3 billion strong, a developing country, so of course, it is a great opportunity for us. We have a long history in this country, it is a good time to meet the customers. If we talk about revenues, China is the biggest in Asia at the moment, we have 21 stores there. In India, we have not started as yet but we have extensive plans here—we plan 25 stores by 2025. We have to be big to meet the demand in India.

How many years would it take for India to be one of the biggest markets in the region compared to China?

We cannot compare India and China, they are two very different countries. We started almost 20 years back in China but today it is a different world altogether. We started as a store only company, but now we are a multi-channel retailer where we want to have store and ecommerce. India could reach there quicker as the world has changed. 

Are there any policy challenges or regulation hurdles now in India? 

First of all, we appreciate the stakeholders on issues around FDI and ecommerce licence etc. but of course, there’s still more that can be done around ease of doing business and we think it should be more modern and open business climate. We are a company that fuels diversity and inclusion in the workplace and we believe that women should be able to work in retail business after 8 pm, to maintain diversity throughout the opening hours. We also see some of the labeling challenges in India. 

What are the labeling challenges?

To reach out to many, we have to keep the costs low. In India there is a maximum retail price (MRP) slip on every product, we are 100 per cent aligned with that. But in a modern retail society we can use things like phones to check prices on the website to maintain transparency. Labeling of items individually drives costs, we work with some of the international retailers and relabeling that has to happen in India when the products enter India is a concern. MRP is something very unique to India, in most countries today they do not have MRP marked on each product, it is mostly on the shelf or the display product, there might be a barcode or online pricing, they do not stick a label on every product. 

Are you in talks with the government to sort this out? Is there any resolution likely?

Labeling for us is a challenge as the volumes we are planning to do, to sit and label each and every product with a unique India label, which is not part of the global supply chain requires a lot of extra effort and it is unnecessary. We are talking with the government and there is an interest not only from the government but other retailers as well. The government while it is listening but nothing has come out as yet. For us, it is one of the issues where we think India would move into modern retailing very soon, and removing this is one of the steps. We are working together with other retailers in European Business Group where we have a principal positioning paper which includes this issue. We are working with CII and FICCI as well, this is not just an Ikea topic anymore.

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