IKEA says: “Here I Come, India”

IKEA

Knowing IKEA:

Ingvar Kamprad grew up on a farm called Elmtaryd in a village called Agunnaryd in Sweden. He started a mail order business in 1943 and christened his business – IKEA (pronounced as eh-ke-yah). The name IKEA is an acronym comprising his initials and the first letters of his farm and village. He ventured into furniture in 1948 and since then IKEA hasn’t looked back. Currently the largest furniture retailer in the world, IKEA designs and sells ready-to-assemble furniture, kitchen appliances and home accessories. 

Ingvar Kamprad

IKEA operates though a very complex set of organizational structure comprising multiple entities in multiple countries. The reason for doing so has been IKEA’s desire to reduce tax burden in order to remain a low-cost player. 

The structure underwent changes in 2016. The parent holding company is Interogo Foundation, based in Liechtenstein. Interogo Foundations owns two holding companies – Inter IKEA Holding B.V. (Netherlands) and Interogo Holding AG (Switzerland). Interogo Holdings manages the financial interests of the IKEA Group through its subsidiaries. Inter Ikea Holding has control on three major aspects of IKEA Group – Inter Ikea Systems B.V. (Netherlands), IKEA range and supply and IKEA Industry. 

Inter IKEA Systems is the owner of the IKEA Concept and the brand and it’s elements. But it does not own any IKEA store. Almost all the IKEA stores are owned by another holding company – INGKA Holdings (Netherlands), which in turn is owned by Stichting INGKA Foundation (Netherlands), founded by Ingvar Kamprad himself. INGKA Holdings operates as the franchisee and pays 3% royalty to IKEA Systems B.V. which acts as the franchisor. 

IKEA India:

India is the 50th country for IKEA. It’s first Indian store opened up at HiTec City, Hyderabad on 9th August 2018, and Indians lived upto their reputation, what with around 40,000 people visiting the store on the first day itself. Perhaps a few of them were more interested in the multi-cuisine highly affordable restaurant that accompanies each IKEA store. The samosas cost just Rs. 10/-. By the way, the restaurant is a 1000 – seater, the largest across all IKEA stores. It has surely done it’s homework nicely. 

Indians would find that the cuisine has been tailored for their tastes and preferences. However, such adaptation would not be visible in the wonderfully mysterious names IKEA gives to its products. For instance, how about buying an ORFJALL – children’s desk chair? Or a Gamleby – a table with 4 chairs? Well, IKEA would not want to keep Indian – sounding names for its products, which is in line with its global strategy of nomenclaturizing its product range. 

The names of IKEA products confirm to a strict logic and is deeply rooted in the Scandinavian culture. 

  • Outdoor furniture – Scandinavian Islands
  • Bed sheets and comforters – plants and flowers
  • Bathroom articles – Swedish lakes
  • Fabrics, curtains – Scandinavian girl’s name
  • Children’s products – Mammals, birds, adjectives
  • Rugs – Danish place names

The story goes that the founder Ingvar Kamprad was dyslexic and had difficulty in learning and remembering names, thus he set up the coding system based on popular names of persons, places and things. The same taxonomy is followed by IKEA for all its products across the world. There exists a dictionary too, explaining the meanings of IKEA names. 

IKEA has major plans for India – bolstered by the twin promises of a major consumption market and a major source for manufacturing and supplies. It has sought permission for a 25-store, 10,500 crore expansion plan for India and it is already revising it’s target to 40 stores. Next in line are Navi Mumbai, Delhi and Bengaluru. 

Omnipresent, omnipotent, Omnichannel:

IKEA integrates the store, the app and the website to create a seamless meaningful experience for the customer. It emphasizes on economizing space and accommodating furniture that you like through IKEA Small Spaces – Small ideas .  It’s new app – IKEA Place can give a 3-D rendition of the digital product in your room. The IKEA Catalogue app gets the extended version of the printed and online catalogue. The IKEA Store App enables one to create a shopping list BEFORE entering the store. Additional items can be added to the list by just scanning the bar codes, and the app-enabled checkout saves time and effort. The real effort at convincing the consumer actually begins much before she enters the store. IKEA Planning Tools enables one to plan their decor and furniture needs, sitting at home. The buying guide gives you the entire gamut of assortment available for each product. For the initiated, this would give a tremendous sense of control and ownership on the entire furniture buying process.

The only challenge, which has been widely circulated too, is that Indians are not yet into the Do-It-Yourself zone when it comes to furniture. The traditional carpenter can thus still hold customers to ransom by dictating all the elements of the process. The younger India is aspirational and brand conscious, and suffers from paucity of time. The middle-class, middle-aged urban literate too can comprehend the superlative benefits than IKEA can deliver. Wanting to break free from the clutches of the middlemen, they seek solace in the possibility of being in charge of their decisions and choosing their preferences. IKEA thus might just be what the doctor prescribed. Surat is perhaps the 5th or 6th city in line for IKEA, and I too shall eagerly await the DIY furniture, and ofcourse, the samosas.

  • Would IKEA succeed in India? Why?
  • Who would be the most profitable customers for IKEA India?

I am Ravi Vaidya, a management educator by profession. This is where I intend to be myself, where I can ‘I’deate.

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15 comments
  1. Yes, I think IKEA does have a tremendous opportunity to succeed in India. This is self explanatory as we’ve seen the response in Hyderabad. Moreover, it also somewhere matches the Indian need of “Sasta, Sundar, Tikao”. Most of the middle class people and youth of our country would definitely opt for IKEA given the benefits it provides their customers through their app and giving them control over their decisions. IKEA is on it’s way to change India’s furniture buying behaviour very soon.

  2. Ans- 1
    In India, it won’t get fast or soon success. Because as mentioned in case that, the carpenters still have the hold on customers test and preferences. Carpenters provides the solution to the customer for making furniture for their home and offices. Other thing which matters that carpenters make the furniture at the customer’s place so customers are ensured that the process is going on under their supervision. Other thing which matters that, in Indian market still the customers have not been that much forward that purchase the furniture from online websites or mobile app.
    IKEA has the unique retail channel I.e. Omnichannel retail form so it will help to be successful in Indian market. IKEA will succeed in India market but it will take enough time. The pace of success will be slower than the other online furniture provider and faster than the offline provider.

    Ans-2
    1- Youngsters
    Today Youngsters do not want to spend more time give contract to carpenters for making the furniture. They want the Quik and ready-made furniture so they can decorate their room according to their preferences by getting the idea that, which kind of furniture will suit in their room by the 3D rendition of digital product.

    2- The showroomers.
    These are the customers who check the physical product in offline and like to purchase the product from online by comparing the prices in different sites.

    3- confused or indecisive customers
    These are customers who aren’t sure if they want to purchase or they’re unable to decide what exactly to buy. IKEA is having the features that can perfectly guide these kind of customers. So these are also the most profitable customers for IKEA.

  3. Yes, There is high probability that IKEA will succeed in India. It took six years to say Namaste India after getting the permission to tap the Indian market. The process has been slow but they are not particularly bothered about speed, they want to get a solid foundation in place because then one can go fast. For this they have done over 800 visits in Indian homes to understand the market as India is big, complex and diverse. Even they are providing food restaurants in-house with Indian mouthwatering dishes at best prices so that customers have no choice to move out of store without buying what they have in their mind. Thus, IKEA has done complete homework for Indian market and delight Indian customers with their assortment with Bright colours as India loves to be mordern in hand with the heritage.

    The trend of nuclear families has started peneterating in India. Lot of growth is seen in working couples in metropolitan cities. These customers have variety seeking behaviour and according to me they would be the most profitable customers of IKEA. There are customers who live on rent but seeks best decor for their homes. These groups could be even attracted towards DIY furnitures which act as a speciality for IKEA. As the consumption power of middle class Indians have increased, major chunk of this population is attracted to work on their home decor. So according to me they are the most profitable customers for IKEA.

  4. ANSWER 1:
    Yes, IKEA would succeed in India because,
    1. It provides vast range of products at one stop
    2. The multi cuisine reasonable restaurant with local taste and preferences would also support because its now a trend that after shopping the families prefer to have food at restaurant.
    3. IKEA app facilitates the consumers to get virtual experience any of the product as a trial.
    4. IKEA’s feature of preparing a shopping list before entering the store would attract the working population as they do not have much time.
    5. India’s furniture market is majorly unorganized, hence the DIY feature enables one to plan their decor and furniture needs, sitting at home.
    6. We Indians are mad after international brands as it gives prestige and status in the society so the brand name would also contribute in the success of IKEA.

    ANSWER 2:

    The middle class and upper middle class population of urban cities of India will be more profitable for IKEA

    *REASONS*
    1. IKEA is planning to open their stores in the tier 1 and tier 2 cities.
    2. The DIY feature is somewhat popular in India among the young population and middle class & middle aged population of urban areas so they can easily penetrate by awaring and training these people.
    3. The urban market of India is moving towards organized sector and the India’s furniture market is majorly unorganized so it becomes a huge opportunity for IKEA.

  5. 1. It may succeed in India due to its tax saving structure . Furniture will be cheap then. So people will be more interested in India .Additionally they are having online virtual experience of furniture for customers which will make customers feel easy before purchasing . They are also having preselecting your orders at home which will save time . As the brand is new it will take some time to be set in indian market . At the end in any product customer will seek for service . If IKEA will provide that then it will boom the market . 2.Most profitable customers will be the one who got transfers in their field and who have very humid atmosphere . So the city which is having more industries will be the target .

  6. And 1) Ikea will succeed in India because
    A) marketing strategies of Ikea are having a very strong impact through it’s new ideas such as Ikea store app enables one to create a shopping list before entering a store and in this way this app enables to check out and saves time and effort
    B) and another reason is may be ikea’s tools enables one to plan their decor and furniture needs, sitting at home. The buying guide gives you the entire gamut of assortment available for each product.
    Ans 2) profitable customers in india who are more conscious about the brand names of the product because the names of ikea’s product confirm to a strict logic. And for that young customers of india who suffers from paucity of time, for them this kind of shopping is perfect.
    Also for those customers who are in the do-it-yourself zone when it comes to furniture.
    Above discussed things are the which will prove to be profitable for the customers of india.

  7. Yes,IKEA would succeed in India seeing to the 40,000 Footfalls of the very First day. Also,IKEA has decided to startin
    India in 2006 but they entered in 2018. Indian market has potential and also it is very difficult one too. IKEA did their homework and then they stepped into the market with preparations. IKEA India has sold worth 6 crore of furniture Before 11pm this shows the response of their efforts and consumer behaviour towards their products.

    The most profitable customers of IKEA will the middle class people and upper middle class,youngsters who suffers from paucity of time and are brand consious too. Also, it is DIY furniture people can easily shift the furniture whenever and wherever required. IKEA is renowned brand in the world and they are omnipresent so people will trust and would like to try and experience new venture. And culture of nuclear families has started penetrating in India. So there are chances of acceptance of this type of concept in India .

  8. IKEA is well known and popular brand for furniture and in india normally the public also attracted to the foreign companies and attracted to use their products.
    INDIA is now with growing middle class india is a big opportunity for the company to get high customer but there is a competitrs also because other brands also in indian market with same product and may be same target market also.
    Where IKEA also come up with mix marketing concept it will attract customers. They advertising for making people aware that we are in market also. Most affected factor for any kind of brand is awareness and IKEA doing well in this.

    As i mentioned in first answer india is now growing middle class country where middle class growth rate is high and its also positive to the market . growing public will demand for good products for better quality and services.
    Higher class public also a target market for the company but as of now situation middle class public is the most profitable customers.

  9. Ans : 1
    Yes, I think IKEA will get successful in india reason being india is a country where sixty to seventy percent of population is youth or middle age people so it would be easy for them to adapt this. Besides even if a custom does not want to buy something from IKEA but just went to eat there still the customer visits the store and if at that time the customer likes something then he or she would like to know about the product and later on he or she might think of purchasing it as well.
    Ans-2
    The potential customers might be youngsters and middle class people as we know youngsters adapt things very fast and they are always ready to try something new so they will at least once visit the store and also they are also very attracted towards brands.
    Middle class can be potential customers because indian middle class people mostly wants everything in reasonable rate with low price and IKEA is just doing that so there are chances that middle class will be a good potential customer

  10. 1 Yes, i do think that IKEA may succeed in India. i agree to this statement due to two reasons that IKEA already has done when entered in the Indian market, the first is obvious the delicious and highly affordable restaurant ,they have even kept the taste and preferences in mind that are they serve chicken or vegetable meatballs and not pork ones. through this restaurant they may connect a relation with brand and this also brings huge amount of footfalls. The second reason for their success can be price leadership , i somewhere read IKEA is providing currently 7500 products out of which they are providing 1000 products in the range INR 200 or less and 500 products in the range of less than INR 100. this shows they will also be able to target somewhat low class people which ultimately shows that IKEA will be able to succeed in India. both the reasons above listed predicts that IKEA may succeed in future. we can also even predict after seeing the first store footfalls in Hyderabad.

    2- i feel mostly the lower middle class people will be a great benefit to the IKEA. As majorly these people will adopt the do it yourself culture.As when we see the kind of products offered by IKEA is for all the classes the lower , middle and upper, here as we know there is almost 22 percent of population a low class category in India so as they have kept products in low range too of both the restaurant and some of the furniture products. These lower middle class would love to purchase goods from international brand and that too at a affordable price. The culture of of diy will take some time time but they will soon adapt it too.

  11. Yes IKEA will scucced in Indian but it will take time.
    One of the reason for the success will be the complex onrgnization structure of the IKEA, which was designed to reduce tax burden to offer low cost product. So when it talks about India, 70% population of India is middle class and this class wants the “sasta” thing. So it will help IKEA to get success in long run. Second thing is apart from urben India if we talk about rural India , they still believe in employing a carpenter to get their home furnished under the observation by choosing the proper wood and other thing by their own, so the DIY thing will take time to get accepted, but at the same time the urban, literate and young India will prefer the online shopping feature of IKEA because of scarcity of time, and this will help IKEA to get success. Another point is that IKEA has done complete homework before entering into the Indian market and the deep assortments, in-house restuarants, omnichannle, IKEA app to get virtual experience of a product for a trial, all these things are going to contribute towards IKEA’s success in Indian market. IKEA can have a competition from companies like paperfry, urben ladder, but the app for 3-D rendition of the digital product, bar code scanning, omnichannel, will help IKEA to deal with competition.

    Families are getting nuclear day by day, so yes the demand of all such things like furniture is increasing, so IKEA have growth opportunities. But the people living in metropolitan cities, the working people with lack of time, the upper middle class which can afford the products of foreign brand with low price benifit at some level would be the most profitable customers of IKEA according to me.

  12. Yes, I think IKEA does have an opportunity to succeed in India. Because
    1. It provides vast range of products in affordable prices.
    2. IKEA’s planning tools will enable customer to prepare a shopping list before entering the store which can save the time of the customer.
    3. It is an omnichannel retail store which provide seamless service to its customer.
    4. DIY feature enables one to plan their decor and furniture needs, sitting at home.
    Ans 2:
    Youngsters, professional, Upper middle class and urban cities can be its most profitable customers.
    Because It can attract them towards DIY furnitures. This would give them a tremendous sense of control and ownership on the entire furniture buying process with the guidance of the experts in the store.

  13. Answer 1:
    According to me this have both positive and negative responses of Indian customers..
    Why yes?
    Because now people’s preferences and trends are changing, they want some uniqueness in everything and specially talking about surties they would surely prefer it beacuse they want to do the things which gives fun.
    Why no?
    People generally having mindset about the traditional furniture by Carpenter and some may not be ready for this type of DIY concept..

    Answer 2:
    According to me those people who wants some uniqueness, change in tradtional concepts and for those who wants to find some fun or enjoyment doing such kind of work for ownself.

  14. Q.1
    – As Ikea is known for its budget furniture in huge stores.
    – In the big cities there is fairly widespread awareness that they will open in there. There is a curiosity around what they plan to do. Also cities are developing at faster pace and gives more oppurtunities to Ikea for penetration.

    Q.2
    – It is betting on India with its growing middle class aiming to avoid a high pricing.
    – Also in hyderabad store there are 1,000 products which are under Rs. 200/- where they focus on people to buy something from the store and experience it.

  15. Q.1
    – As Ikea is known for its budget furniture in huge stores.
    – In the big cities there is fairly widespread awareness that they will open in there. There is a curiosity around what they plan to do. Also cities are developing at faster pace and gives more oppurtunities to Ikea for penetration.

    Q.2
    – It is betting on India with its growing middle class aiming to avoid a high pricing.
    – Also in hyderabad store there are 1,000 products which are under Rs. 200/- where they focus on people to buy something from the store and experience it.

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