IKEA Market Entry Strategy in India

• Founded in Almhulty (Sweden) and headquartered in Leiden (Netherlands)
• IKEA built a global business empire selling affordable, Scandinavian-design inspired furniture with the DIY model.
• Having honed the IKEA WAY over 51 countries with 403 stores and $40.2 billion sales
• As of September 2018, IKEA’s $1.9 billion investment had been India’s biggest single-brand FDI. For the first time ever, IKEA was experimenting with an omnichannel retailing strategy starting from Mumbai in 2019.
• IKEA’s Hyderabad store has IKEA’s biggest restaurant with 1000-seater with customized Nordic — Indian menu. DIY seemed to be replaced with LUHY (Let Us Help You) with home-delivery (using e-vehicles) and assembling services (tie-up with UrbanClap).

• Indian non-commercial furniture market size is estimated to be 30000 Crores per annum.
• The market is expected to expand at a CAGR of 12.91% during the forecast period of 2019–2023. Growth is driven by the rising trend for modular and state of the art furniture among the population living in urban cities.
• Various furniture companies such as Pepperfry, Urban ladder are creating huge demand from these online channels. Apart from this, the demand for low-cost plastic furniture is also increasing in the commercial sector.
• The rapid increase in Work From Home after Covid lockdown has created a large demand for home office furniture in every household. Technological advancements such as the availability of high-speed internet networks such as 4G and spiked absorption of smart gadgets is boosting the e-retail sector in India.
• 100 per cent FDI policy for townships and settlements development project is increasing the quality of residential apartments. Rising demand for high-end western style furniture will bolster the growth of Indian furniture market.
• Low-cost furniture product offerings by unorganized players further decrease the revenues of major market players in India. The high cost of wood and leather further increase the cost of the overall furniture product.

• Families in Top 10 Metros with Annual income of more than 10 Lakhs
• Students living in Shared accommodation in Top 10 Metros
• SOHO / Startups — New Entrepreneurs

• Easy to Use, Compact
• Durable
• Affordable
• Assurance of best quality material
• Range of home furnishing products
• Easy to assemble and disassemble
• Innovative
• Interior designing ideas, solutions, hacks

• Furniture
• Beds and Mattresses
• Storage and organisation
• Kitchen and appliances
• Decoration
• Textiles
• Baby and children
• Lighting
• Home Smart
• Bathroom

1. Making every day better- Low cost, quality products

They work upon this vision by primarily focusing on the ‘affordability factor of the people, such that masses are able to maintain a decent standard of living in an optimal way. IKEA aims at doing better every day, in a cost-efficient way.

2. Have Strong Brand Identity

• The brands that everyone knows are the ones that have a very clear identity. IKEA is one of those brands. Its message of ease, value, and maximizing your space is clear in everything they do.
• They are well known for clean advertising with a few bold colours (blue, yellow, and orange, which are the brand’s colours) and images showing immaculate homes with modern, clean decor.
• “You could never describe Ikea as quirky; it’s very methodical, very structured, very ordered, cool and rational.” An approach reflected in its product range. Product designs from Ikea are remarkably country-neutral. Too many retailers have tried to sell their local-specific fashions — be it in-home or apparel — to other nations, and a whole lot has gotten lost in translation. Ikea’s simple, straightforward design aesthetic works almost anywhere, as proven by the majority of its products that are consistent across international borders.

• Consumer Research — IKEA employees visited 1,000 homes to understand how people lived and what they needed. Indian families spend a lot of time together, with relatives frequently popping in, so the company added more folding chairs and stools that could serve as flexible seating
• India Adaptations — Factored south India’s hot and humid climate while designing Product Mix. Indians clean their floors with water so included small risers below beds to lift off the floor.
• Employee Recruitment — IKEA launched a brand campaign targeting potential employees to position the company as the best place to work wherein existing worldwide employees promoted the work culture.
• Brand Positioning — PR exercise to bring awareness and familiarity of Brand IKEA in India was unleashed 6 months before the first store opening.
• Customer Experience — IKEA launched an experience centre before actual launch to generate touch and feel, WOM advertising and curiosity before actual store opening

• Store Size — IKEA is opening smaller size stores to optimize space cost and to account for online shopping trends
• Brand Campaign — Targeting employed bachelors and elderly couples while keeping the primary focus on Families with kids
• Product Innovations — Adding AI-enabled products to cater to trend on Smart Homes
• Customer experience - Digital kiosk inside the shops for space optimisation and customization

• Furniture market size in Top 50 Cities is 50% of Total Indian Market
• Furnishing Product range would increase the size of the market to 1.5 times the furniture market size
• IKEA would expand to 35 cities in the first 5 years and aims to capture 10% of market share in 5 years time
• IKEA would operate with a gross margin of 5% which will progressively increase to 15% in the next 4 years
• Depreciation is applicable on 50% of investment in Plant and machinery, IT automation
• IKEA has borrowed 20% of total investment through Bonds in the Indian market
• IKEA would keep 2 months inventory which shall reduce to 1-month inventory with increase volumes