Ikea commenced on 28th of July, 1943 when the founder, Ingvar Kamprad, was at the tender age of 17. Just like the company’s conduct, the name is also unique- it is a composite of Kamprad’s initials ‘I’ and ‘K’, the ‘E’ stems from Elmtaryd, the farm on which he grew up, and Agunnaryd, the nearby village gives the ‘A’. It aptly reflects the humble and creative nature of Ingvar and his respect for his Swedish roots.
The biggest takeaway for Ingvar from his business class on Scientific Management by F.W. Taylor was his deep concern for what happens after the product is produced. The theory focused on streamlining the production process. But “the simplest, most cost-effective means of distribution from the factory to the customer” was what the student wanted to discover. And he did.
He started off by importing simple products like nylon stockings, watches and pens, pens being his favourite. But he soon realised what Smålan, Lake Möckeln and the thick forests had to offer- a ton of skilled craftsmen. And thus started the journey of IKEA and Furniture in 1947.
Eventually the craftsmen rose against him and he started in-house production. Kamprad also addressed the issue of costly shipping for bulky furniture by removing the legs of a coffee table, allowing it to be packed flat. Subsequently, IKEA adopted this approach for packaging as many products as possible, resulting in significant cost savings for both the company and its customers. This innovation became the infamous ‘flat pack furniture’ of IKEA.
Ikea’s expansion saga continued as stores sprouted up globally. The first stores outside of Sweden opened in Norway in 1963 and Denmark in 1969. A few short years later its first store outside of Scandinavia opened, and over the next decade IKEAs were popping up worldwide in countries like Japan, Australia and Canada, where crowds lined up for grand openings. Germany is IKEA’s biggest market with 53 stores, followed by the US with 51. As of April 2024, there are 473 IKEA stores in 63 markets globally.
The global furniture market stands at $579 billion USD and IKEA captures $21 billion USD out of it. Today, IKEA’s global footprint is proving to be as expansive as its Billy bookcases with over 850 million customer visits annually.
Ikea Tapping Indian Market
Understanding the diverse and dynamic nature of the Indian consumer market, IKEA conducted extensive research, visiting over 2,000 households across various cities. This research revealed nuanced preferences and challenges, prompting IKEA to tailor its product range accordingly.
- In cities like Mumbai, where space is at a premium, IKEA offers vertical storage options and versatile furniture solutions catering to small-space living.
- Conversely, in cities like Hyderabad, where homes are larger, IKEA provides a range of bigger furniture items such as sofas and beds.
- Recognizing the need for closed storage due to dust, they adjusted its inventory to offer more glass cabinets and cupboards.
- Introduced a “countertop block” to prevent water dripping in modular kitchens.
- Offers pans, woks, and stainless steel idli steamers adapted for Indian cooking.
- Provided lunch boxes with three containers and combination packs for elaborate lunches.
- Served localised menu in cafeterias, including biryanis, samosas, vegetarian meatballs.
- Added new dishes like salmon-fillet in red curry and salmon biryani to cater to diverse tastes.
Product Durability:
IKEA addressed the issue of short-lived furniture by offering products with appealing designs meant for immediate use. However, they were not particularly durable, allowing for disposal when they wore out or when the user desired a change in taste or purchasing preferences.
Demographic Targeting of Ikea:
IKEA successfully targeted the right demographic by offering furniture with a simple aesthetic and assigning them cute, memorable names. This approach appealed to a wide range of consumers, making the brand transparent and accessible to all.
Pricing Strategy:
IKEA implemented a pricing strategy that ensured affordability while maintaining a certain level of quality. This approach made IKEA’s furniture accessible to a broader audience, aligning with its mission of providing stylish yet budget-friendly options.
Retail Experience of Ikea:
Through its elaborate showrooms and cafeterias, IKEA transformed shopping into an immersive experience. The inclusion of famous meatballs in its cafeteria menu added to the allure, making IKEA a unique destination for shoppers seeking both furniture and culinary delights.
IKEA made its foray into the Indian market in 2018, marking a significant milestone in its expansion strategy. IKEA currently has five stores in India. This includes locations in Hyderabad, Navi Mumbai, Mumbai (Worli City Store), Bengaluru, and R CITY (Mumbai).
Despite the stark contrast in its home country’s culture and the love of Indians for their own, IKEA has managed to win the hearts of Indians.
According to Kavitha Rao, Ikea India’s chief commercial officer, “As a market, India always holds surprises for any global retailer. It is price-sensitive and you have to work across consumers in each category.”
Thus, they have tried its best to create a version of IKEA that screams desi.
But IKEA isn’t stopping here. The company is looking into expanding further by launching a store in India’s heart- Delhi. The Swedish firm has big plans as it estimates to invest further Rs. 10,500 crore here with endless possibilities for the future.