Question

1) Why was it so important to IKEA that it understand the market in India? What made the market different from other markets that IKEA operates in?

2. Can IKEA maintain its Swedish identity in India? Discuss.

3. Given that IKEA first opened in India in 2018, research and briefly discuss the status of the stores now (in 2020).

Answer 1

Abstract

Getting into a new market is never easy but nobody knows that better than IKEA. After conquering furniture markets in different countries, India won’t be tough challenge for IKEA.

They know the price sensitivity of Indian market pretty well and the strategy of affordability and accessibility will definitely help to get a strong customer base in India

1. Belwo are the market differentiation and importance to know India Market by IKEA

IKEA came with the plan to invest Rs. 10,500 crores in India. IKEA has already spent more than Rs 1,000 crores on land, construction and capital goods for their Hyderabad store.

IKEA’s CEO, Jesper Brodin announced that IKEA will increase the investment as it expands in India due to availability of great opportunities and potential market growth.

Any business investment plan would pay off in India with the development of better supply chains and mass production. This will lead to global integration and increased tax collection in India which will positively impact the economy.

The market structure has witnessed a relatively slow change in view of the emergence of retail chains in recent years. Furniture retail in India is unorganized and needs restructuring.

Many local retailers like Future Group (Home Town), Landmark (Home Centre), and Shoppers Stop (Home Stop) are still experimenting with format that goes well with Indian customer base.

With the entry of IKEA, there is hope that small and medium retail furniture market will get a standardized structure and shape.

2. Strategy to maintain its Swedish identity in India

1. With a growing middle class, India could be a big opportunity for the company, but it is also a market with many quirks. Ikea's giant blue store sits on a 13-acre campus, by the side of a busy road, in HITEC city.
2. The technology hub in Hyderabad is also home to global firms such as Microsoft, Google and Facebook.
3. The scale of the shop is something that has never been seen in India before.
4. Its size alone has piqued curiosity among those who may have never heard of the brand.
5. Upwardly mobile, well-travelled Indians have known Ikea for a while now.

In fact, with the number of global retailers who've come to India over the past decade, some would say Ikea has taken its time to set up shop here.

The company's global chief executive Jesper Brodin said: "The market of India for us is a dream.

But to be honest, some years ago, when we looked into the business case of India, we felt it was too high risk from the cost perspective of not meeting our targets.

The emergence and rapid growth of e-commerce is another reason why Ikea sees more of an opportunity in India now. In fact, even as it works on expanding its brick and mortar presence, the company wants to start selling its wares online in the country by next year.

3. IKEA's Status of the stores in India - 2020

Now IKEA is not new in India. They have been sourcing for years from India for their global stores. But there is a large market that is seeking the better solution that IKEA offers. It may take a few years to get the proposition perfect and break even, but success is assured in the long run.

The company aims to have 25 outlets across the country by 2025. The next store is slated to open in Mumbai in 2019, followed by Bangalore and Gurgaon, on the outskirts of Delhi. Ikea plans to eventually spread its iconic blue-and-yellow stores across more than 40 Indian cities