Ikea’s Business Model For Success In Indian Market

For its first store in India, the Swedish retailer is upending its business model.

The business strategy used by Ikea to create a global empire was to sell furniture that people assembled themselves at an affordable rate. The Swedish brand is now depending upon that business model for its first store in India,

The first in-house furniture-assembly team of 150 full-time employees would be part of the Ikea’s first Indian store set to open in the southern city of Hyderabad next month. this change in its model was made after a research conducted by them indicated that Indian customers would refrain from purchasing furniture hat they would have to crew together.

Ikeas will also keep items that have been tailor made for the Indian consumer such as lunchbox sets for multiple course meals, frying pans for cooking Indian flatbread, and co0conut fibre filled mattresses. The outlet would also have Ikea’s largest ever restaurant with 1000s

“This is the moment of truth,” said Juvencio Maeztu, the company’s deputy chief executive. He was part of the team that spent the last six years preparing for the launch. “India is an opportunity to make the next 75 years of Ikea”

The growing middle class and young population is being targeted by Ikea, like many other big Western retailers, and the company is expecting that this target market segment will drive the demand for its products. About half of the 1.3 billion people in India is below 25 years of age.

The income and aspirations of Indians are rising even though at current prices, not many would be able to afford an Ikea bed or table. According to an estimate by Indian retail consultancy Technopak, there has been a 90 per cent increase in the home furnishing market in India which is now at $34.45 billion as of March.

It is very important for Ikea to get its business going in India – the second most populous country in the world. in recent years, there has been a sharp decline in the global revenues of the company while heavy investments e-commerce and new channels have pressured its profits.

Ikea had earlier attempted to set up shop in India but was unable to do so because of a regulation that limited direct foreign investment in India in the retail sector.

The company has spent years in researching the right mix for success in India. It opened a temporary store near New Delhi to observe the interaction of invited families with its products. to better understand how Indians eat, sleep, relax and entertain the employees of Ikea have made over 1000 home visits.

As a part of its preparations for opening of its Hyderabad store, last year the company took 75 employees to Sheffield to aid in the opening of a store of the company there. additionally., in order to begin introducing customers to its products, a pop-up shop in a Hyderabad mall was also opened by it.

(Adapted from Business-Standard.com)


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