Business Model And Marketing Strategy Ikea.docx

BUSINESS MODEL AND MARKETING STRATEGY OF IKEA IN INDIA

INDUSTRY

FOUNDER

COMPANY SIZE

• Retail • Company Name: IKEA Group

• Ingvar Kamprad • Founded: Sweden • Headquarter: Netherlands

• Revenue: $44.6 billion ( 2018 ) • EMPLOYEES: 208,000 • STORES: 424 (All over the world)

IKEA CONCEPT

LOW PRICE

GOOD DESIGN

FUNCTION

Wit

Cost-Cutting Solutions

Flat Pack Furniture Concept

Without affecting the quality of products.

Introduce especially to reduce prices for IKEA customers by eliminating transportation & storage concept.

Differentiation from Competitors

Designers do not use design to justify a higher price.

Designers are Instructed To save in Every Possible Way .

Vision

Business Principle

Business Concept

• “To create a better everyday life for the many people.” • “Low price, but not at any price.”

• “You do half, we do half.... Together we save money”

History

The following history shows how over six decades IKEA went from the woods of southern Sweden to being a major retail experience in 40 countries/territories around the world.

The IKEA story begins when founder Ingvar Kamprad is born in Småland in southern Sweden. He is raised on 'Elmtaryd', a farm near the small village of Agunnaryd. Even as a young boy Ingvar knows he wants to develop a business.

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IKEA History 1920s-1950s

1926

Ingvar Kamprad is born At the age of five Ingvar Kamprad starts selling matches to his nearby neighbours and by the time he is seven, he starts selling further a field, using his bicycle. He finds that he can

buy matches in bulk cheaply in Stockholm and re-sell them individually at a very low price but still make a good profit. From matches he expands to selling flower seeds, greeting cards, Christmas tree decorations, and later pencils and ballpoint pens.

1943 IKEA is founded by Ingvar Kamprad When Ingvar Kamprad is 17, his father gives him money as a reward for succeeding in his studies. He uses it to establish his own business. The name IKEA is formed from the founder's initials (I.K.) plus the first letters of Elmtaryd (E) and Agunnaryd (A), the farm and village where he grew up. IKEA originally sells pens, wallets, picture frames, table runners, watches, jewellery and nylon stockings meeting needs with products at reduced prices.

1945 The first IKEA advertisements appear Ingvar Kamprad's business outgrows his ability to make individual sales calls, so he begins advertising in local newspapers and operating a makeshift mail-order service. He uses the local milk van to deliver products to the nearby train station.

1948 Furniture is introduced into the IKEA range The furniture is produced by local manufacturers in the forests close to Ingvar Kamprad's home. The response is positive and the line expands.

1951 The first IKEA catalogue is published IKEA's founder sees the opportunity to sell furniture on a larger scale using a catalogue. The IKEA catalogue that we know today is born.

1953

Furniture showroom opens in Älmhult, Sweden This is an important moment in the development of the IKEA concept - for the first time customers can see and touch IKEA home furnishings before ordering them. The showroom is born out of a price war with IKEA's main competitor. As both companies lowered prices, quality was threatened. By opening the showroom, IKEA clearly demonstrates the function and quality of its low-price products. The innovation is a success; people wisely choose the products with the best value for money.

1956 Designing furniture for flat packs and self-assembly IKEA's decision to design its own furniture stems, ironically, from competitor pressure for suppliers to boycott IKEA. Exploration of flat packing begins when one of IKEA's first co-workers removes the legs of the LÖVET table so that it will fit into a car and avoid damage during transit. After this discovery flat packs and self assembly become part of the concept.

1958 The first IKEA store opens in Sweden The first IKEA store in Älmhult has 6,700 square metres of home furnishings! At the time, it is the largest furniture display in Scandinavia.

Gillis Lundgren designs the TORE drawer unit While visiting one of IKEA's kitchen manufacturers, one of IKEA's earliest coworkers, Gillis Lundgren, notes the simple, practical storage ideas being used in IKEA kitchens and is inspired to apply the same thinking throughout the home. As soon as he gets back to Älmhult he sits down and designs the TORE drawer unit.

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IKEA History 1960s-1970 1960

The first IKEA restaurant The first IKEA restaurant opens in the IKEA store in Älmhult, Sweden.

1961

Product testing begins IKEA begins quality testing its products using Swedish testing standards.

ÖGLA chair on sale The ÖGLA cafe chair is launched with the IKEA concepts of form, function and price in mind. Today it is made of composite plastic in order to further reduce transportation costs.

1962

Marian Grabinski designs the MTP bookcase The MTP bookcase is a contemporary classic and will see numerous imitations over the years. Developing this and other wooden products develops strong relationships between IKEA and Polish suppliers during the 1960s. These relationships continue today and are an important reason for IKEA maintaining low prices so that the many people can afford them.

1962

Marian Grabinski designs the MTP bookcase The MTP bookcase is a contemporary classic and will see numerous imitations over the years. Developing this and other wooden products develops strong relationships between IKEA and Polish suppliers during the 1960s. These relationships continue today and are an important reason for IKEA maintaining low prices so that the many people can afford them.

1963 IKEA arrives in Norway The first IKEA store outside Sweden opens in Oslo.

1965 Largest IKEA store opens in Stockholm, Sweden Thousands of people queue for the opening of the 31,000 square metres flagship store, IKEA Kungens Kurva. The store has a circular design, inspired by New York's Guggenheim Museum. The store's success leads to the opening of a selfserve warehouse - an important part of the IKEA concept is born. Additionally, Accenten is opened, where customers can buy quality cooking items at a low price.

1968 Particleboard makes its mark This inexpensive, hard-wearing and easy-to-process material is a natural fit for IKEA. In 1969, the PRIVAT sofa is designed by architect Åke Fribryter. It has a particleboard base with a white lacquer finish and brown floral cretonne covers by textile artist Sven Fristedt. The straight lines, no-nonsense practicality and unbeatable low price are a tremendously successful combination.

1969 IKEA arrives in Denmark The first IKEA store opens in Copenhagen.

1973 IKEA arrives in Switzerland The first IKEA store outside Scandinavia opens in Zurich.

Denim used for furniture

TAJT, a multifunctional seat/recliner, is one of many good examples of how IKEA sometimes does things differently. By using a low-cost raw material from another industry, in this case denim, a hard-wearing and low-priced product is created.

1974 IKEA arrives in Germany The first IKEA store opens in Munich. The success in Switzerland paves the way for a rapid expansion into Germany, which today is IKEA's largest market.

SKOPA chair raises eyebrows Choosing a manufacturer for the SKOPA chair, designed by Olle Gjerlöv-Knudsen and Torben Lind, is wonderfully simple, even if it raises a few eyebrows. SKOPA is developed by a supplier that usually makes plastic buckets and bowls, creating a chair in which form and function are not compromised by an unorthodox solution.

1975 IKEA arrives in Australia The first IKEA store opens in Sydney.

1976 IKEA arrives in Canada The first IKEA store opens in Vancouver

POEM is launched (later known as POÄNG) Another IKEA classic is born, the comfortable armchair POEM made of laminated wood, which will later evolve into POÄNG.

The Testament of a Furniture Dealer Ingvar Kamprad writes The Testament of a Furniture Dealer and in 1976 it is published - it documents IKEA's vision and business idea and has a strong influence on the development and vitality of IKEA's culture.

1977

IKEA arrives in Austria The first IKEA store opens in Vienna.

1978 BILLY bookcase is born The BILLY bookcase is introduced into the range - an IKEA classic.

1979 IKEA arrives in the Netherlands The first IKEA store opens in Rotterdam.

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IKEA History 1980s

1980 KLIPPAN sofa - another IKEA classic The KLIPPAN evolves into a sofa tough enough to stand up to the kind of punishment only children know how to dish out, yet soft enough to fall asleep on during long bedtime stories. The entire cover can be removed for machine washing.

LACK table arrives This low-priced, functional coffee table is made with a technique that is normally used for interior doors, making the table very strong and light. This sandwich technique is called board-on-frame and will be used in many IKEA products in years to come.

1981 IKEA arrives in France The first IKEA store opens in Paris.

1982 IKEA Group is formed The IKEA Group is formed and its owner is a foundation, the Stitchting INGKA Foundation, which is based in the Netherlands.

LACK range is extended To complement the LACK table, LACK shelves are designed. 1984 IKEA arrives in Belgium The first IKEA store opens in Brussels.

STOCKHOLM range of furnishings appears

IKEA designs a series of high-quality furnishings using some well-loved materials - birch wood, leather and cretonne. The range has everything you would expect of high-quality classics, except the high price tag. STOCKHOLM is a winner of the Excellent Swedish Design award. IKEA catalogue numbers increase

The IKEA catalogue print run expands to 45 million copies, in nine languages.

IKEA FAMILY is launched IKEA FAMILY, the new customer club, is launched. Today, IKEA FAMILY is in 24 countries (over 235 stores) and has about 40 million members

1985 IKEA arrives in the USA The first IKEA store opens in Philadelphia.

Our co-workers IKEA now has 10,000 co-workers and 60 stores in the IKEA Group.

MOMENT sofa is designed by Niels Gammelgaard When

IKEA

looks

for

a

suitable

manufacturer, visits to a supermarkettrolley factory prove successful in utilising knowledge of strength and stability. IKEA takes this as a starting point to create a stylish, comfortable and low-priced sofa with a modern look. The matching table, designed in 1987, wins the Excellent Swedish Design award - something few supermarket trolleys can boast of.

1986 New president and CEO Ingvar Kamprad retires from Group Management to become an advisor to the parent company INGKA Holding B.V. Anders Moberg becomes President and CEO of the IKEA Group.

1987 IKEA arrives in the UK The first IKEA store opens in Manchester.

1989

IKEA arrives in Italy The first IKEA store opens in Milan.

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IKEA History 1990s

1990 IKEA arrives in Hungary The first IKEA store opens in Budapest.

IKEA's first environmental policy The IKEA Group develops an environmental policy to ensure that the company and its co-workers take environmental responsibility for all activities conducted within its business.

1991 IKEA arrives in the Czech Republic and Poland The first IKEA store in former Czechoslovakia opens in Prague. The first Polish IKEA store opens in Poznan.

Swedwood, IKEA's industrial group IKEA acquires its own sawmills and production plants and establishes the industrial group Swedwood to produce wood-based furniture and wooden components.

1993 IKEA and FSC The IKEA Group becomes a member of the global forest certification organisation Forest Stewardship Council (FSC).

1994 MAMMUT Daring to be different. A whole furniture series for children is introduced that not only meets the demands of wild childish imaginations, but also stands up to the wildest of children's games. All the products are made of tough, resilient materials and have rounded corners for safety.

1995 The first IKEA PS collection is launched Launched at the same time as the Furniture Fair in Milan, PS stands for POST SCRIPTUM, or the latest additions to the world of IKEA design. The IKEA PS collection is one way of sharing IKEA's design values form and function at a low price. IKEA PS gives designers free rein to shape the latest creations, where the aim is to create products that are emotional, fun and less predictable, appealing to those who prefer an individual taste to a common style.

1996 IKEA arrives in Spain The first IKEA store opens in Barcelona.

DAGIS kids chair by Richard Clack is born Richard Clack obviously takes a long, hard look at kids before he designs this chair. Children do not have sharp corners, they are fairly soft but can stand up to a little rough and tumble now and again. So he designs his chair to suit the needs of children with one little improvement - the chairs come in stackable versions to save space and make moving them easier.

1997

IKEA on the web The IKEA web site www.IKEA.com is launched.

Children's IKEA is launched IKEA offers furnishings for the entire family, but because kids are the most important people in the world, IKEA decides to develop a range specifically for them. We work with many experts to develop products that are good for the development of kids' co-ordination skills, social skills and creativity. The products we launch in 1997, and continue to sell today are chosen by the most important experts: kids themselves. Even our stores take care of children's needs by providing play areas, children's room settings, baby areas and special meals in the restaurant.

IKEA 365+ for all the days of the year The IKEA 365+ range is launched - a range of functional, attractive everyday products for preparing, cooking, serving and eating food. The products are designed to make kitchen work easier and more enjoyable, at the same time bringing a little more beauty into everyday life with their form and colors.

1998 IKEA arrives in China The first IKEA store opens in Shanghai.

The first forestry manager is employed at the IKEA Group IKEA employs its first forestry manager to work fulltime with securing sustainable use of forestry resources.

1999

Our co-workers and stores The IKEA group grows to 50,000 co-workers and has 158 stores in 29 countries.

A new president and the CEO Anders Dahlvig becomes President and CEO of the IKEA Group, taking over from Anders Moberg. The Big Thank You event The unique Big Thank You event on 9 October 1999 is a millennium reward for the many co-workers within the IKEA Group. The total of all sales on this special day, worldwide, is divided among all co-workers - in total about 84.85 million euros. It is a great way to thank hard-working IKEA coworkers for contributing to the company's ongoing success. Improving education in Kosovo The IKEA Group donates funds to UNICEF and Save the Children to assist in the re-building of schools, the provision of educational materials for children and the special training of teachers in war-torn Kosovo. IKEA wins international award for VÄRDE kitchen VÄRDE is a new way of thinking about kitchens. Its unique modular design allows customers to create an entire kitchen from scratch or simply add a piece here or there. The innovative design, functionality, ergonomics, ecological compatibility and durability combined with attractive design, helps VÄRDE win the Red Dot Award for Highest Design Quality, which organised by Design Zentrum Nordrhein Westfalen in Germany.

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IKEA History 2000s 2000 IKEA arrives in Russia The first IKEA store opens in Moscow.

A code of conduct is launched The code of conduct called The IKEA Way on Purchasing Home Furnishing Products (IWAY) is launched. It defines what suppliers can expect from IKEA and specifies what IKEA expects from its suppliers in terms of legal requirements, working conditions, active prevention of child labour, external environment and forestry management. In addition to this, IKEA also introduces The IKEA Way on Preventing Child Labour to ensure that no child labour is used by our suppliers or their sub-contractors.

Child rights project in India The IKEA Group, in co-operation with UNICEF, initiates a broad community programme in northern India to address the root causes of child labour. The project includes 500 villages and will benefit more than 1 million people, providing more than 80,000 children with an opportunity for an education.

At, present, the project covers a range of initiatives, such as providing alternative learning centres, health and nutrition, education, empowering women and forming women's self-help groups.

IKEA customers can shop online E-shopping is launched in Sweden and Denmark. Since then many other markets have started offering online shopping at IKEA.

2001 IKEA Rail begins

The IKEA Group trials running its own rail operations through IKEA Rail AB. The train runs five round trips a week between Älmhult, in Sweden, and Duisburg, in Germany. In 2004 rail operations are taken over by an external company, with IKEA continuing to use this route. The use of rail continues to be an important part of IKEA's strategy to promote sustainable transportation of IKEA material and products.

Another innovative product IKEA becomes one of the first manufacturers to produce furniture with patterns produced directly on fibreboard and particleboard, in a factory in Poland. This technique is called print-on-board.

Anders Dahlvig speaks at a Greenpeace conference in London IKEA has a long tradition of co-operating with different NGOs such as Greenpeace, a co-operation which started in 1991. Over the years, this has helped IKEA phase out the use of bleach for printed materials, the use of PVC in products, as well as working towards protecting natural intact forests.

A new head office for the IKEA Group

The IKEA Group moves its head office from Humlebaek in Denmark to Leiden in the Netherlands.

Inter IKEA Centre Group is formed Inter IKEA Centre Group was founded in March 2001 to become a Holding company for shopping centres with an IKEA store as an anchor. The group is owned and controlled by the Inter IKEA Group and the IKEA Group and today operates in Poland, Germany, Austria, Czech Republic, Slovak Republic, France, Spain, Portugal, Croatia, Serbia and Slovenia, with headquarters in Denmark.

2002 IKEA recovery is launched A new product-recovery concept is implemented in more than 100 IKEA stores in Europe to ensure that returned products are, where possible, repaired instead of being wasted.

The IKEA and WWF Co-operation on Forest Projects In 2002, the global conservation organization WWF and the IKEA Group join forces to promote responsible forestry in priority regions around the world. The two organizations initiate a series of global and regional forest projects to support the development of responsible forestry.

2003 The fourth IKEA PS collection is launched The focus is on innovative products with the specific ambition to inspire children to play and enjoy physical activity. The range also includes the successful IKEA PS BRUM soft toy. During 2003-2004 customers help to raise more than 2.1 million euros by purchasing a PS BRUM soft toy at an IKEA Group store. These funds are donated to UNICEF projects for children in Angola and Uganda.

2004 IKEA arrives in Portugal The first IKEA store in Lisbon.

First environment report The IKEA Group publishes its first Social & Environmental Responsibility Report. It is launched on the web and gives information as well as facts and figures.

The 200th IKEA store opens The IKEA New Haven store in the US is the 200th IKEA Group store worldwide.

2005 Everything for the bedroom under one roof A complete and co-ordinated collection of bedroom furnishings is launched, including everything from mattresses to smart storage solutions and textiles for all tastes.

IKEA expands its focus to kitchen solutions IKEA wants to make life in the kitchen easier, after all it is one of the most-used rooms in the house. So IKEA looks into all the ways life in the kitchen can be more fun. The result is a wide range of co-ordinated kitchens and dining furnishings that make kitchen life easier.

IKEA customers help children in need Customer purchases of IKEA soft toys help raise funds for UNICEF and Save the Children projects focussing on children and their welfare. This yearly campaign has to date raised a total of 4.8 million euros.

The fifth IKEA PS collection is launched What if the wildest ideas become the wisest solutions? The fifth IKEA PS collection is launched under the headline 'What If...?' Twenty-eight designers develop a range in which innovation is the key word for materials, design, function and techniques. The range

includes everything from rugs with hinges and pillows for your feet, to t-shirtshaped cushions and rocking dining chairs made from wooden plastic.

IKEA and WWF co-operate on cotton cultivation IKEA is working together with WWF to promote better methods of cotton cultivation. About 2,000 farmers in Pakistan are being trained in Farmer Field Schools. In 2006, the cotton cultivation project expands to India, where 500 farmers are being trained. The discovery-based learning process encourages the farmers, many of them illiterate, to adopt more sustainable production practices that serve as a good example to others in the region.

IKEA gives in-kind donations Schools in Liberia and Burundi receive 9,000 tables each for a UNICEF school project. After the tsunami, IKEA gives UNICEF an in-kind donation of 125,000 bed sheets, 100,000 quilts, 18,000 blankets, 145,000 toys and 300 mattresses to help victims in Indonesia, Sri Lanka and India.

IKEA Social Initiative An organisation called IKEA Social Initiative is formed to handle global community involvement through its partnerships with Save the Children and UNICEF.

2006 IKEA arrives in Japan After previous explorations of Japan with a joint venture in the 70s, the IKEA Group opens its first fully-owned store in Tokyo.

IKEA food label IKEA launches its own food label covering about 30 percent of the 150 products in its food range. The range focuses on high-quality food products based on Swedish recipes and tradition, for a low price. The products have an IKEA label and are sold in Swedish Food Markets in IKEA stores and are also served in IKEA restaurants.

Our co-workers The IKEA Group exceeds 100,000 co-workers and operates in 44 countries. Preventing illegal logging The IKEA Group and WWF join forces to curb illegal logging in Russia and reward legal forestry in Russia and China. WWF Russia is actively participating in government working groups to find solutions to illegal logging on the national and regional level. For example, regional anti-illegal logging brigades receive technical assistance to conduct monitoring and gain control over logging activities.

IKEA’S ENTRY INTO INDIA Retailing accounted for 14% of India’s GDP. The industry consisted mostly of small shops with organized retail stores accounting for only 4% of the industry. After liberalization in the 1990s, many foreign companies had set their sights on the Indian market. However, till 2011, FDI in multi-brand retail was forbidden by the Indian government and FDI in single-brand retail was permitted only up to 51%. In November 2011, the FDI reforms were announced but due to opposition from different political parties and activists, they were kept on hold. In January 2012, India allowed 100% FDI in single-brand retail on the condition that the retailer should mandatorily source 30% of their goods from India’s micro, small, and medium enterprises (MSMEs). And 51% FDI was allowed in multi-brand retailing in December 2012. After the reforms, IKEA, which had been trying for a long time to expand into the Indian market, applied for permission in June 2012 to invest US$1.9 billion (€1.5 billion or Rs 105 billion) and set up 25 retail stores in India in two stages.

Ikea of Sweden Ltd opened its first Indian store in Hyderabad on Thursday, a ₹ 1,000-crore bet that affordable furniture and assisted assembly will draw buyers in the world’s fastest-growing economy to its swanky 400,000 sq. ft outlet. It has been a milestone that’s more than a decade in the making. Here’s a look back: 1 June 2006: Ikea says it’s studying the Indian market and would like to be there in five years if foreign ownership regulations change.

A living room display at the new IKEA store in Hyderabad.

10 April 2008: Ikea says it’s interested in entering India, though local laws allowing only 51% foreign ownership are hampering the company’s plans. 11 June 2009: Ikea postpones plans to enter the market after talks with the Indian government on foreign direct investments fail. 1 January 2012: India’s government abandons a rule against foreign singlebrand retailers operating stores without a local partner, paving the way for global companies including Ikea.

22 June 2012: India’s commerce ministry says Ikea may invest € 600 million in the country. 20 November 2012: India’s Foreign Investment Promotion Board (FIPB) approves Ikea’s proposal to open stores in India. 21 May 2016: Ikea announces purchase of land for a 400,000-square-foot store in Navi Mumbai, on the city’s eastern outskirts, and plans to open 25 stores in India by 2025.

Indian customers purchase items at the new IKEA store in Hyderabad

13 September 2016: Ikea says it’s started construction of its first store in Hyderabad and is also looking for land in cities such as Delhi and Bengaluru. 7 December 2016: Ikea says it expects to open a Hyderabad store toward the end of 2017.

An Ikea branded auto-rickshaw during the launch of the company’s store in Hitech City on the outskirts of Hyderabad.

18 May 2017: Ikea predicts doubling its sourcing from India to € 600 million by 2020 and says it will open its first Indian store, in Hyderabad, in early 2018; breaks ground on Mumbai site and says it will invest about ₹ 1,000 crore in the country. 31 May 2017: Ikea announces purchase of 14 acres of land in Bengaluru for a third store in India, which is anticipated to have 5 million visitors per year; it’s also scouting for sites in Delhi, Chennai and Pune. 1 September 2017: The Times of India reports Ikea will invest ₹8,100 crore in its Bengaluru store.

Ambassador of Sweden, Mr Klas Molin (left) with K. Taraka Rama Rao, state minister of Telangana, at the Ikea store in Hyderabad.

2 November 2017: Ikea announces the purchase of 10 acres of land in Gurugram in the National Capital Region outside Delhi from the Haryana Urban Development Authority, and plans to build a 400,000 square-foot store with parking for 1,000 cars and a restaurant seating 1,000 people. 22 November 2017: Ikea opens an experiential centre in Hyderabad’s Forum Mall to showcase products that will be sold in its soon-to-be-opened store, including Swedish and Indian delicacies that will be offered in its planned restaurant; says second India store will open in Mumbai in 2019, followed by Bengaluru and Delhi. 6 December 2017: Ikea announces plan to hire more than 14,600 people in India by 2025 and says half of them must be women. The plan includes 500 to 700 staff for each of its stores slated for Hyderabad, Mumbai, Bengaluru and Delhi NCR. In addition, 171 existing employees will each receive an extra 150,120 rupees ($2,185) contribution to their pension fund.

The Ikea Hyderabad store houses a 1000-seater restaurant.

13 July 2018: Ikea postpones the planned Hyderabad storeopening to 9 August from 18 July and says it may look at opening smaller format stores in cities like Mumbai and Delhi due to space constraints and higher realty costs. 9 August 2018: Opens first Indian store in Hyderabad.

FURNITURE INDSUTRY IN INDIA India was home to rich traditional handicrafts and artistic work of wood. Indian art and design had earned a worldwide reputation for themselves. The supreme quality, exceptional designs, and luxurious trends lent elegance to the Indian furniture segment. However, with the passage of time, the preferences of the Indian consumer had changed and the furniture industry too had changed to suit the consumer needs. The industry produced a wide range of products related to office, living room, bedroom, kitchen, garden, school furniture, and also mattresses, furnishings, upholstery, parts of furniture, etc., using a wide variety of raw materials like wood, rattan, steel, plastic, and metal and more recently silver. Based on the raw material used, the furniture market in India was regionally concentrated. According to research by IKON Marketing Consultant, the furniture market in India was estimated at around Rs. 700 billion in 2010. 16 However, it was considered as an unorganized sector, as handicraft production accounted for about 85%–90% of the total furniture production in the country.17 The market was highly fragmented and production came from small regional firms or individual artisans and only 10%–15% came from the organized sector comprising leading manufacturers, importers, dealers, and distributors. Within

the Indian furniture market, home furniture was the largest segment, accounting for 65% of the industry sales, followed by the office segment with 20%, and the contract segment taking the remaining 15%.

Market Scenario Ranked as one of the top three most attractive investment destinations in the world, India is also one of the fastest growing economies in the world.

According to a study by the World Bank, India’s organized furniture industry is expected to grow 20% per annum over the next few years and is projected to cross US$ 32 billion by 2019. Online home décor market in India is projected to grow at a CAGR of 50.42% in revenue over the period 2014-2019. The Luxury Furniture Market is expected to garner $27.01 billion by 2020, registering a CAGR of 4.1% during the forecast period 2015-2020. FDI in the Indian real estate sector and the government’s Housing-for-All by 2022 initiative and development of 100 smart cities to accommodate India’s growing urban population are some of the growth drivers for revival of the real estate and construction sector. The anticipated increase in tourism, hospitality, retail and hospital sectors is also expected to spur furniture demand in the country. The rise in demand of residential realty is as huge as 20% and the home furniture market is expected to witness the fastest growth over the next five years, followed by the office and institutional segments.

The Asian market is estimated to be the biggest consumer of furniture and India holds a major pie, according to a World Bank study. The FDI enterprise under Make in India has already resulted in a 60 per cent growth in inflows and it is this campaign of the government with the objective of high quality standard that is steadily attracting international capital and technological investment in India thus facilitating localised production. Skilling and Employment Opportunities: According to a National Skill Development Council (NSDC) report, India’s furniture and furnishings industry will need 11.3 million skilled workers by the year 2022. The Furniture & Fittings Skill Council (FFSC) is one of such Sector Skill Council of NSDC and they have unfurled a raft of training programmes and schemes toward meeting this demand without diluting the expected quality standards. According to National Sample Survey Office’s (NSSO) 68th Round, 50% (1,070,681) of the total employment in furniture manufacturing is concentrated in the five states of Maharashtra, Gujarat, Bihar, Uttar Pradesh and West Bengal. The imminent opportunities for “Make in India” products: The “Make in India” campaign is well on its path to creating the nation into a haven for investment and a propeller for economic headway. On the threshold of major reforms and poised to become the third largest economy in the world by 2030, Make in India has announced a variety of initiatives which will facilitate the indigenous manufacturing of furniture and bring about ease of doing business. In 2015, shipments of Indian-made furniture for the U.S. market rose 24% to $336 million. During the first half of 2016, shipments of $180 million, up 18% from the prior six month period in 2015, were on their way to eclipsing that growth for the full year. Hence, with such positive and promising business possibilities, participants at IndiaWood can look forward to capitalise on the opportunities the industry has to offer. However, Indian imports of furniture were growing at a considerable rate, catering to the need of the urban middle class for stylish homes in compact apartments. Countries like Germany, Italy, Korea, Japan, and recently China and Thailand had been major suppliers of furniture to India. With a promising market potential in place, several international brands like Arredo Classic, Art Design Group, B.T.C. International, Bizzarri, Cantori, Desirée, Girasole, Gold Line, Presotto, and Reflex were trying to enter the Indian market. Top domestic companies like Godrej, BP Ergo, Featherlite, Hanworth, Style Spa, Zuari, Durian, and Millenium Lifestyles also had a presence in the industry. The entry of international brands and changing consumer preference had led to the emergence of furniture retailing in India. IKON Marketing Consultants estimated that with India’s robust economy, spurt in real estate and housing activity, burgeoning Information Technology and Services, and the Indian middle-class aspiring for better lifestyles, there would be a further boom in the Indian furniture industry in the near future.

CHALLENGES FOR IKEA IN INDIA 1. Returns on investment Ikea is spending $1.5 billion in India but analysts reckon it is going to be several years before the company with a presence in 49 countries starts seeing significant returns on that investment. The home goods retailer has already spent close to $750 million procuring Indian sites for four stores, including the massive, new 37,160-square-metre (400,000-square-feet) outlet in Hyderabad. Ikea will offer more than 1,000 products under 200 rupees ($2.91) but experts say it faces a difficult balancing act between setting prices low enough to attract cost-sensitive consumers but high enough to reel in the status-conscious rich.

2. Local furniture makers “It needs to get its brand image and product pricing right lest the growing Indian middle class steers away from the brand," Sowmya Adiraju, an analyst at research firm Euromonitor, told AFP. Prising Indians away from local furniture makers that they trust is going to be difficult for Ikea, according to retail experts. Indian towns and cities are not short of small, family run shops whose owners will visit your home and then build furniture from scratch based entirely on your specific furnishing needs. Patrik Antoni, Ikea’s deputy country manager for India, told AFP in a recent interview that the Swedish retailer had visited more than one thousand houses to try to understand exactly what Indian consumers want. Ikea will sell products tailored for India’s market, such as kitchen appliances for making traditional rice cakes, but experts warn that getting consumers to abandon their trusted woodworker for larger items will be tricky and take time.

3. ‘DIY’culture Ikea revolutionised furniture buying in the West with its wide range of ready-to-assemble products at affordable prices but many Indians would be forgiven for wondering why they have to do it themselves. India’s abundant supply of cheap labour means it is not known for its “DIY" culture. Ikea is aware that this may put people off so has teamed up with UrbanClap, an online platform that helps connect handymen with consumers. But analysts say the absence of UrbanClap in lower tier cities could pose a problem.

4. Walmart & Co. Ikea is not the only multinational seeking a large share of India’s growing home goods market, which research firm Forrester currently values at $40 billion. US retail giant Walmart is betting big on the rise of India’s middle class too. The world’s largest retailer recently agreed to buy a majority stake in Indian e-tailer Flipkart, which sells a wide range of home furnishings. Ikea will have to contend with popular Indian online furniture retailers Pepperfry and Urban Ladder as well in a fragmented and competitive market which also includes a smattering of home goods options on Amazon’s local website. Ikea hopes that its walk-in stores and famed restaurants, selling a mixture of Indian favourites like biryani and samosas along with vegetarian versions of its famous meatballs, will give it an edge over its rivals.

5. Finding space for large stores Land acquisition is rarely straightforward or cheap in India though with buyers regularly having to jump through bureaucratic hoops and facing long delays. Finding space big enough for Ikea’s trademark large stores in India’s notoriously congested cities also poses a challenge. The Hyderabad outlet is comparable in size to a typical Indian shopping mall but sites procured in Mumbai, Bangalore and the capital New Delhi are reported to be smaller. Ikea is yet to put a timeframe on when they might open. Afterwards they will look at opening in Pune, Chennai, Ahmedabad, Surat and Kolkata, according to Antoni. Ikea has said it is considering opening small stores which will just give a sample of what they sell. They will contain screens where people can flick through catalogues before ordering.

6. Online rivals With most retail businesses migrating online, there are millions of furniture and home-related products available on the internet and Indians, too, are using online shopping places like Amazon and Flipkart to buy a large share of furniture, especially during offer periods such as the Independence Sale or the Big Billion Sale. Forrester has valued India’s home goods market at $40 billion. In addition, Walmart’s recent deal to buy a majority stake in Flipkart is an indication that the US giant would also be pushing its products through Flipkart in India. Moreover, stores like Pepperfry and Urban Ladder are also popular Indian online furniture stores that IKEA has to overshadow for tasting success in India.

WORKING WITH SUPPLIERS After the company got the approval to set up its stores in India, an IKEA

spokeswoman Ylva Magnusson said, “It will be another four to five years before Indians can purchase the company’s iconic flat-pack furniture.” IKEA’s planned investment was till then the largest by a foreign retailer in India. IKEA’s spokesperson, Josefin Thorell, said, “The Swedish retailer’s presence in India will, in a major way, help improve availability of high quality, low-price products, increase sourcing of goods from India and increase the competitiveness of Indian enterprise through access to global designs, technologies, skill development, and global best practices.”38 But the promoter of a Ludhiana-

headquartered home furnishing unit (an ex-IKEA supplier) was not too enthusiastic about IKEA’s entry and said, “IKEA engages in predatory trade practices. In the first year, they offer excellent margins. In subsequent years, the margins reduce to a level that turns a unit into an unprofitable venture.” After the approval of its application by the CCEA, Ohlsson, said while commenting on the development, “This is a very positive development. IKEA already sources products from the country and will continue to increase our sourcing in India from both existing and new suppliers, building on long-term relations and shared values.”40 India had been IKEA’s sourcing destination for textiles and carpets for a long time. However, the company was interested in further tying up with Indian suppliers in the plastics, steel, lighting and natural fiber categories as well. Analysts opined that this investment by IKEA had come at a time when the Indian furniture market lacked big brands and was sure to shake things up for the benefit of the Indian consumer. IKEA already had 70 suppliers and 1450 sub-suppliers in India. After the company got clearance from the cabinet, it invited all its suppliers to its Gurgaon

office and discussed its plans for the future. If focused its discussion on growth and doubling its sourcing from Indian suppliers. In response to these developments, IKEA’s Indian suppliers began gearing up to face the sudden surge in order volumes. For instance, V Ashok Ram Kumar, managing director, Asian Fabricx, said, “We certainly need more people when there’s a sudden increase in order volumes. To beat labor shortage, automation is being focused on.” Some change in the processes was also taken up by the suppliers. For instance, earlier 80% of the yarn was dyed before weaving into fabric; but now, to reduce costs, most of the weaving was done without the yarn being dyed. Apart from these benefits, analysts expected that IKEA’s entry would have a great impact on the industry as a whole. They expected that large box retail formats, which would be located on the outskirts of big cities, would be introduced and gain popularity with other retailers in India. An increase in the competition between large box furniture retailers that had little or no differentiation and a partial or total wipe-out of the low-cost imported furniture market was also expected. However, retailers or brands that maintained sharp differentiation in their products and services were expected to survive the competition. IKEA, since its founding, had played on the price sensitivity of the customer and low cost furniture. The company’s website stated, “We design the price tag first and then develop the product to suit that price.”43 According to Thorell, “Product developers and designers work directly with suppliers to ensure that creating the low prices starts on the factory floor.”

IKEA CATALOGUE It includes 

Product range



Product information in detail



Product price

The IKEA catalogue is a vital part of IKEA retailing since the first edition was Published in Sweden in 1951. Today, more than 100 million household around the world receive IKEA catalogue, every year, for free of charge. The IKEA catalogue is produced in 32 languages, with more than 210 million copies delivered to homes in 44 countries. The catalogue offers more than just a glimpse at the diverse IKEA product range. You'll discover new affordable solutions and creative approaches to help inspire home furnishing ideas for better living. For the best possible ideas and inspiration the online catalogue comes with a built in app with additional content.

2019

Kitchens

MAKING DREAM KITCHENS FOR YOU We’ve been developing kitchens for nearly 50 years now. It’s been a fantastic journey of learning, listening to people, testing and always aiming higher to meet people’s idea of a dream kitchen. We design them to be tough, work optimally and feel good for you to spend time. for this to happen, quality has to be as important as style and function. A kitchen that lasts, and works for you in your everyday life, should also be a smart kitchen. And the best part? You’ll not only be saving on the planet’s resources, but these are solutions that help you save money too. Not just because they’re so customizable, but also by choosing the level of services you need. Whatever you decide, we offer full support before, during and after purchase. we always strive towards making simple, daily activities a true joy for you to engage in. And to bring beauty and function together at a price that make a dream kitchen affordable for you.

LERHYTTAN You should be able to make delicious dishes in your kitchen for years to come. And you can relax, we offer a 10-year guarantee on our METOD kitchen system. But it takes more than a guarantee to become a quality kitchen. It must be designed for everyday kitchen life, and include all the functions that you need. Plus, everything should be co-ordinated from the inside and out to give you that joyful feeling every time you enter your kitchen. Just like this METOD kitchen with LERHYTTAN fronts.

TORHAMN When choosing an IKEA kitchen, you don’t have to compromise on quality, nor on good looks. Take TORHAMN fronts as an example. The details in the doors add an air of craftsman-ship to the kitchen while the warmth and color variations in the wood create a natural welcoming feeling.

What’s included in the price?

2,46,475

Rs.

Installation service for

this kitchen

Rs.25,000

Affordable living

VEDDINGE

In this METOD kitchen with VEDDINGE fronts, you’ll get a lot of storage space at an affordable price. The white and fresh expression creates a calm atmosphere and the open shelves allows you to store often used kitchen necessities close at hand.

What’s included in the price?

Rs.

1,15,150

Installation service for this kitchen

Rs.15,000

KALLARP

The high gloss fronts of KALLARP give a fresh, modern and spacious feel to the kitchen. This kind of style works especially well in small spaces because the reflective surface gives the impression of more space than there actually is. Combining this with a shallow cabinet and sink make a small kitchen feel and function bigger and better than its size would suggest. Style and optimal function in a small package. You’ll find more kitchens at: IKEA.in METOD/KALLARP kitchen

What’s included in the price?

See page 34 Rs.1,11,950

Installation service for this kitchen

Rs.15,000

VOXTORP

We all have differently sized kitchens as well as unalike needs and wishes for what our kitchens should fulfil. That’s when the kitchen system METOD, behind these VOXTORP fronts becomes extremely practical. As the cabinets come in many sizes you can mix them to fit your needs perfectly.

BODBYN

With METOD kitchen system even the smallest room can handle a lot of needs. In this kitchen with BODBYN fronts, one wall is maximally utilized with shallow cabinets and a matching in size worktop to create space for you as well as your stuff.

1

BODBYN glass door with crossbar

Rs.

2,200/pc

MAXIMIZE YOUR SPACE

VARIERA/UTRUSTA waste sorting for cabinet Rs.2,200

KUNGSBACKA It should be easy to live a more sustainable life at home. We go all-in on developing products that can help you to save energy and reduce waste. It might seem little in the big picture, but the beauty of small actions is that they all add up. KUNGS-BACKA fronts are all made of recycled wood, covered with a surface made from recycled PET bottles.

Installation service for this kitchen

Rs.15,000

METOD/KUNGSBACKA kitchen What’s included in the price?

Rs.

1,31,270

VARIERA containers and lids placed in UTRUSTA pull-out trays, make recycling waste easy and tidy.

Welcome to home furnishings from Sweden

Tray table

GLADOM Dark green, 45x53 cm.

Rs.

1,190

Store opening at HITEC City, Hyderabad, July 2018. All prices quoted are inclusive of G.S.T. All Prices in this brochure are subject to change at the sole discretion of IKEA INDIA PVT. LTD.

Bookcase with glass doors

BILLY Beige, 80x30, H202cm.

Hej!

Rs.

12,990

[Hey!] This is how we say “hello” in Swedish. ®

Welcome to IKEA We are so excited to have finally arrived in Hyderabad. We are a global home furnishing company from Sweden, with the vision ‘to create a better everyday life for the many people.’ At IKEA, you can find a wide range of welldesigned and functional home furnishing products at affordable prices, to help you make your everyday better and brighter.

VOLFGANG chair Chromeplated/gunnared medium grey

Rs.4,950

2

/pc

®

The IKEA concept The IKEA Concept starts with the idea of providing affordable home furnishing solutions to everyone. It is a combination of function, quality, design, value, and more importantly, sustainability. The IKEA Concept lives and grows in every part of our company – from design, sourcing, packing and distributing to our business model. Our aim is to help more people live a better life at home.

STEFAN Chair Brown-black.

Rs.1,550 3

BERGENES holder for mobile phone/tablet Bamboo, 13x8cm. VARIERA box Available in black, grey and green. 24x17cm.

Rs.99

Rs.199/pc

Light at heart and on your pockets. At IKEA, you will find products that suit your needs, desires, and even your budget. And yet, we don’t compromise on the quality. Here’s a preview of some of our affordable and beautiful products and all under 200 rupees.

SPRUTTIG hanger

TOLSBY frame for 2 pictures White, 10x15cm.

Black.

Rs.129/10 pack

Rs.79

RAJTAN spice jar Glass/aluminium-colour.

99

Rs.

/4 pack

CHOSIGT ice lolly maker Assorted colours.

Rs.149

GLIMMA tealight Unscented, 38mm.

Rs.89/24 pack

TVÄRS table lamp White, 18, H17cm.

Rs.199

FÄRGRIK mug Dark turquoise Also available in light green.

Rs.59/pc

VARDAGEN teacup with saucer Off-white.

Rs.199 SINNLIG scented candle in glass Apple and pear, green, 7.5cm.

OFTAST bowl

OFTAST side plate

OFTAST deep plate

White, 15cm.

White, 19cm.

White, 20cm.

Rs.45

Rs.45

Rs.45

BRUNSOPP seasoning pan Black 11cm.

Rs.149 FABULÖS glass Black/white or blue. VARDAGEN carafe with lid

Rs.199/pc

Clear glass, 1.0L

Rs.149

LÄMPLIG pot stand Stainless steel, 18x18cm.

Rs.99

PRUTA food container Transparent/yellow, 0.6L.

GNARP 3-piece kitchen utensil set Black

Rs.69/3 pack

69

Rs.

Clear glass, 1L.

Rs.149

KORKEN jar with lid

BJOLDERUP door mat Natural/red 40x70cm.

Rs.399

LEGITIM chopping board White, 34x24cm.

Rs.179 7

Comfy? Trendy? We’ve got you covered.

VITMOSSA throw Grey, 120x160cm.

Rs.129

What makes home your favourite place in the whole world? The comfort. That is why, our wide range of textiles are perfect for your home – from fluffy bed linens to soft curtains and bright rugs.

GURLI/INNER cushion cover with pad Available in various colours, 50x50cm.

Rs.

349

VÅGSJÖN hand towel Pink. 40x70cm. Available in various colours.

/pc

Rs.99

URSPRUNGLIG bed sheet set sheet with 2 pillowcases 100% cotton, 260x240cm, Pillow case 50x80cm.

Rs.1,590 INDIRA bedspread Green, 150x250cm.

Rs.699

URSPRUNGLIG floor cushion Floral patterned. Cotton cover, Polyester filling, 45x45cm, H10cm.

Rs.999 DVALA pillow case LENDA curtains with tie-backs

Light blue, 50x80cm.

Blue, 100% cotton, 140x300cm.

Rs.199/2 pack

Rs.1,290/1 pair

DVALA sheet KNÖLSYSKA bed sheet set sheet with 1 pillowcase blue, 150x260cm Pillow case 50x80cm.

Light blue, 240x260cm.

Rs.649

Rs.649

TOFTBO bath mat Orange, 40x60cm.

LILLABO 20-piece basic train set Multicolour

Rs.799

Living with children?

It’s child’s play. From their first day at home until they are all grown up, our solutions for children’s rooms and toys will help you turn your home into the best playground, where your children can learn and develop without compromising on safety.

GLIS box with lid Green/white/blue set or Yellow/pink/white set.

Soft toy

DUKTIG play kitchen

Rs.129/3 pack

Beige, 21cm.

72x40, H109 cm.

Rs.99

6,990

Rs.

MULA toy hammering block

FABLER BJÖRN

DUKTIG 5-piece toy cookware set Stainless steel colour.

Multicolour

Rs.499

Rs.699 DUKTIG 14-piece vegetables set Multicolour. MÅLA easel

Rs.499

Softwood/white

Rs.1,490

DUKTIG 5-piece toy kitchen utensil set Multicolour.

Rs.299 MÅLA chalks

SMASKA lunch box

Mixed colours

17x18, H10cm.

Rs.149/9 pack

Rs.149

SMASKA training beaker

Rs.199/2 pack MÅLA drawing paper roll 30m

Rs.249

MÅLA felt-tip pens Mixed colours

Rs.199/12 pack

MAMMUT children’s chair In/outdoor, blue.

Rs.799

ANTILOP highchair with tray MAMMUT White/silver-colour children’s stool

Rs.999

Expecting extra guests? We know running out of places to sit at a family gathering is pretty common. That’s why we introduce you to MARIUS stool. Now you’ll never have to worry about extra seating for friends, family, and even those unexpected guests in the future. OUR LOWEST PRICE! Stool

MARIUS Also available in green and blue.

Rs.

299

/pc

SMÅNATE chair pad White/pink check, 32cm. Also available in white/grey check. Combine with MARIUS stool for added comfort.

Rs.139/each

10

One sofa. Many looks. Sometimes, it’s just you, stretching out and watching your favourite show. Sometimes, it’s the two of you, enjoying a quiet night with soft music and delicious food. No matter what the occasion, you can change KLIPPAN’s cover to suit your mood and style.

HEKTAR floor lamp Dark grey.

Rs.4,990

Sofa

KLIPPAN Vissle grey removable cover.

Rs.

11,990

Tasty food with a Swedish twist. Enjoy a cup of coffee, a snack or a tasty meal with a warm welcome all day. Breakfast. Lunch. Dinner. The menu’s packed with Swedish and local favourites, delicious treats and healthy alternatives for the whole family. And responsibly sourced too. You can even grab a last minute bite at the IKEA café.

Chicken meatballs

Chocolate cake

with mashed potato, cream sauce, vegetables and lingonberry.

Rich and moist chocolate layered cake.

Coffee/Tea + Cinnamon bun IKEA FAMILY member price:

149

Rs.

Also available in a Veggie balls option: Rs.129

120

Rs.

50

Rs.

Regular price: Rs.70 13

A steel deal for your meal. Get bowled over by BLANDA BLANK. Perfectly curved and ready to serve, what ever the occasion.

Serving bowl

BLANDA BLANK Stainless steel, 20cm.

Rs.

14

199

Business Model and Competitive Strategy of IKEA in India “We are very determined but very patient at the same time. We started this journey six years ago. Things are finally moving and we are satisfied with the progress so far… “I truly believe that the IKEA format is going to work. What is an IKEA store? An IKEA store has more than 9000 different articles for the entire family. We offer an experience for the whole family. Also remember, at IKEA we don't sell products, we sell inspiration.”1 – Juvencio Maeztu, IKEA’s Country Manager for India, in 2013 After a year of lobbying and negotiating with and convincing the Indian politicos and bureaucrats, IKEA’s €1.5 billion investment proposal to set up its stores in India was finally accepted by the local government on May 2, 2013. However, as of July 2013, Juvencio Maeztu (Maeztu), IKEA’s Country Manager for India, found he still had a colossal task ahead of him. IKEA, the Netherlands-based Swedish company, was the largest furniture retailer in the world with a presence in 44 countries around the globe – in countries like the US, the UK, Russia, the EU region, Japan, China, Australia, etc. However, it did not enter into the Indian market till 2013, though the company had had a presence in the country since the 1980s as a sourcing destination for its global stores. It had even opened its regional procurement office in Gurgaon, India, in 2007. In 2009, IKEA tried to enter the country to establish its stores, but its attempts were thwarted by India’s stringent Foreign Direct Investment (FDI) regulations. It again applied for permission for entry in June 2012, after India had made some changes in its FDI rules. However, IKEA had to wait another year, hitting many roadblocks on the way, before it was able to obtain the Indian government’s approval to establish its stores. The company also had to tweak its global store model to fit the Indian FDI and sourcing outlines and Indian consumer preferences. While Maeztu was tasked with tapping the Rs. 925 billion Indian furniture and furnishings market, analysts were keenly waiting to see what strategies the furniture giant would come up with to win the highly-fragmented, pricesensitive Indian market – as many Indian middle-class families preferred to have their furniture custom-made from small retailers or local carpenters. No two Indian homes had the same kind of furniture as Indians in general showed more of an affinity for unique woodwork and designs rather than flat geometric furniture. “Living room in India is different from any other country – a place for socializing and every activity is around the food. In some countries it is the kitchen and in some countries living room is used for sleeping,” said Maeztu. More important was the fact the Indian customer did not prefer the concept of

do-it- yourself (where buyers had to assemble different pieces of the product themselves), a key part of IKEA’s globally successful business model. Analysts opined that though the company had managed to impress the Indian Government, getting into the homes of Indian consumers would be an entirely different ball game.

LOOKING AHEAD

In India, the company planned to open 10 stores by 2023 and 15 more in the next phase. The company might also take into consideration the consumers’ concerns. As Ridhika Mandavia, a playschool teacher in Mumbai, said, “I’m not sure if I will want to travel to the end of the city to buy their furniture. Plus I have heard about how you are encouraged to pack your furniture up and then take it home and set it up yourself, and that is not something we Indians are used to. So if they can change that model and help pack and deliver furniture at no extra cost, it may work.” In India, should IKEA consider building larger stores closer to customers’ homes like it did in China? Should it do away with the do-it-yourself (DIY) concept altogether in India? Country Manager Maeztu also acknowledged the challenge that store locations posed in India. As the whole investment was made from internal accruals, Maeztu said, “An ideal location for us would be 10 acres space (it could be between 5-15 acres), close to a highway with good visibility so it is not three kilometers inside and with public transport infrastructure. When I talk of public transport, in India it has to be metro connectivity because you can have a bus stop and if you are struck in the traffic for two hours then you are not properly accessible. We are looking to cater to the real middle class in India. We will never compromise on a good location. So even if it takes five years to locate a place it is no problem. The future is much more important for us than 1-2 years. My job or my salary does not depend on how quickly I open stores. We try to do it right on a long-term basis. We don’t depend on banks or on investors and we don’t need to show (quick results) to our investors or banks.” As of July 2013, with the approval from the Indian government on opening its stores in India, the company was busy understanding the Indian culture to introduce the best possible and workable IKEA model in the country and had hired a consulting and a market research company to map the demographics

.

According to retail consultancy, Technopak Advisors, the highly fragmented Indian furniture market was expected to grow from US$10 billion in 2009 to US$15 billion by 2014.51 But, the working of IKEA’s core concept, the DIY model, in India remained a question. However, IKEA still felt that its prospects were bright in the country and that it was ready to tweak its model to win over the Indian consumers. It was tweaking its product range and showrooms and adding services to accommodate a new culture. In places where people lived in smaller rooms, it modeled its showrooms smaller. Ohlsson said, “Most people don’t really know and can hardly imagine that we visit thousands of homes round every store in the world every year. We sit down in the kitchen and talk to them ... That’s the way we try to learn and understand. ‘What are you annoyed with? What are your frustrations? What would you like to have? How much can you afford? What are your alternatives?’.” In developed markets, IKEA was positioned as a low-priced product, but in emerging markets like India, it planned to target its products at the growing middle class that aspired for an international lifestyle.

and economic parameters of consumers in the top ten cities. Maeztu personally visited about 20 families in the Delhi region, Mumbai, and Bangalore. The question was, could IKEA tweak its globally successful business model to suit the requirements of India without breaking the model?

IKEA’s Revenue Growth (2001–2012) Total Revenue in Billion €

IKEA’s Consolidated Income Statement (2008-2012) In million € (for September 1–August 31 of)

2012

2011

2010

2009

2008

Revenue

27,628

25,173

23,539

21,846

21,534

Cost of sales

15,723

13,773

12,454

11,878

11,802

Gross profit

11,905

11,400

11,085

9,968

9,732

Operating cost

8,423

7,808

7,888

7,198

7,078

Operating income

3,482

3,592

3,197

2,770

2,654

427

165

76

143

177

3,909

3,757

3,273

2,913

2,831

695

781

577

384

546

12

10

8

-

-

3,202

2,966

2,688

2,538

2,280

Total financial income and expense Income before minority interest and tax Tax Minority interests Net income Adapted from www.ikea.com

IKEA’s Corporate Structure

Top 10 Furniture Companies in India Brand

Company

Head Office

Product Categories

Store Locations

1

Godrej Interio

Godrej & Boyce Mfg. Co. Ltd.

Mumbai

Bedroom, Living Room, Study Room, Dining, Kids, Kitchen, Home accessories, Mattresses, Seating, desks, Storage, Carpet, Healthcare, Lab, Marine

Across India

2

Usha Lexus

Usha Shriram Enterprise s Pvt. ltd.

New Delhi

Bedroom, Living Room, Dining Room, Study Room, Office

Srinagar, Delhi, Jammu, Dehradun, Noida, Lucknow, Muradabad, Jaunpur, Varanasi, Allahabad, Patna, Guwahati

3

Zuari

KK Birla Group

Chennai

Home Furniture, Soft Furnishing, Home accessories, Lighting, Kitchens

Across India

Brand

Company

Head Office

Product Categories

Store Locations

3

Home Town

Future Group/ Pantaloon Retail

Mumbai

Home Furniture, Soft Furnishing, Home accessories, Lighting, Kitchens

Across India

4

Durian

Durian Industries Ltd.

Mumbai

Home Furniture, Office furniture, Laminates, Veneers, Turnkey solutions, Plywood, Doors

Across India

5

Damro

Damro Furniture Pvt. Ltd.

Chennai

Bedroom, Living Room, Study Room, Dining, Kids, Seating, storage

Across India

6

Wipro Furniture

Wipro Group

Bengaluru

Home & office furniture and Interior products

Across India

7

Evok

Somany Group/ Hindware (HSIL)

Gurgaon

Home Furniture, Soft Furnishing, Home decor, Flooring, Modular kitchens, Bath, decorative Lighting

Across India

8

@home

Nilkamal Ltd.

Mumbai

Home Furniture, Soft Furnishing, Home accessories, Lighting, Kitchens

Pune, Surat, Vadodara, Mumbai, Kochi, Hyderabad, Ghaziabad, Ahmedabad, Chennai, Coimbatore, Bengaluru

9

Style Spa

Adventz Group of Companie s

Chennai

Home Furniture, Soft Furnishing, Home accessories, Lighting, Kitchens

Across India

10 Housefull

Housefull Furniture Pvt. Ltd.

Mumbai

Bedroom, Living room, Dining & kitchen, office & study, storage, décor

Ahmedabad, Vadodara, Bengaluru, Chennai, Hyderabad, Mumbai, Nashik, Pune, Surat