BUSINESS MODEL AND MARKETING STRATEGY

OF IKEA IN INDIA
 • Retail
• Company Name: IKEA Group
INDUSTRY

• Ingvar Kamprad
• Founded: Sweden
FOUNDER • Headquarter: Netherlands

• Revenue: $44.6 billion ( 2018 )

• EMPLOYEES: 208,000
COMPANY • STORES: 424 (All over the world)
SIZE
IKEA CONCEPT

LOW GOOD
PRICE DESIGN

FUNCTION

Wit

Cost-Cutting Solutions Flat Pack Furniture Concept

Without affecting the quality of Introduce especially to reduce prices for
products. IKEA customers by eliminating
transportation & storage concept.

Differentiation from Competitors

Designers do not use design to justify Designers are Instructed
a To save in Every Possible Way .
higher price.
 • “To create a better
Vision everyday life for
the many people.”

• “Low price, but

Business
not at any price.”
Principle

• “You do half, we
Business
do half.... Together
Concept 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.

__________________________________________________________________

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 ball-
point 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 co-
workers, 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.

__________________________________________________________________
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 self-

serve 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.

__________________________________________________________________
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 supermarket-
trolley 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.

________________________________________________________________
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 co-
workers 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-shirt-
shaped 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 single-

brand 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?

Installation service for

this kitchen Rs.25,000

Rs.2,46,475
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.

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 /pc

[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 well-
designed and functional home
furnishing products at affordable
prices, to help you make your
everyday better and brighter.

VOLFGANG chair Chrome-

plated/gunnared medium grey

Rs.4,950

2
 ®

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.
Rs.99 24x17cm.

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,
Black. 10x15cm.
Rs.129/10 pack
Rs.79

RAJTAN spice jar

Glass/aluminium-colour.

Rs.
99 /4 pack
CHOSIGT ice lolly maker

Assorted colours.

Rs.149

GLIMMA tealight TVÄRS table lamp

Unscented, 38mm. White, 18, H17cm.
FÄRGRIK mug

Rs.89/24 pack Dark turquoise

Rs.199
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

GNARP 3-piece kitchen utensil

set
PRUTA food container
Black
Transparent/yellow, 0.6L.

Rs.69/3 pack
Rs.
69 Clear glass, 1L.

Rs.149

KORKEN jar with lid

 BJOLDERUP door mat

Natural/red 40x70cm.

LEGITIM chopping board

Rs.399

White, 34x24cm.

Rs.179

7
Comfy?
Trendy?
We’ve got you
covered.
What makes home your
favourite place in the whole
VITMOSSA throw world? The comfort. That is
Grey, 120x160cm.
why, our wide range of
textiles are perfect for your
Rs.129
home – from fluffy bed
linens to soft curtains and
bright rugs.
 GURLI/INNER cushion cover with pad
VÅGSJÖN hand towel
Available in various colours, 50x50cm.
Pink. 40x70cm.
Rs.
349 /pc
Available in various colours.

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
GLIS box with lid
Green/white/blue set or and develop without compromising on safety. FABLER BJÖRN
Yellow/pink/white set.
Soft toy
DUKTIG play kitchen
Rs.129/3 pack Beige, 21cm.
72x40, H109 cm.

Rs.99
Rs.
6,990
MULA toy hammering block

Multicolour DUKTIG 5-piece toy

cookware set Stainless
Rs.499 steel colour.

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
MAMMUT
ANTILOP highchair with tray
30m MAMMUT
children’s chair
White/silver-colour
Rs.249 In/outdoor, blue.
children’s stool Rs.999

MÅLA felt-tip pens

Rs.799
Mixed colours

Rs.199/12 pack
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 Coffee/Tea + Cinnamon

with mashed potato, cream sauce, bun
Rich and moist chocolate layered
vegetables and lingonberry. cake. IKEA FAMILY member price:
Rs.
149
Also available in a Veggie balls
120
Rs. Rs.
50
Regular price: Rs.70
option: Rs.129
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.
199

14
 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, price-
sensitive 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

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.
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
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
Total financial income and expense 427 165 76 143 177
Income before minority interest and tax 3,909 3,757 3,273 2,913 2,831
Tax 695 781 577 384 546
Minority interests 12 10 8 - -
Net income 3,202 2,966 2,688 2,538 2,280
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 Godrej & Mumbai Bedroom, Living Across India
Interio Boyce Room, Study Room,
Mfg. Co. Dining, Kids, Kitchen,
Ltd. Home accessories,
Mattresses, Seating,
desks, Storage, Carpet,
Healthcare, Lab,
Marine
2 Usha Usha New Delhi Bedroom, Living Srinagar, Delhi,
Lexus Shriram Room, Dining Room, Jammu, Dehradun,
Enterprise Study Room, Office Noida, Lucknow,
s Pvt. ltd. Muradabad,
Jaunpur, Varanasi,
Allahabad, Patna,
Guwahati
3 Zuari KK Birla Chennai Home Furniture, Soft Across India
Group Furnishing, Home
accessories, Lighting,
Kitchens
 Brand Company Head Office Product Categories Store Locations
3 Home Future Mumbai Home Furniture, Soft Across India
Town Group/ Furnishing, Home
Pantaloon accessories, Lighting,
Retail Kitchens
4 Durian Durian Mumbai Home Furniture, Office Across India
Industries furniture, Laminates,
Ltd. Veneers, Turnkey
solutions, Plywood,
Doors
5 Damro Damro Chennai Bedroom, Living Across India
Furniture Room, Study Room,
Pvt. Ltd. Dining, Kids, Seating,
storage
6 Wipro Wipro Bengaluru Home & office Across India
Furniture Group furniture and
Interior products
7 Evok Somany Gurgaon Home Furniture, Soft Across India
Group/ Furnishing, Home
Hindware decor, Flooring,
(HSIL) Modular kitchens,
Bath, decorative
Lighting
8 @home Nilkamal Mumbai Home Furniture, Soft Pune, Surat,
Ltd. Furnishing, Home Vadodara,
accessories, Lighting, Mumbai, Kochi,
Kitchens Hyderabad,
Ghaziabad,
Ahmedabad,
Chennai,
Coimbatore,
Bengaluru
9 Style Spa Adventz Chennai Home Furniture, Soft Across India
Group of Furnishing, Home
Companie accessories, Lighting,
s Kitchens
10 Housefull Housefull Mumbai Bedroom, Living room, Ahmedabad,
Furniture Dining & kitchen, Vadodara,
Pvt. Ltd. office & study, storage, Bengaluru,
décor Chennai,
Hyderabad,
Mumbai, Nashik,
Pune, Surat