Swedish furniture major IKEA aims to help people beautify their homes through its innovatively designed, stylish home furnishings without costing them a fortune! The brand is all set to open its first store in India this year, unfolding yet another chapter in its worldwide success story. India is one of the world’s fastest growing economies and holds great promise for it.
Success often has modest beginning and IKEA’s story is no different! This global furniture major began its life in 1943 when Ingvar Kamprad started a venture under the trade name of IKEA in Älmhult, a small village in southern Sweden. Originally, it was a mail-order business selling pencils, postcards and other products. Driven by Kamprad’s entrepreneurial acumen, IKEA had developed into a furniture retailer by 1950s, with its first ever store opened in 1953 in Älmhult.
Henceforth, IKEA’s fame continued to spread far and wide and so did its reach, as it gradually metamorphosed into a furniture designer, manufacturer and retailer of international repute. It expanded outside Scandinavia in 1973 by launching a store in the heart of Europe, in Zürich, Switzerland. By 1980s the brand had affirmed presence in USA, Italy, France and the UK.
Through 1990’s and 2000’s, it introduced Children’s IKEA to meet the needs of families with children bearing in mind the environment, forayed into various other markets like Japan and Russia and eventually turned focus to home furnishing solutions wherein everything for the bedroom and kitchen was conceived and presented in a coordinated fashion.
More than seven decades after its birth, IKEA has firmly established itself as the world’s best known home furnishing brand. With 375 stores worldwide, the group recorded retail sales of €33.8 billion (excluding sales tax) in 2015. The brand is all set to roll out its first store in India this year. The country is one of the world’s fastest growing economies and presents a huge scope for its further growth.
States Deputy Country Manager, IKEA India, Patrik Antoni, “IKEA would like to offer home furnishing inspirations to as many people in India as possible at the most affordable price to be able to create a better everyday life for many people. We will begin our marketing campaign in the mid of next year; to make sure that people know us by the time we launch our first store by end 2017.”
The brand’s incredible success is a judicious blend of a clear vision, strong concept, democratic design (an equal balance of function, quality, sustainability, design and price), ‘smarter’ use of raw materials, increased use of renewable materials, long-term partnerships with suppliers and economies of scale.
The Business Idea
Beautifully designed home furnishings are usually not affordable and most people can just dream about them. IKEA’s business idea is to offer a broad array of innovatively designed, stylish home furnishings at prices so low that as many people as possible will be able to afford them.
Country Marketing Manager, IKEA India, Ulf Smedberg says, “From the beginning, we have taken a different path. We have decided to side with the many. That means responding to the home furnishing needs of people around the world: people with many different needs, tastes, dreams, aspirations and wallet sizes; people who want to improve their homes and their everyday lives. The way IKEA creates a relevant offer at a genuinely low price is by shortening the distance between the need of our customers and the possibilities at our suppliers.”
Talking about the company’s global business model, Antoni says, “IKEA concept has been the IKEA brick-and-mortar stores but we will adopt a multi-channel approach as we go along. On a journey to become the world’s leading multi-channel home furnishing retailer, the IKEA Group is increasing its focus on integrating physical and digital commerce to enable customers to shop in ways that suits their needs.”
He also informs that the IKEA Group’s flexible distribution network ensures accessibility and convenience for customers.
IKEA’s product assortment is extensive in several ways – in terms of function, style and coordination. The brand offers everything one needs to furnish their home, from plants and living room furnishings to toys and whole kitchens. With no dearth of style options, it caters to the romantic at heart and also those who like to keep it minimal. And finally by being coordinated, the range is wide in function and style at the same time, and at all times.
“Our design and style inspiration works around the fact that we don’t believe in perfect homes. We believe in homes that are a perfect reflection of the people who live inside. Where everything looks the way you want it to, works the way you need it to, and just generally makes you feel good – without costing a fortune!” Smedberg says.
He also says that their product section is filled with tons of different home ideas, from home decoration ideas to organising tips to inspiration for making a home more ‘Green’. “So, you’ll have all you need for creating a space that you love calling home,” he quips.
The brand also keeps on refreshing its offerings by introducing relevant products from time to time. Its new product range includes wide array of bed frames, children’s furniture, and eye-catching wall art. What’s innovative about them is the focus on interesting materials and textiles of great pieces and prints to freshen up any pad.
Inside the Store
A typical IKEA store is home to 9,500 products on an average which is an experience in itself, with a huge range of home furnishings exhibition. Every area in the showroom has a sales desk where a specialist can assist by answering customers’ queries or offer them home furnishing advice. There’s also a market hall where many different specialty shops are gathered together. They have everything from rugs to linens to picture frames, home lightening and clocks.
In line with the brand’s customer involvement approach, the store also has a self-serve area where shoppers can pick up the flat-packed furnishing items they saw earlier in the room settings. Every store has a children’s furnishings section, stocking plenty of colourful, playful products for kids’ rooms. What’s more, a typical IKEA store has a secure and supervised play area and ballroom to engage the kids while parents shop in peace.
Another interesting feature of IKEA store is its restaurant which provides visitors a scrumptious break from the hard work of shopping. One can even start their day at IKEA with breakfast before the store opens.
Though the brand is yet to start its retail journey in India, the country is not new to IKEA. It has been sourcing from India for 30 years for its stores around the world. Antoni underscores that today IKEA sources products in India for approximately €315 million every year, with an aim of doubling it in the next few years to meet its global and Indian needs. It works with 50 suppliers in India, engaging 45,000+ direct co-workers and approximately 4,00,000 co-workers in its extended supply chain.
He says, “We see potential to make India a major manufacturing and sourcing hub for our global market. We are very strong in textiles today and aim to diversify in other existing categories such as metal, plastic, lighting and in new categories like wood and sustainable locally available materials such as bamboo, jute, acacia, etc.” In his words, the brand is building a strong foundation in India with four IKEA pillars that are unique to India: sourcing (purchasing), retail, IKEA Foundation and Next Generation. This is helping them in bringing alive its vision of creating a better everyday life for many people, in all dimensions.
Corporate philanthropy is one of the core values of IKEA culture. Its philanthropic arm, IKEA Foundation has been working on community projects in partnership with UNICEF, UNDP and Save the Children since 2001, with the aim to create better opportunities for children and families. € 250 million is committed for India so far. The foundation has impacted 178 million children globally out of which 100 million are in India alone. Besides, it has reached out to millions of women as well. The foundation has recently been involved in a skill building project for one million women in India, different sectors including retail in association with other public and private partners.
IKEA Next Generation initiative aims to initiate cooperation with local ‘social entrepreneurs’ through community and skill building projects. Since 2012, the company has been building linkages with social entrepreneurs across the world, sharing knowledge about design, production, export, et al.
Smedberg explains, “Working with IKEA gives social entrepreneurs access to a global marketplace, giving them a strong foundation for self-sufficiency and independence. In return, IKEA customers get the opportunity to buy limited edition collections of handmade and unique products. Today we work with two social entrepreneurs in India, Rangsutra and Industree, involving 1,200 women artisans.”
Stepping into Indian Retail
In June 2013, the IKEA Group became the first major single brand retailer to be given FDI approval to set up retail operations in India. Notably, IKEA’s investment of Rs 10,500 crore is the largest single brand investment so far. It plans to open several stores in key cities across the country. As of now, construction works are in full swing for IKEA’s first India store in Hyderabad, slated to open by end of 2017.
Besides, it has also acquired land in Mumbai and is scouting for suitable locations in the prioritised cities of Delhi-NCR, Karnataka, Maharashtra and Telangana. Shares Antoni, “In addition to our existing plots in Navi Mumbai and Hyderabad, we are working on securing more land; we look for great visibility of the plots and easy access on a major highway and near metros or public transport.”
IKEA has been sourcing from India for decades and believes in long-term partnerships with suppliers who share its values and vision. It has been working with some of its supplier partners for many years, this being one of its strongest foundations as it builds up its retail presence in India. However, the company is looking to increase its sourcing base even beyond minimum 30 per cent local sourcing clause for FDI in single brand retail. It is looking for suppliers that can manufacture the current range and also develop products using new sustainable materials such as bamboo, jute, water hyacinth, et al.
Over the past months, we have already started working with new suppliers for mattresses, sofas and bamboo products, tells Smedberg. “About 9,000 inspirational home furnishing products will be on offer, most of which will be our global IKEA range and some locally relevant range such as the masala box, idli maker, pressure cooker, tawa, etc.,” he shares.
The brand is permitted to sell online in India and IKEA will adopt an Omnichannel approach. Affirms Antoni, “This will allow customers to shop what they want, offline or online. Convenience for customer comes first.”
He further informs that they are now focusing on understanding Indian people’s way of living or how they live in their homes through home visits and researches that can differ from state to state. This will help them assess living situations but also understand frustrations, needs and aspirations.
He also maintains that the IKEA experience for the Indian customer will be the same as the IKEA experience globally. Hence, a store in Delhi will offer the same experience as a store in London, but will offer certain unique products and the way the range is presented will also reflect the needs and aspirations of Delhiites. He signs off by saying that IKEA has a long-term view about India and would want to do things right. Although it has taken time in some processes, that’s because they wanted to bring alive the IKEA concept here 100 per cent.