IKEA has opened its first store in India. The store, located in Hyderabad, cost roughly $100 million to build and is an estimated 400,000 square feet. The company plans to have up to 25 stores in India by 2025.
India has a large and complex retail base. The country’s 1.3 billion people account for about $30 billion per year for furniture and household items. However, unlike the U.S., 95% of the goods are sold through small shops that offer specialty products or single-category stores. IKEA’s broad product mix and store operations had to be significantly revised for India. While the store layout is similar to other IKEAs, the displays are different, featuring hundreds of products priced at 100 rupees or less ($1.45 U.S.).
To research how India’s people live and shop, employees visited about 1,000 homes in different areas of India to understand consumers’ needs. Some differences: most Indians do not use knives to eat, women are shorter than Europeans, and children often sleep in the same room as their parents until they are school-age. In addition, India’s government requires foreign-owned, single-brand retailers to use local suppliers for 30% of the value of the goods sold in India.
IKEA, the Sweden-based multinational, now owns and operates 415 stores in 49 countries around the globe. With revenue in excess of $42 billion (U.S.), and an estimated 12,000 products, the company uses more than 1% of the world’s commercial-product wood.
It’s not always easy to change, but entering a new market requires research and revision.
Group Activities and Discussion Questions:
- Ask students about their experiences at IKEA. What works, doesn’t work?
- View the IKEA India website: https://www.ikea.com/in/en/
- A video of IKEA India store is available at: https://economictimes.indiatimes.com/industry/services/retail/ikea-says-namaste-to-indian-customers-as-it-throws-open-its-first-store-in-hyderabad/videoshow/65340339.cms
- Discuss how to build and use a SWOT analysis grid: strengths, weaknesses, opportunities, and threats.
- Divide students into teams. Have each team develop a SWOT for IKEA in India.
- What are the issues and risks?
Source: Goel, V. (7 August 2018). Ikea opens first India store, tweaking products but not the vibe. New York Times.
