How IKEA Sells Furniture to Indians

After extensive market research, IKEA has developed a solid business strategy that it believes will help the company do good business in India. (Image: Screenshot / Youtube)
After extensive market research, IKEA has developed a solid business strategy that it believes will help the company do good business in India. (Image: Screenshot / Youtube)

When Swedish furniture retailer IKEA entered the Indian market, it did so after thorough research into the country’s culture, spending habits, buying preferences, and so on. The company’s executives visited more than 500 homes in the country to determine how well its products would be received. And based on such extensive research, IKEA has developed a solid business strategy that it believes will help the company do good business in India.

Focus on affordability, family purchases, and Scandinavian design

If IKEA knows one thing about the average Indian customer, it is that they are primarily driven by the affordability of the product. The company offers more than 1,000 products under US$3 in the country. The lower-priced products not only move fast, but also ensure that the company sells more. In India, IKEA sells an average of 13 products per customer, which is much higher than the number of products it sells in other countries.

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The company offers more than 1,000 products under US$3 in India resulting in average sales of 13 items per customer, which is much higher than the number of products it sells in other countries. (Image: via pixabay / CC0 1.0)

The company also understands a key characteristic of the Indian furniture market — it is driven by family purchases. The company ensured that the vast majority of its ads focus on this aspect. “Now, going forward, while families will be at the core of our communication, we will look at targeting bachelors and elderly couples. You will see shades of many of them in our communication,” Indian Television quotes  Amit Wadhwa, President of Dentsu Impact, the agency tasked with managing the promotional activities of IKEA in India.

As a brand, IKEA is popular for its classic Scandinavian design, which has helped it achieve success in markets like North America, Russia, and China. The company is betting that Indians as well take a liking to Scandinavian furniture.

“IKEA range in Hyderabad is 90 percent going to be the same as everywhere else in the world. We are playing around for about 5 to 10 percent of the local adaptation or market specific range product,” India Retailing quotes Mia Lundstrom, Creative Director of Life at Home, IKEA India.

Partnerships with real estate developers

The Swedish company is also planning partnerships with various real estate developers thanks to a burgeoning property sector. IKEA wants to sell kitchen sets, wardrobes, and other related home furniture in upcoming apartments. This is a strategy the company has developed specifically for India and allows IKEA to tap into a new sales channel.

IKEA can also benefit by focusing on the demands of the booming millennial population of the country. “Small is beautiful is the new buzzword with Indian millennials when it comes to buying homes in India’s more expensive cities. Compact homes are also low on maintenance expenses and are invariably very budget-friendly in all respects,” QZ quotes Anuj Puri, Chairman of ANAROCK property consultants. Furniture brands like HomeLane and Godrej Interio already have plans to cash in on the rising demand for furniture that caters to constrained spaces.

At present, IKEA has a 400,000 square foot store in the city of Hyderabad and a distribution center in Pune. It is scouting for land in the state of Maharashtra to set up a warehousing facility. The company will be inaugurating stores in metro areas like Ahmedabad, Pune, Surat, Kolkata, and Chennai very soon. IKEA aims to open about 25 touchpoints across India by 2025.

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At present, IKEA has a 400,000 square foot store in the city of Hyderabad and a distribution center in Pune. (Image via pixabay / CC0 1.0)

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