Why Ikea’s India chapter is only just beginning

With a new Bengaluru store announced, Ikea’s India retail story is slowly but surely shaping up

Last week, at the World Economic Forum in Davos, the chief minister of Karnataka Basavaraj Bommai announced Ikea’s third store in India, expected to open in June this year. The Bengaluru store, spread over five lakh square feet, will employ 800-1,000 direct workers and another 1,500 indirectly, providing services such as assembly and delivery. News reports estimated that the Bengaluru store, located in Nagasandra, is expected to attract more than 70 lakh visitors per year.

However, for Ikea India’s 493k Instagram followers, the news wasn’t exactly new. On 8 May , the account had launched a fun campaign featuring actor and comedy star Danish Sait in a series of parodies of Bengalurians talking about making their way to Nagasandra. It’s an ad campaign that highlights the Swedish furniture and furnishing giant’s local approach, and using Sait for the campaign makes astute sense to establish an instant connect with the audience.

When Ikea India opened its first retail outlet in Hyderabad in 2018, it was the culmination of many years of already being present in the country. From an importer of Indian goods for its large-volume stores, Ikea India had first started thinking aloud about making their retail presence felt in 2006. Ikea’s retail launch came at least 12 years after it started studying India. Announcements were made in 2012, which eventually led to the inaugural store in Hyderabad opening in August 2018 to snaking queues.

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The Indian home market (includes furniture, furnishings, design) which is estimated at $40 billion is mainly targeted at the country’s middle class, which aspires to a better lifestyle. Several of the 8,500-odd products on sale at its two sprawling 430,000 square feet stores in Hyderabad and Mumbai are targeted to suit Indian consumers.

On an extremely hot afternoon in April this year, I am sitting in relative comfort, listening to a presentation being given by Ikea India at their store in Mumbai’s Lower Parel. It’s their annual ‘Life at Home Report,’ which, includes the Indian market in its findings. Kavitha Rao, Ikea India's chief commercial officer, is succinct and thorough with her presentation. Later after a tour of the store, I settle down for a chat with her. “India is very unique. I will not say that there’s another market which is very similar. The heterogeneity of the consumer base in India [is what is unique here].”

While researching the Indian market, this is what Ikea discovered: “India is one country where no average works. That's always been the starting point for us. When we looked at India, the idea was to start right from scratch in terms of understanding the consumers,” emphasises Rao.

In order to better understand the Indian consumer, Ikea’s research methods worked with more than 2,000 households across cities and income levels in the country. The research led Ikea to placing furniture, home furnishings, accessories and kitchens in the homes which were then tested by the households to see how they fared. This led to the company tweaking their product range to better suit the Indian consumer.

Maximising space at home

Ikea’s ‘Life at Home Report’ for 2021 also took into account the effect of the ongoing COVID-19 pandemic. A,“Eighty-nine per cent of Indians say that it is important that their home provides them with a sense of comfort.” The question, then, for Ikea India, was to find space for “comfort” when homes were doubling as offices, schools and gyms. Another discovery was the major shift in the way everyone is utilising and thinking about homes. In the past, there were some things people only did beyond their four walls. Now, life during a pandemic is more fluid.

According to Rao, a third of Ikea's range in India changes every year, and a quarter of its products on sale are locally sourced. “[India] is price-sensitive and you have to work across consumers in each category,” she says. As a result, Ikea retails its sofas from ₹10,000, with the most expensive one being priced at around ₹125,000. Popular with Indian consumers are the unique storage systems and boxes, reasonably priced at ₹150 onwards. Kanta Roshan, a New Delhi-based homemaker swears by their storage systems. “A year ago, I had to move to a temporary home and Ikea came to my rescue.” She made a special trip to Hyderabad and picked up several items that would help her adjust in her new home better–ranging from storage options to a bed and a mattress.

Rao says that their research indicated that Indians do not like open storage. “We found that open storage might not work right. The dust levels [here] are high and people don't want to keep dusting every day. Even if you have a bookshelf, people prefer glass [to cover] the shelf. So we took a call.” Rao contrasts this finding with Scandinavia, where people love open-storage solutions. Ikea also offers more vertical storage options in Mumbai, which is about "small-space living". Mumbaikars are also more likely to buy a sofa-cum-bed, than say someone from Hyderabad or New Delhi, where the homes are more spacious.

The biggest chunk of home expenditure starts with the bedroom, says Rao, “followed by the living room, followed by the kitchen.” What Rao is particularly proud about is the Ikea mattress developed for the Indian market. “Our made-in- India mattress [is] where we have developed supplier capability. It is at a great price point. Typically a mattress of the same quality would cost ₹40,000. In 2021, when we did the campaign for a new lower price, this was one of the products we chose. We could actually decrease the price of the product because of the volume [we were selling]. It sold more than our expectations so we brought down the price to ₹17,991,” explains Rao.

As part of their local approach, Ikea’s food menu, too, has expanded with vegetarian meatballs, samosas and biryanis being offered at the stores’s cafes with the food being reasonably priced and coffee and drinks are unlimited at a fixed price. While the famous meatballs are available in chicken variants, the salmon fillet is a popular draw too.

Different formats

More Ikea stores are expected to come up in New Delhi, and beyond, as the furniture giant steams ahead with its $1.5 billion investment in India. Footfalls to stores have increased to several million a year, and up to 60 million visitors shopped online in 2021, according to a BBC report. In 2019, Ikea launched online in Mumbai, the first time the retail giant had done so before opening a store in any city in the world. Also unique for Ikea is the Mumbai store we are sitting in for our interaction, “When we came to India, we were only thinking about the big blue box. Today we are sitting in a city centre store which is far smaller. We launched the click-and-buy market and e-commerce is the first way for consumers to connect, which has not happened in any part of the market,” says Rao, while discussing the effects of the pandemic on the retail chain.

The store in Lower Parel is also the result of the famous Ikea research methodology that indicated the rise of the neighbourhood and its importance, especially in the last two pandemic-induced years. “[The Mumbai store] was part of the initial pilot and conceptualisation of city [stores] and we will now see more of them,” shares Rao.

What Ikea prides itself on are their values and the agility with which they have responded to their consumers. During the initial months of the earlier lockdowns, the company focused on helping their consumers better, using social media. Rao said that they started putting out a lot of tips and tricks to help their consumers with, say, online meetings. “Simple things like you could [stack] five books and use your laptop on your dining table. And then you are able to take video calls, right?”

Later this year, Ikea will launch their global report with India in focus, a clear indication of just how important the Indian market is for them. As Rao says, the Ikea India story is only just beginning.

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