Will the IKEA model successfully work in India?

It was TOI’s article the other day, which reminded me of the unfinished tryst I had with an IKEA article. Nevertheless, I’ll start afresh!

It’s been quite some time now that IKEA has been contemplating to enter Indian homes with their globally famed furniture. Question is, will this IKEA model work in India? Or should they adopt a polycentric approach like they did in China? To understand this we need to explore two aspects:

• How does the IKEA model archetypally work? and
• How is the Indian consumer behaviour disposed towards furniture purchase in the country?

(One thing before I forget, the underlying consideration for this article is household furniture only and not contract or office furniture.)

The IKEA business model works on very interesting lines. All its furniture are pillared on manual ready-to-assemble scaffolds. It follows the concept of the family life cycle very intricately. If you’re a newly-wed couple, your furniture requirements are definitely going to be different than when you’re experiencing an empty nest syndrome, or when you’re widowed. So, based on your furniture requirements, you could check out the online IKEA catalogue and even reap the benefits of the IKEA Family initiative. You need to take your car/ truck to the big blue-n-yellow box known as the IKEA Store. You could also consider taking your children along with you, given that you could drop them off at Småland play area. After the purchase act, the IKEA staff would help you load the furniture onto the pick-up vehicle you had brought, depending on the weight of the procurement. It’s a self-help deal throughout. However, all this is true only for countries boasting of IKEA stores. By slashing all these extra costs and keeping all avant-garde furniture costs at an alluring low, IKEA has distinguished its archetypal business model. Fascinatingly, shopping at IKEA has become a tradition for customers; many of them are known to take the day off, calling it an IKEA Day, so as to spend more time with their families.

This is one part. The next part is how Indians typically buy furniture. Unless you have your household carpenter come and suggest designs, you could visit showrooms such as Godrej Interio, Damro, Nilkamal, Style Spa or a plethora of furniture retail stores across the length and breadth of the city you live in. You visit the store, look at the sample furnishings heaped around, paint an imaginary picture of how the bed or cabinet would adorn your room and ultimately make an order for home delivery on a negotiated date.

Now let’s consider the Chinese market for IKEA. The robust brand faced a severe dilemma with regard to its low-cost pricing strategy, given that it sparked confusion among aspirational Chinese consumers while the other consumer segment regarded the price to be mid-ranged to high. To add to their woes, local competitors (customarily) aped the innovative designs. Keeping these issues in mind, IKEA had adopted a ‘glocalization strategy’ for the Chinese market. Keeping the do-it-yourself (DIY) assembly concept constant to China, IKEA has built its People’s Republic of China stores near public transportation lines, unlike the western countries, where stores are usually located in the suburbs. They also offer fee-based local home delivery and long-distance delivery to major cities in China, while maintaining taxi lanes and offering other paid assembly services. Moreover, their furniture styles are tailored accordingly to blend right into Chinese apartment sizes. They used social media and micro-blogging sites such as Weibo to promote their offerings in contrast to the IKEA catalogue. Now you may argue that these strategies are prevalent in all other countries, but honestly, they aren’t prominent enough.

So, how must IKEA tweak its marketing and promotional strategies before entering India? Will it be successful? Yes, if you were to ask me. Because it’s new. More importantly, the time is ripe for IKEA to enter India, because of the sharp rise in prices of furniture. By offering its innovative designs at competitive prices, IKEA will definitely win over the mind space of the Indian consumers. But it has to alter a few strategies. Stores must preliminarily be located in centralized locations, which can be accessed from any corner of the city with ease. This is because our consumers will not be willing to spend on double transportation to travel to and fro from far-off shopping centres. Later, as the brand solidifies in the hearts and minds of the Indian consumers, it could scout for suburb locations to capture the aspiring petite bourgeoisie in those areas as well. One objective must be clear for IKEA: Think of the value that customers are getting. If I, as a customer, have to spend (say) ₹2000 on travel and I buy furniture at ₹50000 which gives me a moderate deal than other/ local competitors (who offer at say, ₹55000), I would not be satisfied, even for the ₹3000 savings. The differentiator has to be its superior value or quality of furniture. Remember that in India, you are bound to come across comments such as “I have to pay so much for transportation” or “I will have to install the furniture myself” and on top of that “I don’t think I am getting a good deal out of it”. In such cases, quality will take a backseat in the minds of the consumer, given that a major chunk of the urban masses are still largely price-conscious. Indians buy furniture differently. Hence, I would not agree to a cost-cutting strategy from the very outset. As a pilot exercise, IKEA could consider tying up with a transport agency to deliver furniture till a certain radius, although in-transit advertising wouldn’t be an option in that case.

The most important step, I believe, is to acquaint Indian consumers with the IKEA tradition and value proposition. If the consumers accept it, you are set to roar! This is where the “Future Search” program and similar customer immersion programs gain relevance. The sample must necessarily include consumers from upper-upper to middle-middle class. This is to verify if any commonalities exist, such that IKEA can fit in a central business model across all segments with subsequent alterations. “Invest heavily in consumer interaction and education”, I would say.

It’s turning out to be a very tedious article so I’ll stop here. I’ll end with a graphic containing a few other strategies. Don’t forget to add your valued inputs, in case I’ve overlooked any dimension.