Moneycontrol
Last Updated : Dec 07, 2018 06:41 PM IST | Source: Moneycontrol.com

Ikea breaking brand stereotypes in its India expansion, next stop Mumbai

There has been a change in the overall format for Ikea’s maiden journey in India. The brand, which is known for its DIY (do it yourself) format, has people sent over to assemble furniture

Tasmayee Laha Roy @tasmayee
Neha Alawadhi @alnehaa

The world's largest online retailer Ikea is going to take its smaller, mall-format stores concept called Hej (pronounced "hey") Home to Mumbai, after the first one's success in Hyderabad.

Ikea had opened a Hej Home in Hyderabad last year as an experiential centre, before the launch of its full-scale store which opened in August this year.

“It was a long-standing plan for Ikea to come to India so they have done their research well. They will not repeat the mistakes they have done in some markets. For instance, they had tried European strategies in China and failed. Then they understood the different nuances of the market and adjusted their approach. India is way more diverse and Ikea has realised that. Each store will have a different offering to suit its catchment,” said Devangshu Dutta, CEO of Third Eyesight, a retail consulting firm.

The Swedish retail firm has been clear that it sees India as a long-term market and has made significant investment in the region.

“IKEA India, part of the Ingka group and one of its most recent retail markets, is one of its most important long-term markets. It is on track to invest 1.5 billion euros and aims to be present in many Indian cities in the coming years. Mumbai will be the first megacity in India to offer the full experience, including city centre formats, large stores and a strong digital offering next year," said Peter Betzel, CEO, IKEA India last month.

Ikea also plans to reach 200 million Indians in the coming three years through different channels.

The Indian retail industry is expected to grow to $1.1 trillion by 2020, registering a compound annual growth rate of 8.79 per cent between 2000 and 2020, according to a report by Deloitte and Retailers Association of India. Furniture and furnishing are expected to account for 3.6 per cent.

Ikea, according to sources, has plans to take a major share of the sector’s success in India. Their journey in India so far is a testament to it.

“Ikea would be tweaking its offering in every geography. They plan to venture into the Indian market because the market here is diverse, unlike many of the markets the home goods giant is present in,” said Dutta.

There has been an overall change in format for Ikea’s maiden journey in India. The brand, known for its DIY (do it yourself) format, has people sent over to customer residences to assemble the furniture they have bought.


“India is not a DIY market. It is a serviced market and Ikea has taken care of that by adding a service layer to their offering in association with UrbanClap. The next example would be the opening of a Mumbai store which is said to be coming up in a mall. The brand, known for its extravagant format and sprawling real estate, will have to adjust according to the Mumbai market where space is a pertinent problem. This shows their intent to adjust according to catchment,” Dutta added.


Ikea did not respond to an email from Moneycontrol seeking comment.


According to another retail expert, the brand with its huge offerings is a competition to both modern and traditional stores/brands in the home goods segment and once its adapts well to the Indian market, it has the potential to be market leader.

The world’s biggest furniture group, Ikea had an operational profit of nearly $3.6 billion last year. Reuters had reported earlier that changing shopper behaviour and expectations, and popularity of online rivals such as Amazon, has made Sweden-based IKEA invest in e-commerce and services as well as try new concepts such as pickup points and city-centre showrooms.

First Published on Dec 6, 2018 07:40 pm
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