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Podcast | Deep Dive - IKEA's India journey that has been fraught with roadblocks

Will the Indian consumer warm up to Swedish furniture conglomerate IKEA's flat-packed design idiom?

July 17, 2018 / 12:07 PM IST

People push a shopping cart past a warehouse of the Swedish furniture maker IKEA in Bordeaux, southwestern France, February 13, 2010. REUTERS/Olivier Pon (FRANCE - Tags: BUSINESS) - RTR2A6PO

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The questions come first as always and then the reasons behind them and hopefully some satisfying answers as well.

So let us start with a few tentative queries to begin with.

Will the Indian consumer warm up to Swedish furniture conglomerate IKEA's flat-packed design idiom?

Will consumers who have traditionally relied on kaarigars,  antique shops or neighbourhood carpenters  to furnish their living rooms, get down on the floor eagerly to assemble furniture with the help of a tool kit?


We will be digging deeper into the imminent arrival of IKEA in India but before we address the questions we asked at the beginning of the podcast, let us go back in time a little bit and figure out how we in India have perceived and consumed furniture design in our homes.

First, let us see how India came upon a mixture of design influences in the furniture it used

If popular culture is a reflection of how we live, an overview of Indian cinema from sixties onwards will give you an indication via set design and architecture and of course furniture, about aspiration levels and evolving life style of the upwardly mobile middle-class .

Much before modern designers began to forage through chor bazaars and foreign furniture catalogues to embellish set design, furniture in films varied from ornate to functional depending on the theme till Yash Chopra in Waqt and later Trishul, introduced an evolved international sensibility in the way Hindi film protagonists inhabited living spaces.

Off the screen, in modest Indian homes, furniture has varied from hand me down family heirlooms to sunmica laminated diwans, jute charpoys, leather and rexine embarrassments to trendy metal furniture that grows uncomfortable in a trice to pieces that reflect a mix of styles and influences.

If we go back in history,  in India, furniture making can be traced to ceremonial, overwrought designs in the royal courts of multiple empires right down to English, Portuguese, French, Dutch influences that permeated  the way, India articulated its aspirations. Some regions like Shekhawati in Rajasthan created their own furniture idiom.

The wood used varied from teak, rosewood, ebony, acacia, sheesham etc… and celebrated Indian craftsmanship, inlay work, carving and more.

By the turn of the 20th century, as living habits changed and convenience and price points became more important than just decorative indulgences, veneers, bamboo, cane, plywood and compressed wood products appeared in markets.

Over time upcycling and recycling of salvaged vintage furniture is also becoming popular as is the trend of using industrial waste in the creation of quirky pieces.

What has remained constant though is the tradition of Indian craftsmanship which has adapted to the demands of the changing times even though brands like Godrej Interio are making inroads into Indian homes.

Godrej Interio has been constantly evolving with the emerging India's design story and is currently the country's largest furniture brand whose origins can be traced back to the ubiquitous Storwel cupboard 80 years. Today, its portfolio offers what it terms as well designed, fun and functional furniture solutions to the consumer.

Not just that, the company uses raw materials that are eco-friendly to do its bit to preserve natural resources.

The company offers its customers home and office furniture, along with solutions for laboratories, hospitals and healthcare establishments, education and training institutes, shipyards and navy, auditoriums and stadiums.It is present across India through  50 exclusive showrooms in 18 cities and through 800 dealer outlets.

So IKEA despite its international profile is up against some serious competition.

Even though the modern Indian consumer today is a world citizen, travels to Bali and Dubai and flea markets abroad and browses online catalogues to buy accent pieces, the mass consumption of ready to assemble furniture is still an idea whose time may not have come just yet.

IKEA has been at the forefront of the DIY revolution all over the world and has delivered cutting edge designs in ready to assemble components with detailed manuals.  But it remains to be seen if IKEA's minimalistic design sensibility that was till now a niche indulgence for a certain section of NRIs and foreign returned Indians will gain wide widespread acceptance.

Outsourcing labour for the smallest of chores in India is a way of life.

IKEA perhaps is aware of the impending challenges that the Indian way of life will spring up and hence has tied up with fast growing startup UrbanClap to lend a helping hand to shoppers who may be diffident about the DIY drill.

Not just that, IKEA will also hire 150 in-house assemblers to ease customer anxiety .

What the furniture giant has zeroed on is the need to not just offer a product but an array of services like assembly, delivery, and kitchen installation. India may be a unique consumer market for IKEA but it has offered assembly services even before, to many other consumer sectors China and UK.

In any case, the arrival of IKEA in India has not been a smooth process.

Even though, IKEA had announced its India plans in 2012, it has spent over six years dealing with roadblocks and procedural issues pertaining to foreign investment rules for retail and land acquisition.

After all the years of painstaking fine-tuning and ground work, that included visits to over 1,000 Indian homes across varied economic gradations, the world’s largest furniture retailer will finally welcome the Indian consumers in its distinctive yellow and blue  400,000 square feet store in Hyderabad on July 19 with over 850 assistants lending guidance to bedazzled shoppers.

That this launch is no small event for the company is evident from that fact that it has announced a Rs 105-billion foreign direct investment in India and ploughed in Rs 10 billion in the Hyderabad facility which will also have a large restaurant facility.

The tradition of offering refreshments to exhausted shoppers in IKEA stores dates back to 1956 when IKEA's first store in Ahmult, Sweden, began serving food.  The idea was such a hit that now IKEA' s 5% turnover is derived from its well-loved menu inclusive of its signature meatballs, cinnamon buns, pastas and pizzas and slight variations depending on geographic locations. IKEA Food Services accounted for about USD 1.8 billion in sales recently!

The restaurant in India will seat over a thousand shoppers and adapt 50 percent of its menu to primarily vegetarian options like daal makhni, samosas, idlis, biryani with non-vegetarian dishes conducive to local sensibilities. This will incidentally be IKEA's biggest restaurant globally.

The same adaptive approach will be used towards design.

For decades, IKEA has simplified furniture to include space saving and multi-functional options for multiple areas of the home. In India, apart from offering its design staples in furniture and furnishings, Ikea will serve a refreshed colour palette, Indian consumables like user-friendly pans, kitchen essentials and more.

Pricing will be a key factor in IKEA's success in India and it is aiming for a blockbuster opening, hoping to target upto 200 million potential consumers in the next three years. To make its presence felt in the country, it is adjusting its pricing and marking certain everyday essentials as low as Rs 200 according to multiple media reports.

To tap into the virtual shopping segment, IKEA will also launch its online sales section next year and it hopes to make a healthy profit from the young Indian consumer's shopping habits which have already begun to patronise up and coming vendors like Pepperfry and Urban Ladder.

It will also open its second store in Mumbai and cater to not just the consumer in metros but to buyers in peripheral zones via compact stores of about10,000-50,000 sq ft that will offer the IKEA experience in a nutshell. This move aims to serve customers with different spending capacities and needs.

IKEA however would have you know that its relationship with India is not new.

On the IKEA India website, the company says and we quote, "IKEA India, part of the IKEA Group, has been present in India for 30 years, sourcing many different products for IKEA stores worldwide. Today we source products for approximately € 315 million every year, with the aim of doubling it in the next few years to meet our global and Indian needs. We work with 48 suppliers in India, engaging 45,000+ direct co-workers and approximately 400,000 coworkers in our extended supply chain. Our suppliers are long term partners who share our vision and values." Unquote.

So it would be wrong to assume that IKEA is opening its first retail store in India on the basis of  just a cursory research. It knows the market that it has till now sourced from and that it will be now serving in a totally different capacity.

With its retail facilities that are set to expand across the country in the time to come, IKEA will also do a lot more. That includes and we quote, "create new jobs, grow the manufacturing sector, expand the supplier base, focus on diversity, skill development, transfer of knowledge and best practices, and sustainable development of the retail industry and supply chain."  This is what the brand hopes to achieve and how many of these boxes will be ticked is still up in the air given that it will now have to navigate everyday ground realities.

For now, brand communication is important for the company.

IKEA has tried to demystify the complexity around the concept of DIY assembly with the word, "interactive" and rolled out its first digital campaign that focusses on the Indian consumer, the happy bustle of large families looking to find order in chaos and function in form.  The key phrase the campaign plays with is, 'Make Everyday Brighter’ and shows multiple situations faced by growing families everyday that can be eased with the right products and solutions like storage, furniture that is safe around infants, is ergonomic and can endure the wear and tear of carefree usage. The word 'aspirational' though is not spoken out aloud but the campaign underscores it because it goes without saying that IKEA brings with it the weight of its global standing. Happy TVCs aside, it means business and hopes to deliver what it has promised. The first IKEA store like the TVC hopes to find the golden meeting point between what is Indian and what is ..if we may use the word, IKEAN.

As the Indian consumers wake  up to the design aesthetics of IKEA, they will also become aware of the very structured, well-thought out retailing strategies of the company that have turned IKEA into a success story like no other.

Let us go back a bit in time and find out how the company came into being and learn a bit about the man who changed the way the world puts together furniture.

His name was Ingvar Feodor Kamprad and he passed away in his sleep this year on January 27.  In his lifetime though, he packed many life times and a fairy tale success story that not many are fortunate enough to experience. And he often said to anyone who would listen, "Oh, I have so much work to do and no time to die."

There are many stories about the man. Many complimentary and others not so much but Ingvar Kamprad's legacy continues to grow, as does the business that he began with just an idea that could have been a flash in the pan but turned out to be worth  billions of dollars and seven decades later shows no sign of losing momentum.

Ingvar was not an heir to a business empire and in fact was raised on an impoverished farm in southern Sweden by a family forced to sell matches and pencils to make ends meet. To make matters worse, he was dyslexic.

But his poverty was just one of the many factors that sharpened his appetite for success and the resourcefulness to make the most of his circumstances was visible from a pretty young age.

The legend goes that even as a five year old, Ingvar often bought pencils and matches in bulk, and then resold them to classmates for a profit. At the age of 10, he cycled around his neighbourhood, selling Christmas trinkets, fish, and pencils.

At the age of 17, he thought of starting a mail-order business to sell domestic products like picture frames.  It so happened that his father gave him some money for good grades in school despite his debilitating dyslexia. This was the capital he used to start his company.

This was the very humble beginning of IKEA in 1943.

The name incidentally was derived from Ingvar Kamprad’s initials (I.K.) plus the first letters of Elmtaryd and Agunnaryd, the farm and village where he grew up.

In 1948, Ingvar Kamprad sensed great potential in the furniture business because of a growing demand for affordable pieces that were functional and aesthetically pleasing among customers with medium and low incomes.

One of his most famous statements came possibly around this time, "It’s better to sell 600 chairs at a lower price than sell 60 chairs at a high price.”

In 1951, he thought of distributing booklets among his customers that were called ‘IKEA News’ and these went on to  pave  the way for the now famous IKEA catalogs that have become collectibles.

In 1953, the first IKEA furniture was opened in in Älmhult, Sweden.

And then came the next big idea. The idea that turned IKEA into a profit-generating unstoppable force of nature and the world's most successful furniture retailer with over 370 stores in 47 countries, sales of over $47.6 billion and millions of footfalls.

This idea that made it all happen was all about offering ready-to-assemble furniture, where every component was placed in a flat package.

Along with the success, came the controversies.

There have been whispers that Ingvar recruited for the Nazis in Sweden during the war.  He also later made a public statement to express regret about the past that he said did not truly represent who he was.  His success and the philanthropy in his final years also took the focus away from the controversy though the story goes that as a teenager, he got embroiled in a Nazi youth movement because of the toxic influence of his German grandmother who adored Hitler. But he spent the rest of his life making amends, including writing a letter to his employees asking for their forgiveness.

So really, why did he succeed along with a simple idea that at first glance looked simplistic?

Well, the success came because he recognised the limitations of small budgets and constrained spaces and designed for ordinary consumers who wanted products that would grow with their families.

He delivered on all the fronts while keeping the design, clean lined, modern in a way that was way ahead of its time and hence timeless.

He was working with modular minimalist ideas far before the terms gained currency and much before the DIY revolution swept the Internet.

His standards and work ethic were both exacting and he was known to visit his stores anonymously just to check if the staff was serving the customers the right information in the right way.

To perhaps compensate for the controversial phase of his life, he created the IKEA Foundation which was designed to work for social causes and committed itself to take care of four fundamental aspects of a child’s life: a place to call home; a healthy start in life; a quality education; and a sustainable family income.

In his own life, he remained a follower of a minimalistic lifestyle and flew economy class, stayed in cheap hotels, and drove a weather beaten Volvo for over two decades.

What defined Ingvar and Ikea was finally this statement he made to Forbes once, "

"I see my task as serving the majority of people. The question is, how do you find out what they want, how best to serve them? My answer is to stay close to ordinary people, because at heart I am one of them.”

We will have to see if Ikea’s first India store conforms to the same ideals, and if Indians will embrace the brand quite as enthusiastically as much of the world has.
Moneycontrol News
first published: Jul 17, 2018 12:03 pm

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