CMR1: #1. It is very important that IKEA does well in India. It is the first IKEA that is in India and its success is crucial. The store will have a in house assembly team and hire 150 full- time employees. To be successful in India, the business needs to learn India and the way they do everything. Most Indians do not eat pork or beef, so IKEA is going to serve more chicken and vegetables. The next 75 years could be made by the opportunity for IKEA in India. IKEA done research to study the average age of India and roughly half of India’s people are under the age of twenty- five. A concern for IKEA is that the young people of India will not be able to afford the prices, but the incomes in India are rising. India is the second most populous country in the world, so doing well in India has never been more important for IKEA. The Swedish retailer has spent years studying to understand India. This is a great opportunity for IKEA, so I think they are doing all that is expected for their business to be successful in India. IKEA has learned their customers, what they like and their way of living to customize to India and the Indian people.
#2. The store will have items for Indian preferences. IKEA will have pans to cook flat bread and lunchboxes to carry multi course meals to fit India’s way of life. IKEA’s employees have spent over 1000 hours in house visits to study the way they eat, sleep, and entertain in India. IKEA is doing their best to make this store India oriented. IKEA plans to set up small stores and a large outlet. The online business will help IKEA as well. Online businesses are booming because of convince. People’s time are becoming the most valuable thing, so to save the time to go pick something out and pick it up and pay for it, it can all be done in minutes while cooking supper or watching the kids play. IKEA has done exceptionally well accommodating to India’s culture. In India, they have several roadside carpenters at tiny furniture shops that build to order, that would be a competitor for IKEA. Another competitor would be Urban Ladder that says they are not concerned with IKEA coming to India because they deal with Indian teak and IKEA deals with plywood.
#3. I think IKEA’s way of moving into Inia is wise for their business. They know it is very important that they do well in India so taking things slow seems to be a safe approach. IKEA had 75 employees flew in from India to Sheffield to help open a store in English city. They opened a pop-up shop in Hyderabad mall to start meeting and introducing its products to potential customers. It is a great way to familiarize customers to IKEA employees and products. IKEA also has hundreds of items made affordable for the average Indian. Roughly 800 of the 7,500 products sold in IKEA will be less than three dollars.
CMR2: 1. How crucial is the Indian market to IKEA? IKEA is a global retailer that is famous for ready to assemble furniture. The customer assembles the furniture after purchase. India’s middle class and young population are rising. This is causing the demand for IKEA’s products to rise. This has never been more important to IKEA. According to our article “the country’s home-furnishings market expanded more than 90% over the past six years to $34.45 billion as of March.” IKEA needs to profit from this expansion. In recent years, their global sales have declined and they have invested their profits heavily in e-commerce and new ventures. Because India is the second most populated country in the world, it is very important that IKEA profit from this country. They have tried to do business with India in the past but can’t get past their rules and regulations. The hardest regulation for them to hurdle is the regulation that at least one-third of IKEA’s products must come from locals. They are currently working on this regulation by
- How is IKEA responding to the Indian customers? This first significant change that IKEA made to its business model to fit into Indian culture was to offer assembly services to its customers. They have also made changes to their furniture by making it more Indian friendly. One change was to offer mattresses made from coconut fibers, which Indians love. Another way was to change their restaurant, besides making it larger, was offering foods that Indians mostly eat, such as chicken and vegetables. They also offer pans in which to cook their flatbread. Most Indian competitors don’t fear IKEA because they feel that Indians will not like their box store brands, thinking they will still prefer the small family owned stores India is known for. They feel that the quality of the products of the traditional Indian stores can’t compete with IKEA. They also know Indian culture and feel that IKEA will overlook this with their Western approach to doing business in India.
- What do you think about IKEA’s strategy to enter India? Please clarify your assumptions. I think that they are on to the right idea as far as changing their business model to fit India’s culture. I like the way they are offering assembly services once they learned that most Indians don’t like putting their own furniture together. They also are training locals to work in the stores to assemble the furniture. I think the strategy to make their restaurants larger to accommodate the large crowds is a good one. This goes along with their offerings of foods that Indians prefer to eat instead of the Western foods that IKEA normally offers. I think they may have a hurdle to jump as far as the quality of their big box store furniture in comparison to the custom-made high-quality furniture that they are used to purchasing. I also think they are on the right track when they studied India to learn what their likes and dislikes are. It seems to be a good strategy, and I think they will be successful since they are changing their business model and their products to fit in with Indian culture.
CMR3: How crucial is the Indian market to IKEA?
Juvencio Maeztu believes that India can help “make the next 75 years of IKEA.” IKEA is betting on the “mushrooming middle class and young population will spur demand for the company’s products” in India. Despite that a minority can afford some of the IKEA furniture, it is believed that the “incomes and aspirations are rising.” Not only does IKEA have potential profit from this market, but it also gives IKEA a chance to expand its business.
How is IKEA responding to the Indian customers?
One of the ways they are responding was by setting up a makeshift IKEA store near New Delhi. They invited families to interact with the products and observe their behavior to see what they like and dislike. IKEA also tried to get familiar with its Indian customers was by visiting 1,000 homes to figure out how they “eat, sleep, relax and entertain.” By observing the behavior of their customers and interacting with them, IKEA learned that they should have their furniture built in-house for their customers rather than asking the customers to take home the furniture and build it themselves. Not only that, but IKEA is tailoring many of their items to their customers’ preferences. IKEA made items such as lunchbox sets, “pans to cook Indian flatbread, and mattresses containing coconut fibers.” They are also including restaurants in their IKEA stores that will serve Indian food. They served samosas and biryani and even redesign Swedish meatballs by including chicken or vegetables in it rather than beef or pork.
What do you think about IKEA’s strategy to enter India? Please clarify your assumptions.
It is interesting how they are approaching entering India. I like that they are considering the interest of their customers and applying it to the stores located in the country. For example, they decided to have furniture built in-house for their customers instead of forcing the customers to build the furniture themselves. Not only that, but IKEA even considered their food preferences. For example, replacing the beef and pork in the Swedish meatballs with chicken and vegetables. It’s great that they researched what their potential Indian customers like and don’t like and tried to implement that. However, after reading the article I do think that though IKEA tried to be considerate of all their customers’ wants and needs, the country is diverse enough that they are bound to overlook something and might not cover everything. For example, IKEA’s competitor, Urban Ladder, makes shoe cabinets with locks for customers in case they put their shoes outside and don’t want to worry about their shoes being stolen, yet I don’t think IKEA thought of that. There are many variables to consider that IKEA might not be able to address or at least not immediately, however, it is a learning process. IKEA’s strategy to enter India is, I think, a good strategy overall.
CMR4: With the sales decreasing for IKEA it is imperative that IKEA does everything they can in order to be successful. They are hopeful that with it being a success that it will help keep the company going for the next 75 years. They have invested time and detail into opening in India in hopes that the company will benefit and be able to stay open for many years to come. They are doing what they can in order to not have to close their doors. They are trying to have a very strategic approach and hoping that it pays off.
IKEA has spent the last five years studying the culture, trying to decide what products are going to work. They have made one of the biggest restaurants that will soon open. The menu has been modified and tailored to fit the needs of the culture. They have studied the culture, and what means the most to people who live in India. They have found that a lot of time is spent with the family in the kitchen. Which could be part of the reason why they are making such a big restaurant in this new facility. Due to the lack of people knowing how to put things together, they have set up a group who will help put the furniture together. They are also creating smaller stores to help meet the needs of the area. Not everyone will be able to travel to the bigger store. But if they place smaller stores throughout the area, it could boost sales. A certain percentage of the items sold will have to come from the area which could still be a little tricky. Some of the small business owners are not worried about IKEA coming in because they know that IKEA can not compete with the quality that their stores offer. They do not think that IKEA will last. The new will wear off, and people will still shop locally.
I think IKEA has taken an approach to help sales in their company. I think that IKEA is being proactive. They have spent a lot of time researching what people from India like to do, and what they like to eat. They are trying to make sure that they are successful and ready when they open the doors. They are customizing the store for the culture in order to be successful. As long as IKEA continues to make efforts to change with or for India, I believe it will be successful. Hopefully all the research and delaying of the Grand opening will pay off. I know that with continued studying, which I am sure they will do, that they will be successful. They must continue to find ways to attract people from India to their store. They have to make sure they have quality goods that will make them continue to shop at IKEA. This is a bold move, and I am sure the money that has been put into it has been a lot. But I believe the time and effort will pay off.
CM5: Gaining a share of the market for furniture in India is an extremely crucial aspect of IKEA’s success going forward. As discussed in the article provided, IKEA has endured declining sales figures in recent years, and the company needs a way to ensure continued growth in light of that situation. India represents a strong solution to their problems, with a furniture market that has grown more than 90% in the past six years. With the second largest population and a growing middle-class, India is home to a large potential customer base for IKEA. In addition, there are a lack of large furniture stores that have penetrated the market so far, which means that IKEA would face less competition from big names. This opportunity would allow IKEA to possibly gain some first-mover advantages, such as customer loyalty, that could put them ahead of future competition from other large corporations. Since many people in India have just recently been able to purchase consumer goods such as furniture, there has not been a lot of activity in the markets there. However, the recent changes in the purchasing power of average Indians will make India a very strong market to cater to in the coming years. For these reasons, properly entering the Indian market could be very crucial for IKEA’s future growth and success.
As explained in the article, IKEA has intensely studied Indian culture in order to best respond to consumer preferences. Through visiting the homes of potential customers, they have been able to learn information about daily activities and gain insight into the furniture that would best support these customs. In addition, the establishment of a trial location provided the company with a firsthand look at how Indian consumers interact with products and layouts in potential stores. Likewise, IKEA is studying cultural norms in order to provide food that would be pleasing, as well as products that can be easily afforded. I feel that this is very responsive to the beliefs of Indian consumers, as well as a smart business move. For example, consumers would not respond well to pork-related offerings in IKEA restaurants, which could show a lack of planning on IKEA’s part. Likewise, if consumers will not eat certain things that are being sold, then it is bad business practice to continue offering unpopular products. This amount of attention to detail is extremely important for a company to consider as it enters a new country, especially one that represents the amount of potential that India does for IKEA. I believe that IKEA has been very methodical in its preparation to respond to the needs of India’s markets.
IKEA has employed a very systematic, informed strategy to enter India. The large amount of analyzation of consumer preferences and cultural norms that was undertaken will serve IKEA well as it establishes presence in the Indian market. I also respect that the company took its time with the process. Instead of rushing to meet the announcement deadline, the company actually pushed the deadline back. I feel that that is a much better plan than creating a rushed, less-than-acceptable move. I do believe that IKEA will face more competition than expected from local carpenters, especially since quality and customization are not important features of IKEA’s business model. Luckily, IKEA has taken measures to ensure that its stores will be attractive to consumers in India as it prepares to enter the country. For example, the establishment of on-site assembly teams and smaller stores are expected to cater to consumers’ preferences. These features show the company’s dedication to ensuring that the needs and wants of its new consumer base are accounted for. The smaller stores and online presence will be a strong strategy to introduce IKEA’s products to the new market. Especially since consumers do not respond well to large stores, which are often part of IKEA’s business model, I feel that this is a smart idea. The online presence will allow potential customers to learn about IKEA’s products and could cause them to become more interested in the company. This could lead to more customers and increased sales. Through adaptation of its processes to meet the cultural differences in India, IKEA is more likely to be successful there. I feel like this flexible approach will be more beneficial than a one-size-fits-all approach would. This strategy has the potential to allow successful entrance into the Indian market.
