1.

Situation Assessment
IKEA, the Swedish multinational retail giant renowned for its affordable and stylish furniture,
made its foray into the Indian market with much anticipation. The Indian market, with its
burgeoning middle class and increasing disposable income, presented a lucrative opportunity
for IKEA to expand its global footprint. This essay aims to provide a brief analysis of IKEA's
market share in India since its entry.

❖ Market Share

❖
❖ India holds a prominent position in Ikea’s investment priorities. According to Jesper
Brodin, the global CEO of Ingka Group (which operates most Ikea stores as a franchisee),
India is ranked “number one, two, and three” in Ikea’s priority markets list for
investment. The country’s rapid digital and physical infrastructure development has
impressed the company. India’s economic growth and optimistic outlook have further
solidified its position as a key market for Ikea1.
❖ Ikea began sourcing from India in the 1980s and currently has more than five dozen
suppliers in the country, primarily in textiles. Over a decade ago, the Foreign Investment
Promotion Board (FIPB) approved Ikea’s Rs 10,500 crore investment proposal to open
25 stores in India by 2025. So far, Ikea has opened three large-format stores and two
smaller city stores. The company aims to open bigger stores in Gurgaon and Noida in the
National Capital Region soon. Additionally, Ikea has expanded its e-commerce services
in several states and is targeting online operations in Delhi this year1.
❖ The domestic furniture market in India is estimated at $32 billion, with expectations to
reach $38 billion by 2026. The growing demand for residential and commercial
infrastructure development, driven by a burgeoning middle-class segment, contributes to
the country’s thriving furniture market1.
❖ In its pursuit of growth, Ikea is targeting a 20% share in India’s organized furniture
segment, hoping to be a leading player in this space. With a focus on adapting to local
preferences, Ikea tweaks a third of its range in India every year, and a quarter of its
products are sourced locally23.
❖ India remains one of Ikea’s most exciting expansion adventures, and the company is
committed to making its mark in the Indian furniture landscape4.

❖ Consumer behavior:
 ❖ Consumer behavior towards IKEA furniture products in India is characterized by
several distinctive aspects. Firstly, Indian consumers prioritize value for money
when making purchasing decisions. They appreciate IKEA's ability to offer stylish
and functional furniture solutions at competitive prices, aligning well with their
budget-conscious mindset.

Additionally, there is a growing preference among Indian consumers for modern

aesthetics. IKEA's Scandinavian-inspired designs, characterized by clean lines and
minimalist styles, resonate with this preference for contemporary furniture.

Furthermore, IKEA's concept of "Do It Yourself" (DIY) furniture assembly is gaining

traction among Indian consumers, particularly urban dwellers. The DIY aspect not only
offers customization options but also provides a sense of accomplishment and
convenience.

Moreover, sustainability and ethical practices are increasingly important factors

influencing consumer behavior in India. IKEA's commitment to using renewable
materials, energy-efficient production processes, and ethical sourcing practices
appeals to environmentally conscious consumers. The in-store experience at IKEA
stores, characterized by interactive displays and spacious layouts, is also valued by
Indian consumers. Additionally, the company's investment in e-commerce
infrastructure has expanded its reach to a wider audience, offering convenience to
consumers across different regions. Overall, IKEA has successfully understood and
catered to the diverse preferences and priorities of Indian consumers, allowing it to
establish a strong presence in the Indian furniture market.

Competition Certainly! In India, IKEA faces competition from various players in the furniture
and home decor industry. Let’s explore some of its top competitors:

1. Pepperfry: As a local startup, Pepperfry has mastered many e-commerce tricks that
elude the Swedish giant. It offers a wide range of furniture and home decor products to
Indian consumers1.
2. Godrej Interio: A large organized player in India, Godrej Interio is known for its quality
furniture and home solutions.
3. Local Unorganized Players: India has thousands of unorganized furniture markets in
cities, where small vendors offer a variety of furniture options.
While IKEA enjoys strong brand credibility, it must continue innovating to appeal to a broader
range of Indian customers. Understanding the unique character of the Indian consumer and
serving their needs effectively is crucial in this competitive landscape21.

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❖ Products -
The essay highlights IKEA's extensive product range, including furniture, home
accessories, kitchenware, textiles, lighting, and storage solutions. Each category is
described in detail, emphasizing IKEA's commitment to affordability, style, and
functionality. The essay underscores how IKEA's products cater to diverse tastes and
needs, allowing customers to personalize their living spaces. Additionally, it
emphasizes IKEA's emphasis on design, quality, and sustainability, positioning the
company as a global leader in the home furnishings industry. Overall, the essay
portrays IKEA as a retailer that empowers customers to create homes they love
through its diverse and innovative product offerings..
❖ Technological advancements:

IKEA has strategically utilized technological advancements to enhance customer

experiences, streamline operations, and innovate its product offerings. Through digital
tools such as mobile apps and online platforms, customers can explore products and
design spaces from home. IKEA has also embraced augmented reality (AR) and
virtual reality (VR) to revolutionize the shopping experience, allowing customers to
visualize products in their homes in real-time. Moreover, IKEA has invested in
sustainability by implementing renewable energy solutions and optimizing supply
chain processes. Additionally, IKEA has ventured into smart home technology,
introducing innovative solutions for connected living spaces. Overall, technology
serves as a cornerstone of IKEA's strategy, driving innovation, sustainability, and
customer-centricity in the home furnishings industry.

❖ Economic environment (Price): IKEA's pricing strategy in India is a result of

careful adaptation to the country's unique economic environment. Upon entering
the Indian market in 2018, IKEA faced the challenge of adjusting its global pricing
strategy to meet the demands of a price-sensitive consumer base with varying
purchasing power. To remain competitive while upholding its brand image of
offering quality products at affordable prices, IKEA focused on affordability and
introduced lower-priced options tailored to Indian consumers. Localization
strategies, such as sourcing materials locally and manufacturing products within
the country, were implemented to reduce costs and ensure competitive pricing.
Additionally, IKEA adopted innovative pricing strategies, including value packs
 and financing options, to appeal to Indian consumers' preferences. Despite
competition from local and international players, IKEA aims to differentiate itself
through its unique value proposition of quality, affordability, and design
innovation in India's rapidly growing home furnishings market.

❖ Regulatory environment:.

IKEA's operations in India are influenced by a complex regulatory environment

covering foreign investment, trade, taxation, labor, and environmental standards. As a
multinational corporation, IKEA must navigate these regulations to ensure
compliance and manage risks. Key aspects of the regulatory environment include
foreign direct investment regulations, trade and customs regulations, taxation laws,
labor laws, and environmental standards. IKEA had to obtain government approval
for its investment plans and adhere to FDI caps and conditions. Additionally,
compliance with trade and customs regulations, taxation laws, labor standards, and
environmental regulations is essential for IKEA's operations in India. By
understanding and adhering to these regulations, IKEA can navigate the complexities
of doing business in India while upholding legal compliance, corporate responsibility,
and sustainability.