Ikea in India is being careful about not making the mistake it made in China. Price its products too high.
The Swedish home furnishing company, which opened its first India store in Hyderabad in August, is focused on two things: localisation and competitive prices.
The 7,500 products it offers are priced more affordably than it is elsewhere. In Ikea’s India website, a Friheten corner sofa-bed with storage is tagged at about Rs 37,500 while the same is sold in the UK for about Rs 43,000.
It’s also localising for tastes. Most Indians either eat by hand or use spoons, and seldom use forks. So the company ditched its children’s plastic cutlery pack and instead sells four spoons of different colours. For just Rs 15.
We are selling many products from our global portfolio at a lesser cost in India and working on lower margins, but we know the volumes will make up for this,” Amitabh Pande, strategic planner at Ikea India.
The company says it realised localisation of products to suit the needs of Indian families and customers was the key ingredient to win over a market which is extremely sensitive to price and views any multinational product as premium.
Keeping in mind that Indians cook differently from their western counterparts, Ikea has launched tawa pans, rice bowls, idli makers and kadai, exclusively for the country, said Patrik Antoni, deputy country manager, Ikea India.
Ikea is also tweaking a vital DNA, its DIY (do it yourself) model, for India. In developed markets, customers assemble the furniture themselves. But most Indians are not used to doing that. So Ikea has tied up with home services company UrbanClap to help customer put together their furniture after purchase.
Pande, who was previously with Pepsico for close to 15 years, said Ikea had done more than 1,000 home surveys across the length and breadth of the country for 18 months before it launched the Hyderabad store. “There is nothing more powerful than watching and talking to those people in their natural environment. We watched how they cooked, slept, and sat, and then we thought how we could tweak our existing menus to suit them,” he said.
The company says the Indian way of life varies across regions, unlike in the developed economies where there is a certain level of homogeneity. For example, children in Indian homes rarely have a private room and tend to sleep with their parents for more years than in a country like the US. So Ikea has brought in an expanding bed, whose size can be lengthened till the child turns 15.
Pande said Indian families tend to spend a lot of time together, with relatives frequently popping in, more so during festivities. So the company added more folding chairs and stools that could serve as flexible seating. Indians are also known to prefer hard mattresses for sleeping, a complete opposite to the global norm, which made Ikea work with its 55 local suppliers to launch such mattresses specially for the country.
Tackling heat, dust and humidity is another perennial problem in India. “We placed furniture in people’s homes and saw how they were using it – the sofa, the bed and and other things. We realised some products did not match up to environment conditions. These were mostly wooden products and we decided not to launch them,” said Pande. With Indians having the propensity to wash the home floors daily, Ikea has put in higher stands below the furniture to ensure it does not get damaged by water.
Ikea’s cafeteria in the Hyderabad store is designed to draw in people and encourage them to spend more time in the store. It’s a 1,000-seater and is Ikea’s biggest globally. Here too, there’s plenty of localisation. There are vegetarian dishes. While Swedish meatballs are off the shelves due to religious sensitivities associated with pork and beef, these have been replaced with chicken meatballs and Norwegian salmon dishes. Food is a substantial chunk of business for Ikea globally, contributing $1.8 billion out of its total revenue of $36 billion in 2016.