2. IKEA : An Introduction
• IKEA was founded in 1943 when 17-year-old Ingvar Kamprad decided to start a local
catalog company using some money his father had given him
• Initially, the company sold basic household goods at discount prices
• Today, the IKEA has more than 300 stores in more than 35 countries and more than
130,000 co-workers
3. The IKEA: Concept & Experience
The IKEA Concept
• offering a wide range of well designed, functional home furnishing products
• at prices so low that as many people as possible will be able to afford them
The IKEA Concept guides the way IKEA products are designed, manufactured, transported, sold and assembled. All of
these factors contribute to transforming the IKEA Concept into a reality
The IKEA Store
• Visitors are encouraged to take their time and get comfortable with IKEA home furnishing
solutions and products in realistic room settings and real-life homes.
• To sit, lie down,
• open and close drawers
• compare styles
• Compare prices
• The IKEA Concept relies on customers to choose, collect, transport and assemble IKEA products
themselves
• All products in the store are supported by price and product information that is clearly marked on
large, easy-to-read tags
5. LEGALL
ENVIRONMEN
TAL
E
POLITICALP
ECONOMICAL
SOCIALS
TECHNOLOGI
CAL
T
Allowing 100% FDI in retail
sector
Complex political structure Slow economic reforms
Annual GDP growth rate of
6.9%
Fluctuation of local currency
Recorded inflation rate of 9.3%
in Dec. 2012
Large and young
population,54% below age 25
Different social beliefs and
traditional mind-set
Cultural difference with
IKEA’s home country -
Sweden
Highly educated, skilled and
dynamic human resources -
Low labour cost
Technology and IT hub
Furniture industry has slow
absorption of innovation &
change
Customer protection
regulations
Legal policies and trading
regulations (SAFTA, APTA)
Government preference
towards home-grown
companies (86% market share)
Climate changes
Strong Corporate Social
Responsibility in IKEA’s
culture
Various Tax and Tariffs
E
IKEA : PESTLE for Indian market
6. TECHNOLOGICAL FACTORS
Infrastructure
•Unavailability of roads and electricity connection at interior and remote locations in India
Supply Chain
•The presence of major unorganized players in the logistics and furniture industry cause a problem in the
designing of supply chain networks across the country
Resources
•Lack of skilled manpower in the organized sector. Most skilled carpenter’s have there own businesses
Low investments in R&D in India; however, recently there has been growth in
research
7. ENVIRONMENTAL & LEGAL Factors
ENVIRONMENTAL :
• Climate change issues: IKEA will have to deal with establishment of forests for timber keeping
in mind the geography and tribal populations spread across the country
• IKEA can leverage its strong corporate social responsibility (CSR) activities
LEGAL:
• Labor Laws: IKEA may face issues with labor unions because of presence of private
unorganized players
• Tax and Tariff: Inter-state taxes may cause issues, but the implementation of GST will be very
beneficial for IKEA
• Customer protection regulations
• Government preference towards home-grown companies (86% market share)
• Legal policies and trading regulations (SAFTA, APTA)
8. MARKET OUTLOOK
Market Size
US $ 8 Billion, 0.5% of GDP
Players
Organized sector has 5000
domestic and 10500
foreign players
Employmen
t
More than 300000 people
Sector
Organized sector covers
15% of market, growing at
30% CAGR
Key regions
UP, Gujarat, Kerala, AP,
Punjab & West Bengal
Market
Behavior
Region-specific demands observed for household furniture
Increasing trend of imported furniture seen in upper middle class households
Imports worth about US$ 150 million, growing at 60% CAGR
Imports are a rapidly growing segment, catering to urban and affluent households
Wooden Home furniture constitutes the largest segment of the industry
9. INDUSTRY SEGMENT & INNOVATIONS
Residential
• Growing buying power of Indian middle class segments is a strong target for furniture industry and IKEA
Office
• The increase in infrastructure used by many organizations entering and expanding in the nation and also the rise
in number of start-ups will prove beneficial for the growth of furniture industry
Contracts
• Growing hotel developments due to increase in tourism demand is a significant segment for the players to target
Modular kitchens, traditional and classic furniture and recycled furniture are gaining popularity in
Indian market. Newly built homes and thousands of real estate projects targeting Indian needs brings a
whole new market for home designs and interior furnishings.
10. SWOT Analysis
Strength
Global Brand Image
Diversified Product Portfolio
Government Support to the
Furniture Industry
Low Labor costs
Healthy textile and leather
industry
Weakness
Standard Products
Low product Lifespan
Weak Online Support
Supplier Management in a
developing nation
Opportunity
Huge Market (500 million middle
class)
Increasing demand for Low
Priced Products
Growing Ecommerce
Increasing Consumer Purchasing
Power
Threat
Low price segment competition
from Walmart
Recession and Economic Crisis
Rising Cost of Raw Material
11. Other Factors Impacting IKEA’s Success
in India
• Umbrella Branding – Everything under one roof
• Low response time
and quality service
• Rising Awareness
• CSR Operations in India
• Media Coverage
12. Major Players
Player Business Description
BP Ergo It is based in Mumbai
Company specializes in office furniture
Its brands include Element, Connect, Alfa, League etc.
Damro It is present in both commercial and domestic furniture segment
Its stores are located in Andhra Pradesh, West Bengal, Tamil Nadu, Kerala, Karnataka
and Goa
Durian It is a major player in imported furniture, offering living, bedroom, dining room and
office furniture
The company has been set up by Dokania group which has been involved in plywood
manufacturing
It has 40 imported furniture showrooms in the country
Featherlite Deals exclusively in commercial furniture
It manufactures and retails its furniture through its 25 exclusive showrooms in Mumbai,
Kolkata, Delhi, Chennai, Bangalore and Hyderabad
Style Spa Style spa is headquartered in Chennai
Its Manufacturing capacity is near Chennai and it has over 90 exclusive showrooms
Timber home Timber home is based in Ahmedabad
It is manufacturer and retailer of solid wood furniture, modular kitchens and doors
It currently has 72 exclusive kitchens, furniture and door showrooms
13. Godrej interio It is a business unit of Godrej and Boyce Mfg. Co. Ltd. and it is based in Mumbai
It has nationwide presence with 50 exclusive showrooms in 18 cities and 800 dealer
outlets
It offers home and office furniture along with solutions for labs, healthcare
establishments, education institutes, shipyards and navy, auditorium and stadiums.
Kian Furniture Company is based in Bngalore
HC Dugar Enterprise has brought Malasian furniture maker to India
Besides residential furniture, the company offers furniture for Café, restaurants, hotels
and corporate furniture
Living room It offers furniture for both commercial and residential segment
It has showrooms in Mumbai, Goa, Surat and Pune
It has 2 production center in Mumbai and Goa
Nilkamal It specializes in plastic moulded furniture
It has diversified in lifestyle furniture business
It has eight manufacturing locations in India
It also has JVs in Srilanka and Bangaldesh
PSL Modular
Furniture
PSL specializes in office furniture
Its clients include Airtel, Zee news, NIIT
Its furniture portfolio consists of partitions, workstations, storage system
Major Players
15. Indian Consumer buying behaviour with
respect to buying furniture
Value for
money
Durability of
product
Ease of
assembling
Transport of
furniture till
homes
16. Consumer Behavior
Reasons that are most
important in Indian
customer’s life that leads to
furniture purchase
Wedding season is most
important season for furniture
market
Transfer to a new place/city for
office people triggers sale of
furniture
When old furniture
breaks/wears down
Consumption with respect
to furniture
Low value furniture (Purchased
much more frequently)
Dressing tables
Table-coffee tables/side
table/center tables
Wall units
Storage units
Sociological Behaviour
of Indian Customer in
Furniture market
Furniture shopping is always a family affair
Not much research goes into furniture
before going for shopping
Quality is most important parameter
People go to shop and check the product
based on quality and instinct
Ease of purchase is second most important
factor (Not interested in buying and
assembling the parts on own)
17. 4P Analysis of IKEA
• Product :
• IKEA offers wide range of well designed, functional home furnishing
product and low/Affordable price
• IKEA caters to the need of people having limited budgets and space
constraint in their home
• IKEA uses its vast knowledge of innovation, low cost manufacturing
process to create functional product, often coordinated with style
18. 4P Analysis of IKEA
• Price :
• IKEA is having the vision “To create a better everyday life for
the many people”. Thus with the aim to serve ‘the many
people’ the IKEA product ran ge are having low price levels.
• IKEA designers do their part to keep prices low by using
production capabilities from other areas in unique and
previously unimagined way like, using leftover materials from
the production of one product to create an entirely new one.
19. 4P Analysis of IKEA
• Place :
• Metro cities : Delhi NCR, Mumbai, Chennai, Kolkata, Bangalore
• Tier two cities : Hyderabad, Ahmedabad, Pune, Surat
• Promotion :
• In India IKEA can promote itself as a Fashionable brands for home
• Media channel covered can be Print/Digital/TVC
20. Marketing Strategy
•Furniture for your
house
•New Designs
Rational
Benefits
•Makes the house look
trendy and
fashionable
•Peps up self esteem,
since its an
international brand
Emotional
Benefits • IKEA should therefore
sell fashion and style
Actual Selling
Personality of Brand:
Trendy
Stylish
Contemporary
Young
Experimental
• Wants home
interior to be
stylish &
unique
Consumer
Desire
• Customized
furniture in a
wide variety
of designs
Brand Offering
• Fashionable
Homes
Idea
• Conventional Print
• Put up on Metro Station and Bus Stops
• Advertisements in Magazines like India Today, Home, Living etc
• Partnership and Tie ups with fashion magazines- Vogue, Cosmopolitan, Femina, GQ
• Supplements in Newspapers- Hindustan times / Times Of India etc.
•
• TV Commercials
• Star Movies
• HBO
• Sony – Daily Soaps like Bade ache
lagte hain and Byah Humari Bahu Ka
• Colors – Daily Soaps Big Boss / Balika
Vadhu
• Travel and Living
• MTV & Channel V
• Social Media
• YouTube
• Twitter
• Facebook
• Blogs
MEDIA
21. Distribution Channel
for IKEA in India
Supplier
(1 or more than
factory)
Distribution
Centre
(Warehouse)
Store Customer
Possible Roadblocks Ahead
Huge competition from local players
Sourcing, Procurement and Distribution via transportation might be an issue
due to lack of proper infrastructure and poor logistics
Indian customers might not accept the concept of self-Assembly and self
service
Driving to the city outskirts for their shopping is not practiced by Indian
customers