IKEA India’s Struggle: Does Its Strategy Need a Makeover?

India is one of the developing countries in the Asian continent with the fastest-growing economy and is projected to become the third-largest economy by 2030. One of the best markets for investors, given the high proportion of young people living there, with a fascination for aesthetic lives and aesthetic homes. With cheap labor and weak labor laws, companies are investing highly in the Indian job market and minting money. Companies like IKEA, Apple, and Tesla invest heavily in the Indian market to tap into its consumer base and have an early advantage. But let's talk about IKEA here first. Why is it making a loss for 6 consecutive years in India? Is it not satisfying Indian consumers, or is India just not ready to accept changes in their home with the pinching changes of the western concept coming into society?

Let's start with the basics of IKEA as a company and its original vision. IKEA (Ingvar Kamprad Elmtaryd Agunnaryd) is a Swedish multinational company known for its affordable, ready-to-assemble furniture, home décor, and accessories. Founded in 1943 by Ingvar Kamprad, IKEA has grown into one of the largest furniture retailers in the world, with over 400 stores in 50+ countries. IKEA's vision is “To create a better everyday life for the many people."According to them, their vision goes beyond home furnishing; togetherness, or “Tillsammans” as we say in Swedish, is a big deal for IKEA. In fact, it forms the core of the IKEA culture. Strangely, in India, it is still just the furniture company with many aesthetic models for home, but superb collections for home decor. According to the founder of the company, their business model is “to offer 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.” 

With such great vision and values, IKEA entered the Indian market in 2018 with its first store in Hyderabad. Their USP (unique selling proposition) is affordability, sustainability, and modern structure. IKEA has committed to doing its biggest investment in the Indian market. IKEA currently has stores in Hyderabad, Bengaluru, and Navi Mumbai, with plans to open online sales in Delhi-NCR by 2025. The store in Bengaluru has a children’s play area, a restaurant, and a bistro. The company is also planning smaller stores and online expansion to reach a greater audience and penetrate all sections of society. There are a few interesting things about IKEA, which became a game changer for IKEA, offering low prices to Indian customers.

• Unlike its Swedish outlets, IKEA India offers a 50% Indian menu catering to the local population and adding masala chai and samosas to the menu, which is one of the enjoyable snacks in India, making people spend their time in the cafe after a long walk in their outlets. It has now become like a family outing place in urban areas.
• IKEA created a vision for their consumers and set up a whole living room and bedrooms, which made it easy for consumers to buy a whole setup together with an aesthetic view and modern furnishings. People buying from the local market have to spend less, but it's time-consuming to set up the whole place and look for the right kind of furniture to set up the mood, but IKEA made it easy.
• IKEA had to lower prices in India due to tough competition from local retailers, making it one of the most affordable IKEA markets globally. Because of its global name and amazing home decor products, it penetrated the upper middle class. With sustainability and innovation, home decors of IKEA have unique designs, polished finishing, and aesthetic vibes.
• Over 30% of IKEA India's products are sourced from local Indian manufacturers, including furniture, textiles, and kitchenware. Still, a majority of middle-class people prefer local shops more than IKEA due to price bargaining, less time consumption, and easy access for local shoppers.
• The Navi Mumbai IKEA store, spanning 5.3 lakh sq. ft., is one of the largest in Asia and features a massive warehouse setup to attract more consumers and penetrate into all sections of society.

However, IKEA is still facing massive losses in India. Here's what I think. India has the majority of middle-class people who love affordability with a modern twist, which IKEA has, but it has not been able to penetrate with their furniture. India’s middle class (about 350 million+ people) is price-sensitive yet aspirational—a huge opportunity for IKEA. They have entered the market through home decor products and smaller items. IKEA has to bring major changes into their campaign to be India's every home brand with the Made in India and Made for India campaigns. Maybe like covering gifting needs during festivals like Diwali, Navaratri, and wedding seasons by giving seasonal discounts, coupons, and EMI options for payment without making a hole in their pocket, and so on. They can offer replacements even for gifting items, whether they're with the receipts or without receipts, since the purchase date can be checked on their lists, making it an easy product to gift. 

Create a membership plan for the Indian market where they can offer replacements with similar products, or maybe renting it out, like Furlenco and Pepperfry, which give the consumer an idea about the product. To enter into an Indian market, trust is mandatory; once trust is built up, it becomes the home brand and family brand, and consumers will do the marketing for them. Many Indian customers prefer pre-assembled furniture—IKEA can offer a low-cost assembly service. Moreover, India is still learning and developing their trust in e-commerce websites with giants like Amazon and Flipkart. It gives tough competition to IKEA to brand their website or app for it. IKEA has to increase and strengthen their online presence and start their campaigns like Khusiyon ka tyohar, manayiye IKEA ke saath. Bring IKEA, an additional family member, or gift IKEA (Apno ko pyaar, ab hai hamesa apke saath: MADE IN INDIA, MADE FOR INDIA; Modern touch with old vibes; Celebrating custom, tradition, and festival with IKEA; A trip to IKEA made gift-giving a fun and memorable moment for the whole family).

At last, despite facing initial losses, IKEA has a strong future in India due to the country's booming economy, growing middle class, and rising urbanization.IKEA’s journey in India is just beginning. With a deep understanding of the Indian market, continuous expansion, and localization strategies, IKEA is set to become one of the biggest furniture retailers in India in the next decade. It would be fascinating to watch how IKEA becomes an industry leader despite rising global tariffs, intense competition, and a constantly shifting global economy.