Ikea India: Localisation Case Study

IKEA is the largest retail company which designs and sells a variety of home furnishing products worldwide. IKEA’s fame and reputation is universal and its success stories spread far and wide.

IKEA , like most international companies continue to expand their businesses around the world, therefore requiring the need to gain a deep understanding of new markets. Here, a rather unfamiliar term known as “Glocalisation” comes into practice. Glocalisation is an essential tool for global companies and involves gaining a deep understanding of the local cultural patterns and consequently framing strategies for their target countries. The companies must learn the process of localisation and should have an understanding of customs, language, culture and traditions of the particular area to achieve Success.

IKEA INDIA

IKEA India looked prepared when it opened its first store in India in August 2018; it also claimed that a country with a growing middle class, had opened massive opportunities for the Swedish company and believed that localisation would win over it all.

Steps taken for localisation:

IKEA localised not only its products but also the items on its menu to suit the Indian market. It changed its approach, its offers, its strategy and its style altogether.

• Feedback
  The company collected local feedback and changed its restaurant menu from their signature pork and beef meatballs to chicken and vegetarian items.
• Extensive Research
  The company also claims that it has visited more than a thousand houses for around 12 years to understand the patterns and behaviour of Indian buyers and what they want. It has tailored its products quite well for the Indian market; for instance, they offer kitchen appliances for preparation of traditional rice cakes.
• Pricing
  Another essential factor that determines the success of any product in Indian markets is pricing. So, IKEA India plans to offer over 1000 products below Rs.200 (roughly $2). However, experts say that the company needs to maintain a balance between setting prices low enough to attract price-conscious buyers but high enough not to discourage the status-conscious public.
• Partnership with Urban Clap
  India being a country with abundant cheap labour, is not yet used to the concept of ready-to-assemble furniture. Keeping this trend of India in mind, IKEA partnered up with UrbanClap, an app that connects buyers with service providers such as carpenters, electricians and plumbers.

CHALLENGES

IKEA India seems to be doing well on the food front and on the pricing of its products to attract customers. However, it is not easy to survive in the Indian market as it throws up several challenges.

• The need for huge tracts of land as well as competing with local furniture markets mainly dominated by unorganised retailers and vendors.
• Online furniture startups can also give a hard time to IKEA.
• IKEA is known for its ready-to-assemble products, which is not a trend in India. People usually rely on the abundant supply of cheap labour, carpenters or ready-made products for their needs. Keeping this trend of India in mind is the reason why IKEA partnered with Urbanclap, an app that connects buyers with service providers, including carpenters.

All these open challenges that IKEA has been facing or would face in the coming future indicates the wide gap between culture and business; and how cultural awareness for global companies like IKEA is important in mapping out the real demands and requests of their customers in foreign markets.

By Geetanjali Mehta
Team Loc-N-Apps

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