BUSINESS MODEL AND COMPETITIVE STRATEGY OF IKEA IN INDIA 

Presented by
Preeti, Vibhor, Dibyajyoti, Sonal, Manpreet
Table of Content
 Business Model

 Distribution Channels

 Competitive Strategies

 Challenges

 Case Study Discussion( Pepper Fry)

 Retail Stores & Supply Chain

 Cross Culture Management Initiatives

 SWOT Analysis

 Positioning
Introduction

1046 9500 32
Suppliers in 52 Different Distribution centers
countries. products. in 16 countries

345 1.5 million

Stores in 42 Shipments
countries. per year.

Our customers yearly buy home furnishings

that stand for

30.000.000 m3!
Business Model
IKEA India has a balanced focus on product range, sourcing, vertical integration, mass marketing, cost leadership and a
distinctive image.

Products   Products

Furniture & Kitchen Appliances Textiles

Beds & Mattresses Decoration

Storage & Organization Bathroom Products

Working from Home Outdoor Products

Lighting Home Electronics

Carpets, Mats & Flooring Air Quality Products

Baby & Children Laundry & Cleaning

Pots & Plants Home Smart

Kitchenware & Tableware Vinter Collections

Home improvement
Dishwashing Accessories
Food & Beverages
 Furniture Assembly IKEA Store
at Ikea Store locations

Delivery Vehicles Food in Ikea Store

Business
Products and Model IKEA Restaurant
Pricing

Assembly Service for IKEA India partners

Online Shopping with Tata STRIVE 
Macro Environmental Factors Pestle Analysis.
General environmental factors in India that Impacted IKEA.

SEGMENTS ELEMENTS
Demographic Segments Low Household Income
Large Population Size
Dense population in the cities
Large Income Gap

Economic Segment One of the fastest Growing economy in the world

Political & Legal Segments Corruption Issues

Difficult FDI Issues
Regulatory & Political Roadblocks

Sociocultural Segment People prefer readymade furniture

People prefer shop assistants
Cultural differences compared IKEA's moto from Sweden

Sustainable Physical Environment Segment Availability of renewal resources Energy

Competitive Advantages
General environmental factors in India that Impacted IKEA.

   Top Furniture Companies in India

Godrej Interio Usha Lexus Durian Style Spa Home Town Zuari

• Differentiation – European Concept of Fashionable & Stylish Furnitures were not widely popular in India yet.

• High Level of Customization

• Cost leadership Strategy – Determine price first and develop to fit  in that.

• 85% of India's furniture market is of unorganized sector.

Challenges IKEA may face in India

• Availability of Retail Space and its cost.

• Hiring Activities and vendor negotiations.

• Last mile supply-chain issues.

• IKEA's do-it-yourself (DIY) may not work in India.

• IKEA's Anti-Corruption Policy

• Reception of IKEA's Products is unpredictable. 

Link
Challenges IKEA may face in India

• Strict control of Foreign Investment Promotion Board

• Limited permission granted initially

• Delays in granting permissions

• Price sensitive market

• Diverse cultural amalgamation

• Acculturation

• Assimilation

• Existing legacy retailers

• Unorganized market
The battle for India’s $32 billion furniture market heats up

VS

https://abcnews.go.com/Business/wireStory/ikea-woos-indias-rising-consumer-class-tapping-markets-61093100
Competitive Strategies
• Cost Leadership Strategy or Price leadership (low cost) model
• Targeted markets
• Source locally
• Hiring of local women coworkers
• Knowledge Sharing between SO
• Transnational Strategy
• Multi-domestic (decentralization of local inflexibility)
• Multi-global (centralization of global coordination & experience)
• Use of renewable resources
• Adoption of mass Omni-channel initiatives and ecommerce
expansions across targeted cities
Current Competitive Strategies
• Ikea will cut product prices in India as part of its strategy to reach more
than 200 million consumers through a more affordable portfolio.

• To reduce price-tags, it said it will rework on efficient sourcing,

transport solutions and, in some cases, take a slight hit on margins.

• The company is planning to open six to eight Ikea stores of different

formats in each city in the next few years. 

• They will also  open a small format in Mumbai, its first city center store
in India, which will be nearly a sixth of its regular big-box format.

• During the lockdown when the stores were shut down, IKEA expanded its
Ecommerce business 3 to 5 times.

• They are planning to open new stores in MUMBAI which will focus on
Home Deliveries.

• They are aiming to sell 9000 different products online in upcoming

quarters. Link
Current Competitive Strategies
• An article by Reuters The malls division of IKEA will invest around
$1.19 Billion USD in building two centers in India.

• Out of which 50% of investments is towards key retail investment alone

and also Investments in Hyderabad, Mumbai, fulfilment units in Pune,
first big store in Bengaluru and mixed-use projects.

• Additional investments in upcoming global business office and digital

hub in India.

• They are aiming to sell 9000 different products online in upcoming

quarters. Link
 IKEA RETAIL STORE
• IKEA India launches its first city store in Mumbai.

• Introducing new customer meeting formats is part of IKEA’s

omnichannel approach.

• The city store format allows IKEA to be adapted to smaller spaces in

an urban context and makes it more convenient for the many
customers to experience the IKEA offer. 

• Consumers will be able to shop the IKEA range based on a well-

integrated digital and physical shopping experience

• In the city (smaller retail space) due to its high cost, outside the city
(larger retail space)

• IKEA is more likely to benefit from a smaller retailer space in or near

the city. Link
 IKEA INDIA's  RETAIL STORE 
• They have also planning to open both Small and Large stores
targeting big Indian Cities.

• IKEA to open mixed-use store in Indian city of Gurgaon, Haryana.

• The store will be a mixed-use meeting place designed to provide an

omnichannel experience for customers.

• The store will complement IKEA’s plans for a store in Noida, Uttar
Pradesh.

• It is expected to serve 20 million people a year and create more than

2,500 jobs. Link
 Supply chain in INDIA

• IKEA is already sourcing more than 30 percent of its entire textile

range of its global operations from India .

• IKEA is now well positioned to increase both its sourcing volumes

from this market feeding its global supply chain, as well as
expanding inside the Indian market. 

• Their first distribution center is opened in Pune and they are

expanding in Maharastra to build its own warehouse facility.

• Ikea will operate a non-bonded warehouse for domestic goods, and a

custom warehouse which will stock imported goods.

• Home furnishing delivery solutions after 7 days of placing the

order.  Link 

• Ikea will operate a non-bonded warehouse for domestic goods, and a

custom warehouse which will stock imported goods. 
Cross Cultural Management Initiatives

• IKEA's International Corporate-level Strategy for India.

• Hofstede cultural model 

• Changing their corporate culture

• Considering National Preferences.

• Do not over adapt its philosophy

• Maximizing local sourcing 

• More made in India products 

• Exploring online opportunities in tier-II and tier-III cities of India.

• Opening new categories only for India . Link

Indian expansions

• Their assortment are customized specifically for India mainly lower

cabinets and countertops.

• Modified and new service lines for Indian Market.

• IKEA Partnership with Home service providers for assembling

service. 

• IKEA India's purchasing organization  works with 55+ suppliers,

engaging 45,000+ direct co-workers and approximately 400,000 co-
workers in our extended supply chain. 
SWOT ANALYSIS

S
• Clear Vision  W O
• Further expansion into
untapped markets •
T
Growth of average
consumer income on the
• Customer knowledge – • Growing online sales one hand
IKEA is a trendsetter • Standard products – the • Growing in DIY preference • Recessions and economic
• Supply chain integration product portfolio is almost crises on the other
• Lower Labor cost
• Diversified product portfolio 100% the same in every
store and every country • Increasing in purchasing power • Many competitors
• Brand reputation and market
presence • Lack of delivery service • Expansion to growing grocery • Low entry barrier

• Store locations limited market and other product • Conservative style of house
segments of the IKEA portfolio furnishings
WEAKNESSES
• Products required assembly by .
customers • counterfeit

OPPORTUNITIES

T H R E AT S
STRENGTHS

IKEA India started its business operations with a Key target segments were young, middle-class price-conscious consumers. IKEA India aimed to sell
experience center in 2018 and currently focusing on its products at a low price, aligning with its vision. However, the CEO was challenged with developing
expanding its business with short format city stores . a strategy for business growth at a time when major global retailers were going bankrupt.
Positioning

• Ikea believes to create everyday life for many people with customer
focus driven by localized style and taste.

• Company aims to be an omnichannel retailer, Procurements only

from sustainable sources.

• IKEA is positioned as a low-priced products but in emerging markets

like India, it is positioned to target its products at the growing middle
class that aspired to an international lifestyle.
Facts:
• # People were surveyed
and data for their
furniture purchase
preference was collected
• Age Range: 18-44 years
• Location: India

Finding:
Overall, survey shows
that People want
customization at
affordable price
 Survey Link: https://forms.gle/9X7faWJBTj5VAASMA

Key takeaways from Survey:

• Ikea has right approach for providing affordable furniture with customization; revenue generation
opportunity.
• majority of people want furniture to be assembled and fitted, Ikea has offered a trade-off:
customization and choice at reasonable price with a self- assembly feature
• Ikea understands the priority of the customers. 
BUSINESS MODEL AND COMPETITIVE STRATEGY OF IKEA IN INDIA 

Thank You
Preeti, Vibhor, Dibyajyoti, Sonal, Manpreet