Retail giant Ikea opens first store in India - with success far from guaranteed

First of 25 outlets it hopes to open across India, the world's biggest furniture retailer expects 7 million people a year to throng its new store in the southern city of Hyderabad
Retail giant Ikea opens first store in India - with success far from guaranteed
An Indian worker takes notes inside a room display at the new IKEA store in Hyderabad on August 8, 2018. Ikea's boss promised to meet the 'needs, frustrations and dreams' of local consumers with the Swedish firm's first Indian store, its second attempt to break into a vast but difficult market.
By AFP
Thu 09 Aug 2018 08:09 AM

Ikea revolutionised homeware retail with affordable, self-assembly furniture with a Scandinavian twist, sold in stroll-around megastores offering a break for Swedish meatballs.

On Thursday its first Indian outlet opens - with success far from guaranteed.

While Indians may be getting richer, creating an apparent golden opportunity for Ikea as in other emerging economies, spending levels remain low.

The culture of DIY furnishing is also alien and local consumers retain their trust in Indian products.

The world's biggest furniture retailer expects seven million people a year to throng its new store in the southern city of Hyderabad, the first of 25 outlets it hopes to open across the country of 1.25 billion people by 2025.

To try and ensure it recoups its $1.5-billion investment, the Swedish company has tweaked its offerings to suit Indian tastes, starting with the restaurant, where "Smaklig Maltid - 'Enjoy your Meal' in Swedish" is written on the wall.

The 1,000-seater eatery, Ikea's biggest ever, will not offer pork or beef meatballs -- for religious reasons -- substituting chicken or vegetarian alternatives instead. Indians' beloved biryani dish will sell for 99 rupees ($1.44).

"We have changed quite a lot for India. We have two ranges. One is the Swedish Unique range and one is the local range," food manager Henrik Osterstrom told AFP. "It's a big store and you need to have some energy boost halfway through."

Loveseats and tawas

Alongside standard Ikea furniture like Billy bookshelves and Klippan "loveseats", the chain will offer "locally relevant products" like masala boxes, Indian frying pans called tawas, rice cake makers and mattresses with a coconut-fibre centre.

There are also more than 1,000 products under 200 rupees to satisfy consumers whom John Achillea, store manager, says have "big aspirations for their homes and small wallets". A six-piece bowl set with cutlery for kids costs 131 rupees, for example.

The interior of the store has a noticeable local feel too, with Indian-design bedspreads and framed photos of the Taj Mahal and other Indian monuments -- alongside Klimt's painting "The Kiss" recalling faraway Europe.

"We decided not to copy and paste," Juvencio Maeztu, Ikea's finance chief, told AFP. "We met and interacted with 1,000 Indian families to understand what were their dreams, their frustrations and what they want."

And to overcome Indians' aversion to assembling their furniture, with people used to small, family-owned firms providing a bespoke service, Ikea teamed up with UrbanClap, an online platform that helps connect handymen with consumers.

'A flop, I tell you'

After Hyderabad, Ikea plans to open outlets in the financial capital Mumbai next year, followed by Bangalore and New Delhi as it seeks to grab a share of India's estimated $40 billion home goods market.

But Satish Meena from Forrester Research said the firm will also have to adapt its offerings to the "extremely diverse" Indian market.

"No two states or cities have the same furniture demand and behaviour, lifestyle and culture vary from one region to another. Hence, Ikea will have to address space, pricing and design issues and pick products accordingly," Meena said.

Locals in Hyderabad meanwhile were sceptical.

"I will wait and watch," Mohammad Noor, a businessman, told AFP. "I have never been to an IKEA store before. But I believe there it's all compressed wood. Indian wood is much better."

And Siddharth, in charge of a Hyderabad shop for bespoke furniture, said Ikea might attract hard-up students but in general people would stick with "quality".

"It will be a flop, I tell you," he told AFP. "The regular furniture consumer will stick with the more solid wood available in the Indian market... I don't think it will give us much competition."

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