With plans to invest $1.5 bn in the country, the home-goods giant will ride big on its'value with quality' promise to consumers.
The words 'Hej there!' (pronounced 'hey there'; 'hej' is Swedish for 'Hi') have been visible on outdoor media across Hyderabad for a while now. Virtual Reality tours in special autos, a good amount of OOH and branded cartons on airport conveyor belts are some of the activities adding to the buzz surrounding the launch of Swedish furniture and accessories giant IKEA's first store in India.
On August 9, hordes of IKEA staff, waving Indian and Swedish flags, cheered on as the first customers walked into its first store in Hyderabad's HITEC city. And let's not forget the Army marching band playing 'Saare Jahan Se Achcha'.
On the eve of the launch, Peter Betzel, CEO, IKEA India, said, "India is good for IKEA and IKEA is good for India. It's a long-term commitment and not some short visit." He added that the store is just a starting point. "We want to reach as many people as possible - online and offline - in cities and in smaller, new formats too," he explained and further stated, "In India, there's a love for homes, for people and people do want to spend money wisely."
Experts say brands like Pepperfry and Urban Ladder have been instrumental in getting consumers to break away from their traditional reliance on local carpenters and, according to Betzel, IKEA will take that notch higher. "Everyone who is in the business will benefit as wherever we have set up a store, the interest in home furnishings has spiked," he says confidently.
"This is a historic day for the IKEA family," says Jesper Brodin, CEO, IKEA Group, as he speaks of the brand's founder, Ingvar Kamprad who started the whole journey as a one-man show at the age of 17 and also of India's 30-year-old business and philanthropic association with IKEA. "We close that loop as we open the first store here," he adds.
IKEA spent two years visiting 1000 Indian homes to learn about the Indian way of living and to understand affordability the Indian way.
According to Brodin, the team had to learn and rethink a lot in India. "We understood the true meaning of low price. It's all about affordability, but great function and quality are priorities too. Also, it's the worlds driest and the most humid country at the same time, so we had to learn to make furniture accordingly," he reveals.
Both Brodin and Betzel also credited former IKEA India CEO, Juvencio Maeztu (now part of global management) and his team for laying a strong foundation in the last five years.
There are currently 403 IKEA stores in 49 countries (sales volume - 38.3 billion Euros). Post Hyderabad, the company will open another store in Navi Mumbai next year followed by Bengaluru and Delhi NCR. While its distribution centre in Pune is already underway, e-commerce operations will begin in March 2019.
The IKEA-India history
IKEA has been sourcing products from India since the 90s. The company has more than 50 suppliers with 45,000 direct employees and 4 lakh people in an extended supply chain. The IKEA Foundation has also been working in India for over 20 years.
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The brand wanted to enter Indian retail in 2006-07, but strict FDI norms didn't make it feasible. In November 2011, after the government allowed 100 per cent FDI in single-brand retail, IKEA was among the first to get approval (there was even a change made to a sourcing norm as per IKEA's request). While it had shortlisted Bangalore, Mumbai, Delhi-NCR, and Hyderabad, the latter (post some hard-selling by Telangana officials) eventually became the choice for the brand's first store.
Over 2000 products have been adapted to Indian needs and with over 1000 products in the store priced below Rs 200, the company wants to ensure that India is the "most cost-effective IKEA experience globally".
A quick run-down on the first IKEA store in Hyderabad:-
• Located in 'HITEC City', the mammoth store (in typical 'warehouse-box type' IKEA layout) is 4,00,000 sq. ft. spread over 13 acres of land.
• It has 7,500 home furnishing products on display.
• The store will remain open 365 days between 10.00 am - 11:00 pm.
• It exhibits two full sample homes besides different room sets based on different parts of the home. It also has a 'market hall' for kitchen utensils and accessories, textiles, rugs, lighting, decoration, stationery, and live plants.
• Besides the classic IKEA range (the BILLY bookcase, KLIPPAN sofa, LACK table, POÄNG armchair etc.) locally relevant products like masala boxes, pressure cookers, tawas, idli makers, colourful sheets, and coir mattresses are also part of the range.
• The 1,000-seater in-store restaurant is the largest in the IKEA world. There's also a kids' play area named 'Småland'.
• It has 950-odd employees with 1500 indirectly in services. 48 per cent of these are women and the company aims to hire 50 per cent women co-workers at all levels in India including forklift drivers and assembling co-workers.
• IKEA expects to host close to seven million visitors at this store every year.
Do-It-Yourself, or Don't...
Most customers around the world are used to taking home IKEA furniture in 'flat packs', but in India, only 'hobbyists' might be enthusiastic about its DIY philosophy. Talking about the demand for convenience and service, Betzel says that 150 home-delivery workers have been appointed to assemble and deliver furniture, among which, 50 per cent are female. While IKEA has also partnered with online service app UrbanClap, it does hope that consumers will slowly warm up to DIY.
Talking to the consumer...
Months before launch, IKEA ran a six-month 'concept exhibition' 'IKEA Hej HOME' in Hyderabad, to offer customers a first-hand experience of an IKEA store and they plan to do that in the other cities too.
Ulf Smedberg, country marketing manager, IKEA India, states that the brand's classic blue and yellow signage, while widely recognized globally, in Hyderabad, awareness was just 2 per cent. However, post the initial campaign, it is now above 80 per cent.
We had a quick chat with him on IKEA's marketing journey going forward.
India likes colours vis a vis the Swedish prefer white and the typical couch plays different roles (homework, TV-watching, dinner) in the course of the day. These are some IKEA insights - any more that you share with us?
Functional needs, like storage, are, of course, big, due to space constraints. Multi-functional usage is important too. Traditional furniture used to be multi-functional but it was also bulky and not easily portable. So, we've taken all this into account. Also, living rooms are more important than bedrooms -people socialise a lot, they stay home and invite people over, have home parties. We also think we have strong offers for families with children - in many homes, kids are not integrated into key spaces - we'd like to do that - have a kids table in the kitchen, for instance.
There might not be one homogenous perception of IKEA in India... but what are the ones that do exist currently?
Well, most people know it as a furniture store - it is big, it is 'foreign'. We want them to know that the store is a great family destination and that the brand is about affordable solutions, quality, design as well as 'it fits my home' - that is the relevance bit.
Globally, IKEA has this distinct brand tone with edgy, quirky creatives. When will that phase start here?
While the first campaign to establish the brand will have a second edition, the next level (around Diwali) will bring in the IKEA tone of voice with a bit of its trademark humour. It will show that we understand people here, laugh with them and make fun of ourselves and of situations. Also, because 500 million people are below 25 years, we will have a younger approach and it'll be a mix of both - only-for-India and global communication.
Will you talk about the DIY concept at all in your messaging?
That will be done more on digital, on the website, with some bit in print too. We'd like to tell them that 'you can go DIY and if not, we can help you too'.
IKEA has invested a lot in digital and branded content globally. How much will you focus on digital vis a vis traditional and OOH (which is big for IKEA) in India?
In digital, mobile is a significant vehicle for us reach-wise; there's more in-depth communication about our product range there. We'll focus on single iconic products. Since 85 per cent of India uses a mobile, all our digital communication, including our website, is mobile-first. That's a first in the IKEA world. TV is important for reach, but in digital, you can interact quickly. There's social media too, so you need both. OOH currently works very well in Hyderabad.
'Come for meatballs-stay for sofas.' Food is an important part of the IKEA experience, even the hoarding outside the store highlights 'Chicken Meatballs'. What other experiences are you looking to focus on?
For most people, the first interaction could be with food and the next could be a pillow or a bed in the future. Other experiences that we are planning to look at are the 'Before and After' concept; we'll ask people to participate in a contest (probably via a TV show) - it's a known thing, but we'll try to make it more popular in India.
The ever-famous IKEA catalogue; how will it reach Indian consumers?
We will have it all on digital; we won't print physical copies of the big catalogue. However, a smaller booklet will be distributed every second month to all households via newspapers, as that's an effective way of distribution.
The brand is known for its creative collaborations. What's your view on the ideal agency-client partnership?
The term 'partnership' is the keyword. We would like to create together, with India's insights and IKEA's vision and all our partners will work towards that.