Ikea’s consumer challenge in India

Brand may need to tweak its ways for this market
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First Published: Thu, Nov 15 2012. 07 57 PM IST
Updated: Thu, Nov 15 2012. 09 39 PM IST
If news reports are to be believed, next week the Foreign Investment Promotion Board (FIPB) is likely to clear Swedish furniture maker Ikea’s application to invest €1.5 billion (over Rs.10,000 crore) in opening stores in India. Ikea, the popular chain selling furniture and all things needed to set up a home, is entering the country through the 100% foreign direct investment route allowed in single-brand retail.
Over the years, the privately held furniture chain present in several countries in Europe, North America, the Asia Pacific, West Asia and the Caribbean has consumed a lot of ink and newsprint in the Indian media rife with speculation on its plans. FT.com recently said that the retailer is keen to become the “world’s biggest furniture retailer by increasing the number of stores by 50% by the end of the decade and almost doubling its sales and customer numbers.” Back in India, news on the multinational company’s recruitment activities, vendor negotiations and CSR (corporate social responsibility) initiatives supporting United Nations Development Programme projects is trickling in.
Yet, those familiar with the Ikea systems say that the much-awaited brand may need to tweak its ways for this market. For a start, even the shopping experience at the do-it-yourself furniture store is one of its kind. There is little human assistance and it is arrows and glow signs all around that help you navigate the byzantine multi-storey shopping arena. The good news is that you can touch, feel and explore the furniture and related accessories required for every room, nook or corner of the house.
How this format will match up to the genuflection that the Indian consumers expect from shop assistants remains to be seen. At the end of your shopping spree that entails pushing pushcarts through long corridors, you are left alone to package your own stuff and carry it to the car. There is wrapping paper, tape and a pair of scissors to pack your delicate glassware, for instance. The flat-pack furniture, fortunately, comes in cardboard boxes. Indians are used to their large shopping bags being reached to their cars by helpful shop assistants. Even the furniture makers home deliver beds, book cases and sofas.
The other worry is the lack of self-regulation or sense of discipline among Indian consumers, especially those who go shopping with little children. The scale of the shopping space, in case Ikea plans to replicate its model in India, could be a quiet consumer’s worst nightmare come true with rowdy children jumping over display furniture and running across corridors. Recall any one of your painful train journeys, flights or theatre experiences to get the drift. Hope the retailer will ensure a safe and peaceful shopping experience for its customers with the help of support staff who will enforce order.
Last but not the least the furniture itself may need to be re-worked to suit Indian tastes. Ikea creates clean, functional designs. Although Indians are used to heavy teakwood furniture with intricate design, retail experts claim that that may be changing. What hasn’t changed still, however, are the cleaning habits of Indian households.
Unlike in Europe where houses are vacuum-cleaned once a week, obsessive Indian households move, shift and even lift furniture daily to sweep and mop their floors. Clearly Ikea needs sturdy furniture that can withstand such daily onslaught.
B Narayanaswamy, consumer insight expert and a consultant with Ipsos Research, agrees that Indians like being served and find sales staff in stores abroad a bit stiff. But he says that there may be pent-up demand for a brand like Ikea. Besides, consumer behaviour at a branded store versus an unbranded retail store may not be hugely different. And that behaviour is improving.
The former chief executive of an apparel retail chain that sells a clutch of foreign brands does not agree that Indians make for badly behaved consumers. Shoppers at the modern retail outlets show that people now enjoy doing their own thing and are not looking to be served. “I have seen consumers with old money in Bangalore push their own carts in malls. Besides, isn’t the Delhi Metro proof that we are better behaved as consumers? The Indian consumer has evolved. We are ready for all kinds of brands and formats,” he concludes.
Shuchi Bansal is marketing and media editor with Mint. Comment at whatwebuy@livemint.com
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First Published: Thu, Nov 15 2012. 07 57 PM IST
More Topics: What we buy | shuchi bansal | ikea | consumer |