Mumbai: One of the lessons that Jesper Brodin, president and chief executive officer of Ikea group, remembers from his time spent as assistant to the Swedish company’s founder Ingvar Kamprad was his philosophy of siding with the people. This idea translates into principles of functionality, affordability and quality that underlie every Ikea product. In his 24 years at Ikea, Brodin has worked across business categories, starting with his role as a purchase manager in Pakistan. Of late, Brodin’s thrust has been to catapult Ikea into the digital age and catch up with the e-commerce boom. The brand’s foray into India has largely been about taking risks and creating new experimental models around the world. Edited excerpts:
The Hyderabad store has been in business for the last six months or so. Can you tell us about any insights that you have gained about the Indian market and its consumers?
It had been a dream for many of us for so many years to open in India. All these studies, all this planning, and finally we opened. Now, after six to seven months, we are starting to see some results. We have more than two million customers already in the Hyderabad store and we learn every day. There are a few things that we had to adapt to and so we keep listening to our customers. There are lots of details that we had to change as people here are new to our concept and not very used to it. The good news is that sales are good. If you compare Hyderabad to an average Ikea (store), visitation is average or a little bit higher. But the interesting thing is that people are buying more in Hyderabad than in any other store.
We learnt about the importance of low prices. We also struggle with low prices but we also work very hard and succeed. We see that some product categories are more popular than others. We sell a lot of mattresses and sofas. We were not sure of this before. Things related to cooking and home decoration are also flying off the shelves. I think we have tapped into this segment with the right products at the right price levels. This was thanks to the market research we did about Indian homes and requirements. We also adapted some of the homeware products, for example, we took out utensils that were not essential for Indian cuisine. People seem to like our design so that also worked.
You recently launched an India-inspired fabric collection, ‘Änglatårar’. Do you have other India-focused design initiatives in the offing?
Yes we do. India is easy for us as it has been a sourcing market for the last 35 years and the country is known for its super textile producers and overall it is quite easy for us from a design perspective. We want to merge the Scandinavian design tradition with India’s aesthetics and colours and see what happens. The Änglatårar collection in Hyderabad is a result of this experiment.
There have been rumours of Ikea opening smaller format stores in Kamala Mills, Mumbai. How do these stores fit in with the Ikea vision?
For many years the retail concept at Ikea was strong and we kept improving till we got to a point where I feel we got too confident and we stopped developing. Then the digital opportunities arrived, bringing newer competition and also the ability to reach people much faster and do more, apart from selling all our products in a store. We are also testing and trying different formats and among them is addressing the question of how we bring Ikea to people in the city centres. Apart from the 25,000 sq. metre flagship stores, we have also introduced formats for 10,000, 5,000 and 3,000 sq. metre stores. We even have a plan for bringing this down to a 1,000 sq. metre store. This way we can be quicker and get closer to people. I don’t know what this version of Ikea will look like and some things will work and some won’t. But we are not afraid of trying new things and taking feedback from our customers.
Also, we don’t have any plans of any store in Kamala Mills at the moment. Our idea is to look at the map of cities and identify the white spots and how we can bring some version of an Ikea to those spots. For that, we need to show up in city centres, suburbs, shopping malls and retail parks. Home delivery will be a big part of the smaller format store as obviously every product from the flagship store will not be available here.
How do the urban challenges in a city like Mumbai work with the products on offer?
Our experience from other markets is that we work best when people live in small apartments and have limited money. In places where there is a high degree of affluence or big spaces we can be there and we can support that kind of home as well. Our overall vision is to make life at home better. This morning, we were out on field visits and we had visited a few apartments. They were really small with limited space and sometimes with a limited budget as well. But this is when we smile because we are very good at storage and organizing. These challenges that lie ahead make us feel that we have a purpose to fill in this market.
What are Ikea’s expansion plans for Mumbai and the rest of India?
India will be a test laboratory for Ikea worldwide and we will have fun and also take some risks at the same time. One store is obviously not going to be enough for Mumbai’s large population but we felt we had to build the flagship store so that people could come and see the best of Ikea and all that we have to offer. But then we will test and create smaller touch points to bring Ikea physically closer to people in different parts of the city, together with a great digital experience and possibility of e-commerce. So we want to make Ikea accessible to everybody in Mumbai. Once we do that, the possible challenge is to see how we can become affordable for everybody.
India from a growth perspective is the biggest investment for us now as far as a new market is concerned. It makes perfect sense as it is a combination of 1.3 billion people, an exponentially developing economy, and a market where we have been present for the last 35 years from a purchasing and investment point of view. Historically, Ikea has been a higher risk taker in India as compared to other places and that is part of our expansion plan. We will try to go fast and be in the volume game. Telangana was very supportive and processes were quick and that is why we opened in Hyderabad first. But we are obviously looking at Mumbai, Delhi, and Bengaluru as the next options. Places like Chennai, Kolkata and Ahmedabad are also on our radar and we will see if we can speed up the expansion with smaller touch points and e-commerce models.
Ikea is known for its DIY furniture, which is quite novel for India where local carpenters offer a quick fix to everything. How would that concept work here?
We see a little bit of change and we are going to be stubborn here. We think we can change India and we will try. We are having a lot of fun with this. In Hyderabad, we invite customers for workshops. It is also interesting that one of our best-selling products in India is a tool kit. This is not the number one product in most markets. It tells us that either the customers want to test and try this assembly or maybe give the tool kit to their carpenter. I think DIY doesn’t mean that you have to be a carpenter. While the installation of a kitchen is not for everybody, assembling a chair is so easy that my 80-year-old mother could do it. We also tell the consumers that if you don’t want to do it yourself, there are services we have tied up with which can help you do the same.
Is there a ubiquitous piece of Ikea furniture such as the (McDonald’s burger) Big Mac, which could offer some measure of affordability across currencies?
In Ikea we have different ranges—the higher price products, the medium range and 50% of the products are in the low price range. Then there are the BTIs (breath taking items) where the price is so low that you lose your breath! Some of these classic BTIs like the Klippan sofa and the Billy bookcases provide that kind of an index across markets. We never operate with fat margins. We are the happiest when we make homes beautiful for people with thin wallets. In new markets such as India we have a built in stamina in our plans and we are investing in our future rather than worrying about profits right now. However, India seems to encompass the whole world and so many different strata. It would easy for us to be complacent and serve the upper middle class but our ambition is to serve many more people. In the US also it is a wide range of income groups though we would sell more products in the medium and high priced range than in India. If you compare prices on our website, the difference is really not all that much, though we hope that prices in India will be lower than anywhere else.