by Ikea India is a subsidiary of the Swedish company Ikea. On July 25, 2016, the company commenced operations in India with its store in Hyderabad. The retail store is spread over 1 million square feet and offers a wide selection of products for home furnishing, including furniture (home furnishing), textiles (curtains and pillows), kitchenware (cookware, dinnerware, and food storage options), and various accessories like rugs”.
What is Ikea India?
Ikea India is a subsidiary of the Swedish Company Ikea. It imports products from the parent company and exports to other countries in South-East Asia, especially India. Ikea India has no manufacturing and all production is done in Sweden.
What will you do to curb pollution?
IKEA has announced plans to cut its global carbon footprint by 20% by 2020 from an estimated 2005 level of 2.2 billion tonnes. The company plans to achieve this by decreasing energy consumption and using renewable energy. The company has invested in solar panels at its stores and distribution centers, which cover almost 6.2 million square feet. It has also repaid the debt of two wind farms, totaling 236 megawatts, bringing it closer to achieving its goal of becoming a totally renewable energy firm. In 2015, Ikea also collaborated with the Chinese government to invest $3 billion into expanding its manufacturing industry there by 2020, while aiming to meet 100% of the company’s global demand for wood with sustainable resources by 2020.
Why did IKEA fail in India?
IKEA India could not compete with the numerous Indian furniture manufacturers and shops, which offered a wide variety of inexpensive products. Another disadvantage for IKEA was that it was unable to get land allotted in some of India’s most prominent cities, like Delhi, Mumbai, and Bangalore. Moreover, the absence of a ‘no-objection certificate’ from the state government delayed matters further. Despite all this frustration, IKEA is not yet ready to give up on India. Recently it bought land in Hyderabad and with its new acquisition, IKEA will have enough space to fit out a store spanning over 1 million square feet.
The lack of a no-objection certificate prevented IKEA from getting access to prime locations.
Why is India attractive to IKEA?
India is growing at a very fast rate, with the retail sector being one of the fastest-growing segments. Half of India’s population is below the age of 25 years, which makes it an attractive market for consumer goods. Right now, furniture sales account for just 5% of the spending in India’s retail industry; but in Western countries like Sweden and Germany, furniture sales account for 15-20% of total sales value. Over 35 million households in India currently spend over Rs 10,000 on purchasing furniture every year.
What challenges will IKEA face and how will it overcome them?
IKEA has already faced several challenges in its journey to set up stores in India. The Indian taxation system and the complex environmental regulations were deterrents. The company will have to introduce new strategies in order to successfully overcome these challenges. Ikea has to devise a strategy for dealing with the massive public transportation and logistics problem that plagues India; this will prove to be a challenge considering that Ikea’s product range is pretty large, with many bulky items in it.
Ikea also has to develop a strong supply chain network if it wants to keep its prices low. Which is why it needed land for further expansion and more stores across India. The company will have to overcome the complex land acquisition process in India which involves state governments, municipal corporations, and local political leaders who always try to extract unauthorized benefits from companies like IKEA.
Is IKEA doing well in India?
Ikea India has opened their first store in India that is quite successful. The store has attracted 160,000 visitors, which is twice as much as the initial target. In addition to this, the company has also made a profit of Rs 3.8 crore from this store.
The Hyderabad store is key for Ikea’s expansion plans in India and it will allow Ikea to obtain a wider range of furniture and have enough space to run their own retail chain. Ikea has also set up a manufacturing unit in Hyderabad and with improved logistics facilities. It is able to provide all its products quickly without depending on import duties or delays due to corruption charges.
Crisis And Complication On The Road To Conquest
On July 25, 2016, Ikea opened its first store in India in Hyderabad. The store opened to much fanfare and was a big step forward for Ikea’s expansion plans. Unfortunately, the next day hundreds of customers found that they were locked out with no access to their products or a refund of their money. By 11 am the following morning Ikea had shut itself down and refused to answer queries or return people’s money. The reason for this inconvenience was poor planning on behalf of Ikea India. IKEA India had not planned for enough cashiers and staff members to handle the volume of customers who came through the door on its opening day which resulted in long wait lines outside and inside the store.
