IKEA India launch builds on China market success

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Swedish furniture chain IKEA will launch its first store in India on Thursday, in a high-profile move looking to cater to one of the fastest-growing consumer markets in the world.

Famous for its flat-pack furniture, affordability and Swedish meatballs, the decision to enter India has been at least 10 years in the making, with plans to cater to Indian tastes ahead of at least 25 new store openings by 2025.

The first Indian IKEA store will open in Hyderabad after a 10 billion rupee investment (145.7 million US dollars) and some 12 years of market research, according to Bloomberg.

Furniture on sale has been especially designed with Indian customers and the country’s hot, humid climate in mind, while the store’s canteen – the biggest of any IKEA store globally – will serve up biryani, samosas and vegetarian versions of its popular meatballs.

Pledging to make 50 percent of its staff women, this first step into India for IKEA is a bold move in a country with a 30 billion US dollar market for furniture, 95 percent of which is custom-built and sold through small independent retailers, according to consultancy firm Technopak.

According to Bloomberg, India will overtake the US as the world’s second largest source of middle-class consumers by 2022, just behind China – a country where IKEA has rapidly expanded in in recent decades.

IKEA has grown particularly popular in China, especially with shoppers looking to escape the summer heat, like this customer in Hangzhou, east China's Zhejiang Province, July 29, 2018. /VCG Photo

The Brookings Institution reported last year that by 2030, 17 percent of the world’s middle-class will be based in India, while 22 percent will be living in China. For companies like IKEA, now is the time to build solid foundations in the big markets of the future.

IKEA, which has 313 stores in 38 countries and regions, opened its first location in China in 1998, and now has 25 stores across the country, according to its website.

The brand has found success in China after adapting its products for the local market. In its most recent financial year, the company made revenue of 13.2 billion yuan (1.98 billion US dollars), up 14 percent on the previous year.

Talking to China Daily last year, the company confirmed plans to further its expansion into e-commerce in China, including working with an unnamed third-party platform. Its plans for India are similar, with its first online store in the country set to launch next year, along with an even larger physical store in Mumbai.