Subject: Retail Management

Submitted to: Prof. Sathish Mahendran

Topic: Retail Format & Site Location Strategy

Company: IKEA

‘Make Everyday Brighter’

Submitted by: Abhaysinh Rahul Shirole

Batch: 2019-2021
PRN: 19020841156
IKEA: A Short Introduction
 IKEA is a furnishings manufacturer and company founded in
Sweden, in 1943, by Ingvar Kamprad, who had first started
the business by peddling useful items to neighbours.

Today, IKEA is known for its modernist, eco-friendly and

simplistic designs that go along with various appliances and
furniture. The firm is also known for its incredible mastery
upon cost control, operational details, and tireless never-
ending product development. This has enabled IKEA to cut
its prices & cost by an average of 2-3%.

Today, IKEA has a global presence with 430+ stores in over Mr. Ingvar Kamprad
52 stores, and has a top-line of $44 Billion. It is responsible
(1926-2018)
for approx. 1% of world commercial-product wood
consumption. This high consumption makes it one of the
biggest users of wood in the retail sector.

The company also has a strong, online presence, 12,000+
products and 2 Billion+ yearly visitors.
Founded IKEA when was 17. In fact, the name
IKEA is made up of the initials of :
(Ingvar Kamprad) + Elmtaryd, his family farm,
and the nearby village Agunnaryd where he
was raised.

____________________________________________________________________________________________________

IKEA in India
Address: Survey no. 83/1,
Rangareddy, Raidurg Khalsa,
Hyderabad, Telangana

Land Parcel: 13 Acres

Store Size: 4,00,000 Sq.ft.

No. of floors 4 (2 for parking)

Working Hours: 10 AM – 11 PM
(Open 365 Days of the year)

Opened: 9th August 2018

Landing Page: IKEA Hyderabad Store | E-commerce: www.ikea.com/in/en | G-

Maps: IKEA Hyderabad Location

Retail Format: Big box retail Store

Based on size alone, IKEA can be classified as a Big Box store because of its blocky but imposing
design. Also, it is meant to be a ‘one-stop shop’ for its customers thanks to the depth of its product
category. It offers incredible value for a low price. The store expects a footfall of 6 million visitors a
year (pre-covid estimates) and thanks to not just IKEA’s popularity but also the fact that Hyderabad
is a now a bustling MNC investment destination with the offices of Amazon, Dell, Deloitte and many
others.
 Retail Analysis of IKEA Hyderabad
Product Mix
Categories Available: Storage & organisation | Baby & children | Winter | Children's furniture |
Decoration | Wardrobes | Kitchenware & tableware | Chairs | Textiles | Beds & mattresses | Tables &
desks | Outdoor products | Lamps | Outdoor furniture | Cabinets & cupboards | Kitchen & appliances |
Pots & plants | Bookcases & shelving units | TV & media furniture |Showers | Laundry & cleaning |
Mobile & tablet accessories | Carpets, mats & flooring

Wide Product range: Over 7500 products. Also, 1000

products priced below Rs.200

IKEA Hyderabad contains a wide product range that includes

cooking utensils, chandeliers, beds, small and large
cupboards, storage solutions.

Sustainable Range: The store also showcases over 500

sustainable products. This is done to promote sustainable
living. All textiles are produced from 100% cotton textile,
while all lightings are (100%) LED.

International Bestsellers available: The BILLY

bookcase, KLIPPAN Sofa, LACK table, and others.

The ‘Make in India Factor’: As per the FDI norms

imposed on IKEA, 20% of the products are sourced
locally and 1000 are produced in India. It is important
to know that India has been an important part of
IKEA’s supply chain for over 30 years.

To provide products that are more relevant to the

Indian Market, IKEA has brought products like Masala
Boxes, idli makers, coconut fibre mattresses, tawas and
much more. It continues to sell its classic IKEA range.

_________________________________________________________________________________

Pricing:
IKEA is emphasising on affordability to try and compete in the Indian market. In fact, IKEA’s Hyderabad store has one
thousand products which are priced below Rs 200. The lowest priced item at IKEA starting at as low as Rs 15 while the most
expensive product is above Rs. 80,000.

Assembly and Product Delivery

Ikea is popular for selling its products as separate components, ones that require to be assembled back home. For this
very reason, IKEA is offering:

 In-house assembly (outsourced)

 Pick Up option
 Delivery Service
Partnership for Delivery:
IKEA has also partnered with Urban Company (formerly known as
Urban Clap) for furniture assembly service. Consumers buying furniture
from IKEA can call upon furniture assembly services using the UC app.
IKEA has vowed to train carpenters on UC’s platform, upskilling them to
become certified IKEA assemblers.

Culinary Highlight – The 1000 seater IKEA Restaurant

IKEA’s best-selling Food items with Indian variants

Apart from home décor items, the food at IKEA has also
been priced nominally. A Samosa plate or frozen yogurt,
each costing only Rs 10, and most items are priced below
Rs 100. Biryani is also at just Rs 99.
STORE LAYOUT OF IKEA HYDERABAD

IKEA’s store layout Analysis

The IKEA trick:
IKEA states that its maze-like store layout
inspires and mesmerises the customers with
its interiors before a purchase is even made -
while also stating that its products are
versatile.

However, a closer inspection will show you

that it is a way to bamboozle its customers
and trick them in spending more. For eg.
After every 50 feet, the aisle takes a turn!
 The Bulla Bulla Technique
IKEA employs the technique called "Bulla
Bulla," where it deliberately puts piles of
items in large bins to give the facade of
high volume.

The maze-like design is important in making the customers curious and has to turn every fifty feet to have
people guessing on the items they’d encounter. There are doors that become shortcuts and are reserved for
long-time customers. In theory, these doors could be used by anyone but they aren’t easy to spot.

FACTORS CONSIDERED FOR LOCATION SELECTION

Before getting to why IKEA chose Hyderabad as its first location in India, let’s take a look at
its Global Standards.
 Population The basic requirement is population. IKEA’s market
research mandates 2 million people within 70-80 km
Density of a single market.

Brand IKEA wants strong brand awareness in its potential

market, and local city & community is a crucial factor.
Awareness

Single Media IKEA prefers areas where majority population is in one

major media market. This is how radio, TV and
Market newspaper ads are focused towards one market.

Factors for IKEA India:

Why did IKEA choose Hyderabad?
With an proposal of Rs. 10,500 crore
investment for its 25 stores, IKEA
became the 1st major single-brand
retailer to get FDI approval in India. In
fact, the company had to wait a
whopping 12 years to get the
approval, during which, the company
did extensive market research to
understand the Indian Market.

Post the approval, IKEA was looking at

Mumbai and Delhi for its first store
however, it was one man, that
changed everything, and brought IKEA
to Hyderabad, and that is Mr. Pradeep
Chandra.
Mr. Pradeep Chandra, IAS
The man who brought IKEA to Hyderabad
Strategic Acquisition
Mr. Pradeep Chandra of personally mailed Mr. Josh Brodin & provided a
Land: ten-point list on why Hyderabad will be the ideal destination to set up
its first store. In fact, Hyderabad govt. is said to have convinced IKEA
with fast land allotments & permissions and even a potential metro
station. Mr. Chandra said that post leaving the office, his successor
Always looking
held up his athelped
strategies & the IKEA
future:
begin its India operations.

This land parcel is in Raidurgam.  IKEA had requested for a parcel

close to a metro station. Even in 2015, IKEA successfully guessed
that this land will be to the final terminating station at Raidurgam. 
The Shilparamam station had been shifted to Raidurgam because
of unavailablity of land at Shilparamam. to serve the employment
hubs of Hitec City.

The Knowledge City map is provided here to locate both the new
metro station and store location. Both locations are close to the
Mindspace.

IKEA had already opened a store at Sujana Mall in Nov ‘17. The
experience store was closed after the main store opened in
Raidurgam.
ANALYSIS OF THE SITE LOCATION:

IKEA Store to Raidurg Metro Station

– only one-minute distance.

Bus Stop

Notable landmarks: Mindspace IT Park | Amazon Corporate Office | Medicover Hospital |

Mindspace Road | Hitec City

Advantages of the location:

  Built in the new and well-planned part of Hyderabad
 Superb Connectivity to Metro & Roadways
 Incredible Landmark nearby
 Built close to the IT hub of Hyderabad
 Strong brand awareness within the people of Hyderabad

Aug 9, 2018: As hordes of enthusiastic shoppers

rushed for a dekko of the first IKEA store on its
inaugural day, many headed home after work in the
area experience huge traffic snarls.

On its first day itself, the IT hub of Hyderabad was

brought to a grinding halt.

The turnout at the store was so massive that

Cyberabad police to issue a traffic advisory.

Disadvantages

1. Presence of several strong retail outlets & direct competitors like:

 Dmart
 Godrej Interio (Direct Competitor)
 @Home (Direct Competitor)
 Timbercraft (Direct Competitor)
 Elevate (Direct Competitor)

2. Not close to Hydebad’s city center

However, it is easy to see that in spite of being surrounded by several direct competitors, IKEA still
has a stronger presence and in fact, is the bigger threat to all the furniture stores in the area.

First Year Performance of FY19 for IKEA

Rs. 400 Crore+ Revenue in FY19

Since opening its store in August 2018

Rs. 2 Crore Everyday

This is a record for any brand from just a single outlet -and in its
very fist year - in India - a market that is cost conscious.

Innovation Practices
Stalled by Covid-19, but back online with new solutions

CLICK & COLLECT

May 2020: IKEA restarted its services in Hyderabad, by launching ‘Click & Collect’, its online
shopping service, under which buyers will have to collect their furniture from the store’s carpark.
buyers will be given instructions and told to collect the products from the carpark

STREAMLINED & SANITISED

June 2020: To ensure a smooth shopping experience at the store, customers can take support from
greeters and personal shopper service. Some safety measures include – contact-less temperature
checks, compulsory face mask, etc.

The store’s shopping trolleys are continuously sanitised as per local norms and hand
sanitiser machines will be set up along with indicators on floors for social distancing, unique
physical barriers for extra safety during shopping. Special queue management for line-ups,
separation screens around sales point, and customer service points along with other safety
checks are in place. However, keeping safety requirements and social distancing in mind,
the Ikea food-court and the children’s playing area - Småland will also open later.

SCOPE TO CHANGE

Sights set on 2025 & Competition from Pepperfry & Urban Ladder in
Towards Profitability the online retail space

IKEA is expected to face stiff competition from Pepperfry.

By the year 2025, IKEA wants to What puts IKEA on the backfoot is the fact that its
open over 25+ stores in India in both superstores require humongous investments.
Tier 1 & 2 cities with stores in
Bengaluru, Chennai & Mumbai are in
For the Hyderabad store, IKEA spent 2 years just building
the pipeline. Several days before
launching a full-functioning store in it. This is why it has been unable to expand into other
Mumbai, IKEA had started shipping metrocities. IKEA hasn’t invested heavily in its online
its products online and had also platform & currently ships products in Mumbai.
installed trucks named IKEA-on-
wheels to act pop up stores.
TURNITIN REPORT