Ikea assembles a ‘do-it-for-me’ business plan as it heads into India The retailer is setting up its first in-house assembly team and changing its menu to suit local palates

Ikea is set to open its first store in India next month, and the world’s biggest furniture retailer is localising its offering – from the food menu to its “doit-yourself” assembly model – to ensure success in the country.

The retailer, which aims to soon open a 37,160 square metre store in the southern city of Hyderabad, is setting up its first in-house assembly team and offering local delicacies such as samosas to woo shoppers, at a time when growth in some of its more established markets is slowing.

“The entry point has been that the identity was going to be the same,” says Ikea’s finance head Juvencio Maeztu.

“But, for example, Indians like firm mattresses, so you need to adapt the mattress offering. And we are developing a mattress that has a coconut layer because it is cooler for the summer,” says Mr Maeztu.

Such customisation will be seen in items ranging from cutlery to showroom layouts, he says. India’s furniture market is largely dominated by unorganised retail and local vendors, and consumers are used to enjoying the comfort of made-to-order or fully assembled furniture delivered to their doorsteps.

The “do-it-for-me” culture is very prevalent in India, says Sowmya Adiraju, an analyst at research company Euromonitor.

He says Ikea will have to look into delivery and assembly needs to woo Indians. While Ikea’s popular DIY furniture is well known, it is also sometimes parodied, as shoppers are at times overwhelmed by the task of assembling intricate units.

The Swedish retailer is setting up a 150-member team to help assemble furniture and is also partnering with UrbanClap, an app-based service that connects people with everyone from tutors to carpenters.

The Ikea in-house assembly team will be a little more expensive than UrbanClap’s services, says Patrik Antoni, Ikea’s deputy head in India.

The companies both declined to reveal pricing details, but UrbanClap charges customers about $3.75 (Dh13.77) for a 30-minute carpentry job, such as installing Ikea’s popular Billy bookcase.

In comparison, TaskRabbit, the services platform acquired by Ikea in 2017, charges US shoppers a minimum of $36 for any installation job.

Ikea has visited more than 800 homes in India to see how people live, says Mr Maeztu, who led the company’s India team before moving to take on his new global role earlier this year.

While the Hyderabad store will have spacious room designs, its Mumbai store will pack a lot more product into a smaller space to reflect the city’s apartment sizes.

“You need to understand what life’s about and then the range is presented to give solutions to the needs and frustrations,” Mr Maeztu says.

Like many international restaurant chains in India, Ikea is also changing parts of its menu to suit local palates.

It will not sell its beef meatballs in the country, but serve chicken and veggie balls instead, while also offering shoppers biryani, samosas and veggie hot dogs, says Mr Antoni.

One winning formula that Ikea plans to stick with is low price points, by offering 1,000 products priced under $3, says Ikea Group chief executive Jesper Brodin. It is keen to avoid missteps made in Australia and China, where its initially higher pricing discouraged potential customers, he says.

Although Ikea plans to gradually increase local sourcing, one challenge to keeping prices low will be taxes, says Mr Brodin. “I’d say the biggest challenge for us is [import] duties. That’s not something we can do something about,” he says.

The foray into India comes at a time when Ikea’s growth has slowed in some of its established markets, pushing it to enter new markets such as Chile and India, while developing its digital offering and smaller city centre store formats.

Ikea’s company-owned stores grew retail sales by 4 per cent in 2017. In comparison, sales in India’s homeware and home furnishing stores grew some 9 per cent, according to Euromonitor.

Still, Ikea – which has already sunk about $670 million into India – will face stiff competition from a slew of online furniture start-ups such as Pepperfry, UrbanLadder and FabFurnish, so success will come at a price.

The company, which has bought land in Hyderabad, Bangalore, Mumbai and Gurugram, is also looking to expand into five other markets – Surat, Ahmedabad, Kolkata, Chennai and Pune, says Mr Brodin.

“This is our next really big market,” he says. But he warns it will take years for the company to see major profits from the market.