IKEA: Devising a market entry strategy for India and managing the incumbents' response

Abstract

IKEA sells Scandinavian style of furniture. Operating in 40 countries, it is the world’s largest furniture retailer with more than 338 stores1. Sales volume of the privately held company is estimated at over EUR 27.5 Billion in 20122.They are very popular in UK. They set up their store far from the big cities. Their furniture is sold in connectible parts which can be assembled later. The main benefit that they provide is that their furniture is flat-pack, hence easily portable. But this business model may not suit the needs of an Indian consumer who is more comfortable with traditional bulky furniture. IKEA doesn’t provide home service or assemble facility in US and UK. This strategy also contradicts with the furniture buying behavior from the Indian context. Hence this paper aims to devise a market entry strategy for IKEA in India, overcoming these contradictions. After IKEA enters the market, the existing players may retaliate by declaring a price war or by reacting passively. Hence, this paper also aims to devise a specific plan of action for IKEA that would be able to counter the reactions that may come after its entry into the Indian market.