Wednesday, July 9, 2014

Ikea Wins India’s Accha! / OK! Captures Sub-Continent’s Demand - Side, Too!

Even Happier Than Disneyland!

Ikea is no stranger to the land of the Taj Mahal. It has been sourcing a large volume of its rugs and other fabrics from India’s huge export textile manufacturing industry, and expects to step up its supply – side activities and improve the lot of its labor force. After much deliberate cultural engineering, the world’s largest specialized furniture manufacturer, Sweden’s IKEA, was finally and recently given the government’s official “Accha!” (Hindi) / “OK!” (Swedish), to move ahead with plans to build, solely own and operate the first four of about 25 retail stores in the sub-continent.

With 301 stores already in 37 countries (as of 2012) and many first time enterprises planned in the Slavic countries of the former Soviet Union, as well as in New Zealand, Indonesia and South Korea in the coming years, Ikea has trumped the Disneyland enterprise, with outposts only in the USA, Hong Kong, Tokyo and Paris. While Ikea’s mission, “Creating a better life for the many people!” it seems not to mean “all people”, as it has no signs of moving into South America or continental Africa, save the unlikelihood that its proposed opening in September in Cairo proceeding on schedule.

These premiere emporia of good life and style will serve the targeted middle classes living adjacent to Mumbai, Hyderabad, New Delhi and Bangalore, cities with total population over 50 million. Like Target, the presence of an Ikea store is a sign of an upwardly mobile, culturally Western-leaning population in a nation with over a third of the world’s poorest people.

Like the Happiest place on earth!” (aka Disneyland), Ikea wants its customers to come to a store that is more than a place to get stuff. It is an entire experience: a museum (whose works you can interact with buy and replicate exactly in your own home or office), a warehouse that makes purchasing efficient and a place to enjoy with the whole family.

In addition to its products, Ikea stores are known for their restaurants and accommodations for children. We will be interested to see if the new India branches will have the iconic Småland, a supervised play area for children named after the province in Sweden where Ikea’s founder was born. In addition to the ultimate focus group (your kids) having the opportunity to test some of Ikea’s products, shoppers can also enjoy the store’s Swedish-themed restaurant. Like those iconic Levy’s Rye Bread ads, you don’t have to be Swedish to love Ikea’s ligonberry juice, but in Ikea Israel the food will be Kosher in accord with dietary laws. In Dubai or Abu Dhabi, hotdogs and soft-serv frozen yoghurt will not appeal to the locals, so they have adapted the menu that includes meatless options. We can expect the same in India, with 42% of the population being vegetarian.

108+ Words for Elephant

It is not yet clear whether Ikea will create its promotional materials in Hindi, or just rely on the fact that in India, a country that has had upwards of over 1600 languages spoken daily, English (of British lineage) is the most common language used by its target market: the upwardly mobile middle-class. Ikea’s paper catalogs are still published in 20 languages in 62 versions amounting to 211 million copies annually. Each regional version of the look-book is tightly edited to visually reflect what Ikea marketing gurus believe to reflect the appropriate lifestyle for a locale. (Exactly what are those storage bins holding?) Last year The Wall Street Journal reported that Swedes and Saudi Arabians were both up in arms about a page in the latter’s book that edited out images of women in some of the photos.

Of course Ikea has been actively using digital technology, including websites (which are offered in English as well as local languages), the new Ikea Now app and regional advertising.  It will save many trees, part of the company’s environmental policy.

Whether promoted in bricks-and-mortar stores or in print or online, only time will tell whether iconoclastic Ikea’s products “translate” into the Indian culture. In the land of Lord Ganesha, the god with the elephant head (and over 108 Sanskrit words for “elephant”), will Ikea repurpose its child-pleasers, such “Sagosten”, to better fit the traditions or rewrite its “LEKA CIRKUS“ to accommodate the beloved popular devotional tale, or will it take the lead from the ever accommodating webtailer Cafe Press and just sell whatever the market will bear?

Each of Ikea’s product names is an actual word in Swedish that was selected because it somehow relates to the product. The website "Ikea in Swedish" can provide assistance in pronunciation. Perhaps when Ganesha’s mom, Goddess Parvati, tells him its time to put away his ritual weapons for the day, he can use one of Ikea’s many storage systems, such as “Trofast”, which coincidentally means “faithful” in Scandinavian languages. Can we anticipate new Swedish language programs in India’s universities, utilizing the catalog as text?

Ikea’s Do (Weave, Assemble, Etc.) - it Yourself Ikea: Gandhi-ji Would Approve

Ikea is no stranger to the land of Gandhi. It has been sourcing a large volume of its rugs and other fabrics from India’s huge export textile manufacturing industry, and expects to step up its supply – side activities and improve the log of its labor force.

Beyond the typical marketing research that a powerful multi-national corporation must undertake before asserting itself into a new market, Ikea has been engaged in corporate system-wide campaigns of social responsibility assessment and realignment through the company’s signature  ”management by running around” style.

Ikea’s corporate executives, in tandem with local executives and scholars have been considering viable ways to continue to maintain profit margins and competitive edge while working with local public and private sectors to blend seemingly incompatible ethical, social, cultural and economic standards to achieve a positive bottom line for all, including its subcontracted indigenous labor force, many of whom are children. Ikea’s social and environmental responsibility campaigns are engaging international and local NGOs and even the United Nations around the table; although, its “Galant” model seems much to small to accommodate all the players. 

The Ikea Foundation, touted in The Economist as being the largest philanthropic entity in the world, has been working in India to find appropriate ways to improve the quality of life for its supply-side laborers, including women and children living in poverty. This will no doubt take longer than it does to build the new stores.

In the mean time, India will be an interesting lab to test the “Ikea effect”, where “labor leads to love”, a well-documented marketing phenomenon that individuals were in fact willing to pay more for the box they built themselves as opposed to an identical pre-assembled box. The test markets are in Ethiopia and Iraq where Ikea has worked with the United Nations High Commission on Refugees and other groups to create set-up-youself shelters for Syrian refugees. Gandhi-ji would no doubt approve.

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