How IKEA is Accelerating its India Growth Journey by Adopting Digital Technology

When it comes to IKEA, the digital transformation is the key and at the same time it is very important for us, but, everything the brand is doing on the digital front hinges on omnichannel making IKEA more accessible to the consumers.
How IKEA is Accelerating its India Growth Journey by Adopting Digital Technology 
Kavitha Rao

The pandemic has accelerated digital adoption amongst consumers across the globe. This in return has changed the way consumers shop and interact with the brands. Now they want everything within the reach of just a click of the button. And to match these ever-evolving consumer needs, the brands are transforming their growth journeys by foraying into the digital space.

One such brand is Swedish furniture giant IKEA which started its e-commerce journey in July 2019 by launching its online operations in Mumbai. The next stop for the brand was Hyderabad, where it opened its store in 2018. Then over time, it forayed into Pune market and started looking at the other opportunities based upon its fulfillment capabilities like Gujarat. Recently, it has launched its e-commerce operations in Bengaluru. 

“Within the digital transformation journey, there are two important transformations we have looked at. One is how to reach our consumers through technology to make their journey comfortable and easy. This is what we broadly call consumer-facing technology. This is the space we have always looked at to make things better for them. During the pandemic, digital natives were shopping online, but we also saw digital non-natives were also trying the e-commerce platform for the first time. We wanted to make this experience better for both types of consumers. That's why we introduced concepts like personal shoppers, home-furnishing consultancy, even remote planning for people doing their home. So, we offered remote planning services for consumers in the context of kitchen planning or wardrobe or bedroom planning. At the same time, we also looked at how we can improve the features of our website. We also looked at how do we improve the search feature, product discovery along with the functionality of the website. We have also introduced new planners which customers can try on their own. There is also a big transformation that is underway both globally and in India, which will help us create an even stronger backbone and give us a lot of flexibility when it comes to our fulfillment capability,” Kavitha Rao, Country Commercial Manager, IKEA explains. 
“When it comes to IKEA, the digital transformation is the key and at the same time it is very important for us, but, everything we are doing on the digital front hinges on omnichannel making IKEA more accessible to the consumers,” she adds. 

Launching Region-Specific Online Stores

India is a big country with millions of people living in different cities. It is going to take some time for IKEA to penetrate and be present in more markets.

“Sometimes it is very easy to talk about the PAN India expansion but it also very important to also to realize that India is a large country when we talk about urban India alone, we are talking about over 500 million people/ consumers that we can actually reach out to,” she asserts.

“The second important aspect is related to the affordability of the home furnishing. It has always been our endeavor to keep the costs low to make sure that the product plus the service is very affordable and as far as possible the lowest price in terms of different functions within home furnishings that we offer,” she adds.

Apart from this, IKEA uses a mix of centralized fulfillment as well as store-based fulfillment options, therefore it is very important that it has a physical presence in order to fulfill the demand that is coming on the e-commerce front.

“Home furnishings always come with services like delivery, assembly and installation and Indians are not DIY-friendly. Hence, we need to look at the option where consumers have a choice where they do want to DIY they can do that or if they need services to be provided to support them in that assembly, they should be able to leverage that as well,” she states.

“Finally, when it comes to more complex systems such as kitchens and wardrobes, the support of interior designers is needed. So, when we have to offer the complete array of home furnishing products under one roof, we need to take a step-by-step approach,” she further adds.

Incorporating Technologies like AR and VR 
IKEA globally has done the acquisition of Geomagical Labs and the idea is to bring AR/ VR capabilities and AI capabilities along with it, in terms of how people can actually visualize spaces and how IKEA's furnishing and furnishing products fit in the consumer's home.

“Over time our ambition is for such features to be available on IKEA App. But this is also a journey we are onto. We also need to look at the technology available to reach more people with features around AR/ VR. In the home furnishing category, we see this as a relevant functionality for consumers who are using digital and online as a predominant way to interact with the brand,” Rao states.

Apart from this, going ahead, IKEA is looking at how it can in a good fashion combine human capabilities/ support along with technology to bring the right experience to consumers. 

“In the context of home furnishing, we have seen that even if you can make a decision online, people would make a level of confirmation with somebody who has experience in this space. This can never be a technology solution, and it has to be a human one. We have mapped out different consumer journeys and looked at what aspects of the journey can be improved. In other cases, we have bespoke technologies like planners we use, which are developed mainly by us, taking into account aspects of how furniture modularity really works. That technology is available to consumers through the web. Over time, there will be better renderings on the front end, better experience that we constantly look at, maybe better algorithms that are supporting customers in terms of research features and so on,” she explains.

Overcoming Challenges
Last-mile is always challenging and in the context of home furnishing it is important to realize that it is not just a parcel delivery, it is about truck deliveries which mean there are times you need to meet people to get a product to a consumer's home. 

“In addition to that, there are always some challenges; in the Indian context, we come across narrow lanes where a truck is unable to enter, there are apartments that don't have elevators, and with COVID, there are various precautions that are necessary for us to take care of. So it is not easy. It is important to take into account real last-mile challenges that are there in this category,” she shares. 
“In IKEA, we also try to bring sustainability factors. One of the key questions in front of us is how we can move to EV in the last mile and what we can do to cut emissions in the last mile moving to cleaner energy options. So there are many dimensions we need to look at when it comes to the last mile and really making a particular piece of furniture available to our consumers,” she adds.

Apart from this, on-ground realities and varying spends on home furnishing in a market like India have been few other challenges for IKEA.

IKEA is new to the Indian market and still on the learning journey regarding what works and what doesn't. Timelines have been a challenge. It is important for consumers to understand the value propositions that we bring to the market. Even bigger aspect is the spend on home furnishing in a market like India, which varies across the consumer segment. It can be as low as 2 percent and as high as 6 percent today with an average of 4-4.5 percent, which is still far lesser than what other consumers in other markets spend on home furnishing. We need to explain to the consumers why home furnishing is equally important,” she asserts.

Future Plans

In the future, IKEA is planning to open more large-format as well as small-format stores along with expanding its online presence.
“It is about what is right in a particular location in a city. If you look at Navi Mumbai, we identified the land parcel, bought it, constructed the store, and operated from it since December 2020. This always means that in Mumbai, a city of 25 million people, there is also an opportunity for us to have more than one IKEA store, which is also why we are looking at the small-format stores and, in the future, large-format stores. So then, we have a good ecosystem of multiple stores. Eventually, we intend that a consumer can reach IKEA within 30 minutes from their home,” she concludes.

Kavitha Rao