Many globally popular and successful companies and brands have struggled to adapt and adjust to India. Deploying a playbook that has worked elsewhere in the world is a surefire recipe for failure here. Kellogg’s is a classic example of a brand that struggled for years to get Indians to adopt Western breakfast habits. A McDonald’s or a Domino’s, on the other hand, brought in the aloo tikki burger and paneer toppings on pizzas to become more relevant to local tastes. Another iconic brand is now realising what works and tweaking its strategy accordingly. This piece by Samar Srivastava in Forbes India is also instructive in how great franchises think about and build competitive advantages.
For four decades Ikea’s model was in offering its customers not just a shop, but almost a day out. People set aside a Saturday, drove to a vast blue-and-yellow shed on the edge of the city, wandered through a maze of mocked-up living rooms and tidy kitchens, ate a plate of meatballs, and left with a trolley of flat-packed furniture. That formula travelled seamlessly from Sweden to North America and on to China, and it arrived in India intact in 2018, when Ikea’s first store opened in Hyderabad across more than 400,000 square feet, built for families to spend an entire day in.
The trouble, as Srivastava puts it, was not that the model was broken but that the customer had changed. Ecommerce had quietly rewired how Indians shop for furniture: they now research on their phones, want to see a product in the flesh, and expect it delivered home in days rather than hauled out of a warehouse themselves. Rapid urbanisation and worsening traffic only sharpened the shift – a Saturday pilgrimage to the city’s edge is a harder sell when the city’s edge is a two-hour crawl away.
Ikea’s response amounts to one of the boldest rethinks it has attempted anywhere in the world. Rather than wait for Indian consumers to adapt to Ikea, it is adapting Ikea to them. Patrik Antoni, who runs Ikea in India is leading this change and his new mantra is that the brand should be “one click, or 30 minutes away” – reachable whether you fancy a weekend at a flagship store, a browse in a neighbourhood store or a purchase made entirely on the app. The old model put the giant warehouse at the centre of the universe, holding the whole catalogue and every customer relationship; the new model makes the customer the starting point and treats stores, ecommerce, fulfilment and digital planning tools as one connected system. In practice that means a hub-and-spoke network. Big destination stores still anchor the major cities, supported by a growing network of smaller city stores, planning studios and neighbourhood formats. In Delhi for example, two large stores are coming up in Gurugram and Noida and will be supported by compact outlets each serving their own catchment rather than one mega-store straining to serve them all.
There is a lesson here for anyone who thinks about competitive advantage for a living. Ikea’s moat was its format. The scale, the economics of flat-pack products and the theatre of the destination store. What the India experiment shows is a management willing to dismantle its own source of advantage before the market does it for them. The idea is to protect what matters – the brand and the customer relationship. The smaller stores are being reimagined not as warehouses but as showrooms, where you might plan a kitchen with a specialist and complete the purchase online later. As chief commercial officer Adosh Sharma frames it, the aim is not to pit ecommerce against physical stores but to have each strengthen the other.
The harder half of the job, Srivastava writes, has been making the stores feel Indian. Here Ikea has taken a different route from the brands that came before it. Where McDonald’s reworked its menu and Domino’s its toppings, Ikea has largely left its product range untouched, tailoring instead how those products are shown, arranged and located. Even that has demanded unusual effort from a company that worships standardisation. Ikea has conducted hundreds of home visits to study how Indian families cook, store and share space, on the principle that it is solving everyday problems rather than merely selling furniture. The results surface in small, telling ways: foldable tables and modular storage for cramped Mumbai flats, more expansive settings for larger Hyderabad homes, prayer areas worked into room displays, and kitchens arranged around Indian cooking and its outsized utensils.
Another challenge in adapting to India has been the local real estate markets. Even in its smaller format, Ikea needs far more space than a typical mall tenant. “For big retailers like Ikea, getting the right space is not always easy,” says Anuj Kejriwal of Anarock. The chain “typically requires 1,000 to 3,000 sq m and sometime – and often much more, like its 1.2 lakh sq ft lease in Bengaluru,” and “landlords usually design such spaces at the project stage rather than retrofit them later.”
Developers are enthusiastic. “Ikea’s move towards smaller stores seems to be a wise strategy given the move towards online purchases by consumers,” says Nirzar Jain of Nexus Malls, noting that it also “brings in some excitement for mall owners and operators as this is not a format that was earlier present in malls.” The pull of a big-format tenant runs deep: “Large-format retailers are seen by mall owners as anchor tenants, and whole wings or floors are often designed around them,” Kejriwal adds, since such anchors “bring in footfall, which benefits smaller shops in the vicinity.” The catch is supply – “Grade A mall stock in India is still limited, which pushes rentals up and delays rollouts,” he says – though Ikea’s drawing power lets it bargain rents down in return for long leases. Its site-picking, meanwhile, has turned almost forensic, slicing metros into micro-markets (Mumbai alone represents several such markets) and weighing demographics, incomes, commuting patterns and even future metro lines years before a store opens.
For a firm still running only a handful of outlets, the ambition is striking. From seven customer touchpoints today to around 30 by 2030, and a plan to quadruple the India business over the next four to five years, from revenue of Rs1,749 crore in FY25. Ingka Centres, which owns the property, is backing this with more than Rs10,000 crore of mixed-use projects in Gurugram and Noida. India matters to Ikea well beyond the shop floor, too. It already exports more than €400 million of goods a year from here and houses technology centres serving the group globally. But it is the time horizon that ought to catch a long-term investor’s eye. India is, on Ikea’s own telling, one of just three global “breakthrough markets” alongside America and China. After seven years spent mostly learning how Indians actually live, the company is content to keep playing the long game. “We’re building Ikea in India for the next 50 to 70 years,” Antoni says. “This isn’t about the next five years.”
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