Ikea Opens Its First Store in India and Bets Localization Will Win Over the Middle Class

August 9, 2018, 9:55 AM UTC

Nothing marks your arrival in the middle class quite like that first trip to fill up the car at Ikea. Now Indian consumers can experience the joys and frustrations of navigating a flatpack furniture-filled fluorescent labyrinth of their own.

Ikea opened its first Indian store on Thursday in Hyderabad, part of a $1.5 billion investment in the country with 25 stores planned. It is tweaking its offerings to suit Indian tastes, from selling rice cake makers to partnering with local assembly contractors to reach consumers who are more familiar with ordering custom furniture from a neighborhood shop than deciphering cartoon assembly instructions and wielding Allen wrenches.

Rethinking its products to match local habits is nothing new for Ikea. In fact, it’s a long-practiced approach that Fortune profiled in this 2015 feature. “Ikea, it seems, is a genius at selling Ikea—flat packing, transporting, and reassembling its quirky Swedish styling all across the planet,” Fortune reported at the time.

Indian worker prepares chicken meatballs at the restaurant section of the new IKEA store in Hyderabad, (NOAH SEELAM/AFP/Getty Images)
Noah Seelam—AFP/Getty Images

When it comes to adapting the Ikea model to India, the stakes are incredibly high.

India’s middle class may number in the low hundreds of millions of people, depending on how you count it, and its growth is on par with China’s.

But earlier this year The Economist warned that many multinationals have been disappointed by India’s consumption patterns. The explanation may be inequality: too much of India’s middle class is still just over the poverty threshold and isn’t yet willing to cough up for a Netflix subscription or chicken meatballs with lingonberry sauce. Too much of India’s growth may be going to the 1% there, which control some 22% of the country’s wealth.

Ikea has tweaked its traditional menu at the Hyderabad store to meet the tastes of Indian consumers. (NOAH SEELAM/AFP/Getty Images)
Noah Seelam—AFP/Getty Images

Local sellers may also offer resistance to multinational intrusion, as they did when Walmart acquired 77% of Flipkart, an Indian e-commerce giant, earlier this year.

In what may be a nod to the challenges of the market, it reportedly took Ikea some 12 years to finally get the stores’ doors open.

So there’s your labyrinth, Ikea. Checkout is that way. Or is it that way?


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