IKEA and its India connection

Ingvar Kamprad is the 5th richest man in the world with a $22 billion fortune. The seed-bearer of such wealth? The INGKA foundation. At worth $36 billion, it is estimated to be the wealthiest foundation in the world (beating the Bill and Melinda Gates foundation) and is also the owner of IKEA.

Cite IKEA on any street in the US, Europe, Canada or Australia and chances are that you will barely find anyone unaware of this brand. It is a household name across the major markets where it operates. What does it do? Well, it sells furniture.

But its popularity lies somewhere else; in its USP. IKEA sells self-assembling furniture, which means that you have to put together the various parts of your furniture that it supplies in a dismantled form. This kind of business model makes the furniture cheap, reduces packaging costs and saves fuel consumption associated with shipping assembled furniture. As IKEA folks say, 'we don't like to ship air!'

IKEA publishes a yearly catalogue which depicts all its designs of household items across the board, from built-up kitchens to dining rooms, bedrooms; you name it! And the best part is, you can walk into a store and access the catalogue or even browse it online; IKEA makes good use of its catalogue as a marketing tool. It is due to this contemporary set of designs, combined with its rock-bottom prices, that IKEA and its publications have developed a cult-like following among people. And from this cult-like following comes its India connection.

Although IKEA stores have yet to arrive in India, its catalogues are sold by street hawkers and bookstores in many major cities across the country. With this, the Great Indian Mind starts working. Mighty impressed by IKEA's minimalist style, people enjoy the Swedish company's designs by hiring locals to make knockoffs. And that too at a fraction of its cost in the West. IKEA is aware of such infringement in many countries, but it cannot do much anyway.

There was a ray of hope for IKEA fans in 2006, when the company announced plans to open its first store in India by 2011. But as seen recently, talks with the government fell through over relaxations in FDI norms for single-brand retailers, thereby forcing IKEA to indefinitely postpone its India plans.

Meanwhile, locally made knockoffs of IKEA furniture continue to grow incessantly in many Indian households.

-Sumeet Seth (sumeets29@gmail.com)