IKEAs

plans to
enter India
International
Distribution

Nikhil Garg
Lov Loothra
Emilie Perrussel
Anne-Laure Laclau
 SUMMARY

Summary
I. Presentation of the company
II. IKEAs General distribution strategy
III. IKEA in India: 3 possible strategies
Plan A: Leverage the Global Production &
Distribution Network
Plan B: Setup a Production & Distribution centre
Plan C: Identify established player for a Joint
Venture
IV. Suggestion
V. Conclusion
 I. Presentation of IKEA

IKEA
Founded in Sweden (1943); HQ in Netherlands
Privately held, international home products
company
Specialized in affordable self-assembly
furniture
338 stores in 40 countries in 2012
27,5 billion turnover of which
80% made in Europe
15% made in the US
Only 5 % in Asia!
 I. Presentation of IKEA

The IKEA Vision

Offer well designed, functional home
furnishing products
Low prices in order to ensure
affordability by most people

The IKEA VISION guides the way IKEA

products are designed, manufactured,
transported, sold and assembled
 II. Distribution strategy

Hallmarks of IKEAs
Distribution
 II. Distribution strategy

Distribution Statistics
27 distribution centers
11 customer distribution centers in 16
countries
41 trading services offices in 30
countries
1380 suppliers in 54 countries
Most supplies purchased from Europe
9500 products
 II. Distribution strategy

Success Factors
Sourcing materials close to the supply chain
to reduce transport costs
Building DCs closer to seaports so that it can
use more of ocean transport and less of road
transport
Delivering products directly from the supplier
to IKEA stores to cut handling cost, reduce
road miles and lower the carbon footprint
Warehouse attached to retail stores
 II. Distribution strategy

Success Factors
Using flat packs: reduce costs through
reduced transportation expenses, lowered
storage space requirements, decreased
transportation damage and reductions in
labor costs
Transporting goods where possible by rail and
sea
Utilizing fuel-saving techniques that allows to
be cost-effective and environmentally
friendly
 II. Distribution strategy

Success Factors
Implementing JDA supply chain management tools
JDA Demand
JDA fulfillment
Advantages:
Consolidated suppliers base, helps focus on low cost
suppliers
Improved forecast accuracy to drive profits
Cost saving due to long term commitments achieved
from near accurate forecasts
Increased overall supply chain visibility
Better coordination in sales, capacity and distribution
 III. IKEA in India: 3
possible strategies

Foray into India

On 21st January 2013, Indias Foreign
Investment Promotion Board (FIPB)
provided its clearance to IKEA to invest
in India

Ikea
plans to open 25 stores, investing
about 1.5 billion over the next 15 to
20 years
 III. IKEA in India: 3
possible strategies
Distribution Challenges in
India
 III. IKEA in India: 3
possible strategies

Ikea Design vs. Indian typical

style
 III. IKEA in India: 3
possible strategies

Plan A
Leverage the Global Production &
Distribution Network
Pros
Already established: no initial setup costs
Reliable
Consistency of Quality
Cons
Costly
Decreased viability in the long run
Legislative constraints
 III. IKEA in India: 3
possible strategies

Distribution Center
(China)
Rail / Trucks
Swedwood
Production Multimodal

Center
(Europe)
European
Suppliers
Retail Stores/ Multimodal
Warehouse
(India)

Indian
Suppliers
Personal
Vehicles
Personal
Vehicles

Plan Customers

A
 III. IKEA in India: 3
possible strategies

Plan B
Setup a Production & Distribution
center in India
Pros
Easy to meet local demand
Better coverage possible
Will create jobs for locals
Cons
Huge initial time and cost
Infrastructure can be a hindrance
 III. IKEA in India: 3
possible strategies

Distribution Center
Huge (India)
Initial Indian Rail / Trucks
Cost Production
Center

Rail / Trucks

Retail Stores/
Warehouse
Rail / Trucks
(India)

Personal
Vehicles

Indian
Plan Suppliers
Customers

B
 III. IKEA in India: 3
possible strategies

Plan C
Identify established player for a Joint
Venture
Pros
Can leverage contacts/infrastructure of the
partner
Valuable insights and experience into an
untapped but growing market
Cons
Imbalance of expertise and/or investment may
create conflicts
Initial establishment of a working model may
prove to be difficult
 III. IKEA in India: 3
possible strategies

Distribution Center
(Indian Partner)
Rail / Multimodal

Production Rail / Multimodal

Center (India /
(Partner)
Europe)
European
Suppliers
Rail / Multimodal
(Partner)

Retail Stores/
Warehouse
Rail / Multimodal
(IKEA +
Indian Partner)

Personal
Vehicles

Indian
Plan Suppliers
Customers

C
 IV. Conclusion

Conclusion
Our distribution plan suggestion

Exercising patience

Therefore,a well-developed strategic

plan with both short-term and long-term
goals is extremely important to finally
be successful in a huge, diverse, and
fast-growing country as India
 REFERENCES

References
1. TREBILCOCK Bob, "IKEA: Think global, act local for warehouse
distribution", Modern Materials Handling, 25 August 2011
2. SHARMA Amol, HANSEGARD Jens, IKEA Says It Is Ready To Give
India a Try, The Wall Street Journal, 24 June 2012
3. SHARMA Malavika, IKEA India Plans Give Scant Reassurance to
Foreigners, Bloomberg, 10 January 2013
4. ROY Rajesh, AHMED Rumman, Indian Agency Clears IKEA's
Proposal to Open Stores, The Wall Street Journal, 21 January 2013
5. DAS Sohini, "Local players give thumbs up to IKEA's entry in
India", Business Standard, 28 January 2013
6. http://www.youtube.com/watch?v=11AehTPD-Vg
7. http://franchisor.ikea.com/about.html
8. http://www.swedwood.com/about-swedwood/
Thank you for your
attention!