International business of ikea
Product designs from Ikea are remarkably country-neutral. Consumers are ready for new brands and products, but they should fit in their pocket. The industry also lacked new technologies and they viewed the firm as an opportunity to acquire such technologies.
Why ikea failed in china
But it had to customize its products based on local needs. IKEA will likely have hopes of attracting India's urban middle-class buyers who are keen on decorating their homes with stylish international brands. The European headquarters' excitement to enter new markets with proven best practices is something of the past, proving that the real shift in the global mindset is to recognise that local versus global can bring optimum results. It understood early on that Chinese apartments were small and customers required functional, modular solutions. The main problem for IKEA was that its prices, considered low in Europe and the US, were higher than the average in China The company realised this and started targeting the young middle-class population. There always will be local manufacturers who will have a lower cost structure. Like IKEA the company offered stylish products at low prices. This was a massive change in strategy, as IKEA was targeting the mass market in other parts of the world. Price-sensitive Chinese consumers seem to be annoyed when asked to pay extra for plastic bags and they did not want to bring their own shopping bags.
All this proved difficult to implement in China. Almost from the start, international expansion was part of the strategy, not an afterthought, as it has been for some retailers that, having saturated their native countries, then looked around for what to do next.
Shortly after, the company started its foreign expansion into European markets in deprived of any local adaption to these markets.
Although IKEA had made a good fortune in the Sweden market, moving capital from the country was a challenge. Targeting this segment helped IKEA project itself as an aspirational western brand.
Customizing Retail Strategy IKEA spent years researching the Indian market, where it conducted a study on how people live, how they furnish their homes, what are their needs, etc. The company made slight modifications to its furniture to meet local needs. The China expansion came at a cost. This is not just an American thing, either.
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