Feasibility of Ikea in India - Market Research 2014

MINOR PROJECT REPORTFEASIBILITY OF ENTERING THE CONTEMPORARY FURNITURE MARKET FOR IKEASubmitted byTrishala KumarA0101913042MBA Class of 2013-2015Under the Supervision ofMs.Bandana ChadhaAssistant ProfessorDepartment of International BusinessIn Partial Fulfillment of the Requirements for the Degree ofMaster of Business Administration (General)AMITY BUSINESS SCHOOLAMITY UNIVERSITY UTTAR PRADESHSECTOR 125, NOIDA - 201303, UTTAR PRADESH, INDIA

DECLARATION

The title of Minor Project is Feasibility of Entering the Contemporary Furniture Market For IKEAI declare that (a) the work presented for assessment in this Minor Project is my original work, that it has not previously been presented for any other assessment and that my debts (for words, data, arguments and ideas) have been appropriately acknowledged; (b) work conforms to the guidelines laid by the University, and (c) Plagiarism for this report has been checked using small seo tools software and is 91 % unique. The summary of report is attached along with for reference. Date: 20th March 2014 Trishala Kumar A0101913042 MBA General (Class of 2013)

CERTIFICATEThis is to certify that Trishala Kumar student of Masters of Business Administration General at Amity Business School, Amity University Uttar Pradesh has completed the Minor Project on Feasibility of Entering the Contemporary Furniture Market for IKEA, in Partial Fulfillment of the Requirements for the Degree of Master of Business Administration General under my guidance.The report has been checked for the plagiarism and it is acceptable.

Ms. Bandana ChadhaAssistant ProfessorDepartment of International Business

ACKNOWLEDGEMENTI would take this opportunity to express my sincere thanks and deep gratitude to my program leader and mentor Ms.Bandana Chadha who extended her wholehearted co-operation and has helped me in completing this company report on Feasibility of Entering the Contemporary Furniture Market for IKEA, successfully. I would like to express my gratitude towards my mentor, who guided me throughout the creation of this minor report by clearing our doubts and providing full co-operation regarding the meetings and communication. Her guidance assisted me in every way possible and hence there was no confusion regarding the submission of documents and reports till the end. In all I found this experience enriching and informative. This is all because of the industry specific curriculum designed by our respected Director Dr.Sanjeev Bansal sir and the senior management at ABS. Compiled By: Guided By:Trishala Kumar A-20 MentorMBA General 2013-2015 Ms.Bandana Chadha ABS Asst.Professor Amity Business School

TABLE OF CONTENTS

ABSTRACT6 IKEA ENTERING INDIAN MARKETS6INTRODUCTION7 ABOUT IKEA7 TRENDS IN THE RETAIL INDUSTRY : FDIs IMPLICATIONS8 THE FURNITURE SECTOR IN INDIA: CURRENT SCENARIO9 FACTS ABOUT THE INDUSTRY10RATIONALE 11LITERATURE REVIEW12 CONSUMER PERCEPTION12IKEA ETHICS IN THE BUSINESS14RESEARCH METHODOLOGY16 RESEARCH OBJECTIVE16 TYPE OF RESEARCH16 SAMPLING TECHNIQUE16 QUESTIONNAIRE DESIGN17 PROCEDURE USED17DATA ANALYSIS18 DESCRIPTIVE STATISTICS18 INDEPENDENT SAMPLE T-TESTS44 CROSSTABULATIONS48CONCLUSION62 FINDINGS58 RECOMMENDATIONS62REFERENCES63APPENDIX65 QUESTIONNAIRE65

ABSTRACTIKEA ENTERING INDIAN MARKETSAnand Sharma, Indias commerce and industry minister met with the Swedishhome-warecompany IKEAs CEO M Ohlsson in St. Petersburg in the month of July 2012. Theyre agenda: to discuss the investment prospects of IKEA in India after the news about the relaxation of rules that had been guiding FDI in single-brand retail.The government of India hadincreased the FDI cap for the investments in single-brand retail from 51% to 100% last year, which was subject to the clause that 30% of the sourcing had to be from the various domestic , small and medium enterprises (SMEs) (and up to $ 1 million investment was to be made in plant and machinery). After stalling its India-entry plans due to the 30% local sourcing clause that was defined by the Indian government, IKEAwill now finally enter the Indian retail sector with an investment of 1.5 billion.This deal makes IKEA the largest foreign investment in Indias retail sectorand gives the country a much needed boost in investor confidence that has been quite low due to the lack of important reforms by thegovernment to handle the various failings in the Indian economy.This research will determine the feasibility of a brand like IKEA, in the Indian retail furniture sector. IKEA has already been sourcing many products from India and has been a major source responsible for the growth in Indias exports in this sector. This study will help identify the major factors that affect the consumer perception towards a contemporary brand like IKEA. It will also focus on the competitive advantage that IKEA has over its Indian counterparts and how does its future look like with the entry of various Indian companies into the furniture store concept for home dcor. Does it have what it takes to attract the Indian customer base with so many options to choose from? What is the target market of IKEA in India? All these questions will be looked upon to search for a broader answer that can focus on the companys strengths and weaknesses in a volatile market like India.

INTRODUCTION ABOUT IKEAIKEA was founded in Sweden by Ingvar Kamprad, a man who was known for never showing off his money and not spending it onunnecessary products to attain a materialistic lifestyle. Such was his dedication towards the optimization of resources.Ingvar Kamprad shaped the value system of IKEA.Since its 1943 founding in Sweden, its business idea is "To provide a wide array of well designed and functional home furnishing products at prices so low that as many people as possible will be able to easily afford them. The IKEA concept is based on their market positioning statement Your partner in better living. We do our part, you do yours. Together we save money. Anderson Dahlvig, former CEO of IKEA, wrote in his book The IKEA edge that in all the countries and social systems be it in the eastern or western region, there is a very large part of all resources that are being used tosatisfya small part of the population. He said that in their line of business for instance there are too many new and beautifully designed products that only a small group of people with some particular standard of living can afford. IKEAs aim has been to change this kind of situation. The company has been trying to eliminate all the status symbols and thus create a trustful and worthwhile relationship between its employees and managers. This has made a considerable difference to many workers and it has helped to entice them to stay with the company even when other firms offer them more.IKEA might use a lot more of its Indian vendors for its various global needs.In Russia for instance, around 40% of all IKEA products that are sold are produced in Russia.Another case where more than 50% of the units sold in China are produced in the country itself. This can thus be seen as a pointer to IKEAs India operations and its strategies here.Though India is not very rich in its resource of natural wood, IKEA could help form new non-woodcategories like outdoor patio furniture, garden range etc.A huge number of these vendors will be small and medium sized enterprises. This will thereforehelp in creating many manufacturing jobs at the bottom end of the pyramid.IKEA has been one of themost trusted and ethical retail brands in the world. It has been designing and delivering products that help improve the lifestyle of the many and has combined this power with sustainable job creation to devise the best way to tackle poverty.TRENDS IN THE RETAIL INDUSTRY FDIs IMPLICATIONS Emergence oforganized retail Increased expenditure capacity of youth of India. The per capita income of Indian citizens has doubled between 2000-01 and 2009-10 resulting in improved purchasing power. Change in the mindset of traditional customers Easy customer credit. Higher brandconsciousness

FIGURE 1

[footnoteRef:2] [2: Source: Deloitte Retail POV Indian Retail Report Changing with the changing times;IBEF report;]

THE FURNITURE SECTOR IN INDIA: CURRENT SCENARIOGenerally the need for furniture is mostly these four areas: Domestic Office Hotel Furniture parts

India, as we know is the land of marvelous cultural artistic works. It is also named for its tradition and handcrafts. It has established its reputation and strength in the field of wood crafts and furniture and the companies in this sector are utilizing this strength rapidly. The antique works with the keen designs and the sculpting works are the lead that has fast established its part in furniture and wood works. FIGURE 2

[footnoteRef:3] [3: KPMG Analysis]

The furniture industry in India is mostly considered as a non organized sector, with handicraft production accounts for about 85% of the furniture production in India. The industry is set to grow by 20 percent in the near future. The furniture industry has transformed itself to a great pride for the nation as it holds a magnificent impact for its fine arts and marvelous works.

The furniture industry in India is both an organized and a non-organized sector. The furniture segment comprises of 65 percent of the home market and 35 percent of institutions. The whole of the home dcor category furniture accounts for about 68 percent of the share while the remaining 32 percent comprises of furnishing and home investments.

FACTS ABOUT THE INDUSTRY The market share of the wooden furniture market in India is around Rs 60 crore (Rs 600 million). The world home furniture market share is worth Rs 20,000 crore (Rs 200 billion). It has been seen that during the past three years, it grew steadily by 20 per cent a year. Manufacturers present in India are generally using a three-tier selling and distributing structure that is comprising of the following :- the distributor, wholesaler and retailer. In India, the current imports are mainly from Italy, Korea, Malaysia, Indonesia, Germany, Spain, China, the Philippines and Japan. The furniture sector in India is primarily concentrated in A, B and C cities around 589 in number. It has been anticipated that the main 784 urban centers contribute around 41 per cent to the total consumer furniture market share. The A and B type cities together comprise of 33 per cent of the total market. The furniture sector in India only makes a minor contribution to the development of GDP, representing just a small percentage (about 0.5%).

RATIONALE

Conventional market research study is extremely dependent on prejudiced consumer report. That is, the information that advertisers, marketers, and publishers get to know about the consumersis based on what the consumers say. Consumers talk about what they are feeling, thinking, and doing with regard to the many brands. However the customers may not be consciousofallthat they are thinking about a brand. Hence Consumer Perception about a new furniture brand like IKEA with high international standards and an all together different perspective would be something new to analyze and study.

This research focuses on the feasibility of a contemporary brand like IKEA in Indias market. As there is a demand for branded furniture by the modern citizens, a one stop furniture store with high quality assurance may attract the Indian consumers. Design, appearance, and quality apart from the price are the main competitive area for the companies. Therefore, while considering the strategies of IKEA in India, it is always a dilemma to what extent their homogeneous product could be offered unaltered and whether the company needs to be able to adapt to the local market tastes.

LITERATURE REVIEWCONSUMER PERCEPTION The purpose of this research is to determine how the IKEA Indias entry into the market will be welcomed by the customers and how will they react to this new concept of furniture retail. More significantly, it will try to analyze how the customers will perceive the IKEA concept of furnishing stores, the service that they will be given and the products they are presented. The definition of perception can be defined as the process by which an individual selects, organizes and construes stimuli. Perception is the ability to take up something through the many different senses. It can be through any of the following i.e. hearing, seeing, touching or smelling. The sensory urge of the human system deliberately registers an event in the human memory. These stimuli are filtered and attuned to become an individuals own view of the world. Even though exposed to the same thing, in the identical environment, two people will never experience the same. (Schiffman and Kanuk, 2000). We reside in a world presently, where we are daily exposed to millions of dissimilar stimuli, unusual sounds, tastes, sights smells, and textures. Our brain can only take in and processes a very small number of all these stimuli. (Solomon, Askegaard , Bamossy, and Hogg, 2006) Zeithaml (1988) said that perceived value is very subjective and individual and it is poles apart from one customer to another. After consolidating four consumers' terminology of value, she defined perceived value as a customers on the whole assessment of the usefulness of a product based on the perception of what is received and what is given. A customer may also evaluate the value aspect of the same product differently with respect to various different occasionsIn simple terms, value can be and has been referred to as the difference between perceived benefits and costs. However, whatever constitutes value appears to be vastly personal, distinctive, and may be different in a significant way from one customer to another (Holbrook, 1994; Zenithal, 1988). Research evidence suggests that those customers who perceive that they have received value for money are more content than the customers who did not perceive that they received "value for the money" (Zeithaml, 1988)However, Anderson, Fornell & Lehman (1996), on studying the relationship between customer satisfaction, profitability and market share, proposed that value will have a direct impact on how satisfied customers are with the suppliers. Similarly, Fornell, Johnson, Anderson, Cha & Bryant (1996) used the construct perceived value as the supposed level of service quality relative to the price that is paid.

The concept of customer perception is formed by the customer experiences, how they look at the service they are presented with and eventually by whether they actually are pleased with their experiences or not. Eventually, the victory of the business is settled by how greatly the image of the store and the products that the store is selling, meet the consumers expectations. (Porter, Claycomb 1997)

A Norwegian study by Solvang (2007) discovered that the customer service within the furniture retail business is of immense importance. Compared to various other retail industries, e.g. the grocery industry, clothing industry etc, the aspect of service is much more critical for success of a business within this sector. In furniture stores, customers generally depend much more on the service and advices provided by the staff than in other kind of stores, which are to a vast extent self-service oriented. The whole perception process is formed by three stages, the exposure stage, the attention stage and the interpretation stage. The brain captures the stimuli in the attention stage and interprets the stimuli according to various filters like our previous experiences and desires, in the interpretation stage. In the end, these three stages shape our perceptions. (Solomon, Bamossy, Askegaard and Hogg, 2006)

It is therefore not surprising that the perception of customers with respect to the service and the image of furniture stores are closely linked to the parameters of customer loyalty and satisfaction. (Solvang 2007) Attitude towards the customer and a customers perceptions are always directly proportional and important. By knowing and understanding the customers perception, how they perceive prices, location, service, products, and cleanliness, customers contentment and in due course the success of the business can be affected especially in case of small businesses.

IKEA ETHICS IN THE BUSINESSThe IKEA aim is to construct an improved daily lifestyle for the numerous people.This comprises of doing what the firm can to help create an environment where they can take care of the earths non-renewable resources, and also each other. The company understands that this uninterrupted development is a day to day job, and that they themselves are in most cases, part of the problem. However they have been working a lot to be part of a solution. The unobtrusive, light weighted designs that the firm has pioneered mean that the amount of materials used in the creation of each item of furniture is less, while also reducing the amount of emissions generated in transporting them. As the designs can be easily assembled at home, this also helps in cutting emissions - by dipping the number of automated assembly lines that IKEA requires. This also helps in lowering the cost of the manufactured furniture. IKEA as a firm is heading towards powering all of its stores with renewable sources of energy. It has been working to slash its power consumption amounts since 2005, though it is yet to create a deadline for their targets. [footnoteRef:4]FIGURE 3 [4: http://www.IKEA.com/ms/en_US/about_IKEA/pdf/sustainability_report_fy11.pdf]

IKEA aims to decrease or totally refrain from the usage of chemicals and other harmful substances that can be hazardous to people and even the environment, by picking out better alternatives wherever it is possible. Water-based and UV-based lacquers are the base for IKEA products. The company has strict limits for the levels of formaldehyde. It permits the use of PVC only in certain electric leads. Freons (CFCs) that are harmful with respect to global warming have not been used to make their products since the year 1992.The company does not use illegally felled wood i.e. deforestation or any kind of wood from intact natural forests. This is one of the main conditions that IKEA stresses on its suppliers of solid wood. The suppliers must be able to provide the origin of their wood. IKEA even has its own forest specialists. These people are those who work in the field and are close to both the suppliers and forests. Their most significant chore is to encourage expansion towards extra responsibly managed forests by spreading knowledge about the ill effects.

RESEARCH METHODOLOGYRESEARCH OBJECTIVEThis objective of this study aims to address the feasibility of IKEA entering Indias market. The study is to identify the consumer perception towards a contemporary furniture brand. It will look into how they decide the selection of a store to purchase their furniture. It will also look into the comparison of such an International brand with the home brands. It will focus on the analysis of the following factors associated with the success of a brand in a huge market like India: To understand the perception of consumer towards a contemporary furniture brand like IKEA in Indian market. To find out the level of awareness about IKEA among various age groups of consumers. To determine how the following factors affect the attitude of consumers towards branded furniture stores like IKEA:

1. Design2. Price3. Quality4. Eco-friendly products5. Location 6. Brand Image7. After Sales Service8. Online presence

TYPE OF RESEARCH The study was done using descriptive research in which we have quantitative as well as qualitative data using a structured questionnaire.

SAMPLING TECHNIQUE In this research, the kind of sampling technique that was used was convenience sampling as the respondents were chosen according to the convenience by which they can be approached. In this research a sample size of 153 respondents have been taken into account.

QUESTIONNAIRE DESIGNThe questionnaire that was used in the research was created to focus on all the objectives that had been defined. The questionnaire was a structured questionnaire. The questionnaire comprised of 26 questions. These were close ended in nature.

PROCEDURE USEDSecondary Data CollectionThe first step was collection of secondary data. The secondary data comprised of the facts and figures related to the furniture sector in India. Questionnaire Design & AdministrationThe design of the questionnaire with respect to the objective that was set up was the next step. Questionnaire administration was the most important part as the respondents need to be aware of why they are being asked to answer the survey. The questions were close ended and the administration was done face to face as well as on the telephone. The region covered was NCR. The sample size was of 153.Primary Data CollectionAfter administration of the questionnaire the responses provided defined the primary data that was collected. This data would help in providing a picture about the consumers perception towards a given issue and the various factors that were stated in the objective.Tool UsedThe usage of SPSS tool to code and interpret data was the main part of the research. The tests included mean and standard deviation of data; cross tabulations and independent sample t-tests

DATA ANALYSIS

DESCRIPTIVE STATISTICSQ1. HOW OFTEN DO YOU BUY FURNITURE IN A YEAR?How often do you buy furniture in a year?

FrequencyPercentValid PercentCumulative Percent

ValidOnce9260.160.160.1

Twice5032.732.792.8

Thrice117.27.2100.0

Total153100.0100.0

INFERENCE

The data shows that around 60% of the sample purchases furniture only once during a year.

Around 33% purchase furniture two times in a year and only around 7% prefer buying furniture more than thrice in a year

Statistics

BedroomKitchenLiving RoomDining RoomOffice FurnitureOutdoor FurnitureChildren's PRoom

NValid153153153153153153153

Missing0000000

Mean1.381.691.251.681.851.881.76

Std. Deviation.487.466.433.468.359.331.426

Q2. WHAT KIND OF FURNITURE HAVE YOU BOUGHT IN THE PAST?

INFERENCE It can be seen that the mean value for bedroom furniture is 1.38 and living room furniture is 1.25 as it lies in the yes response section. The standard deviation for bedroom is 0.487 which is deviating from the higher response of no for furniture categories like outdoor and office furniture is also high showing it is more preferred.

The outdoor furniture has the least standard deviation and highest mean value of 1.88 depicting that the maximum number of negative responses has been received by it.

Q3. IS BRAND NAME AN IMPORTANT FACTOR FOR PURCHASING FURNITURE ?Is Brand Name an important factor for purchasing furniture ?


ValidStrongly Agree11474.574.574.5

Agree3925.525.5100.0

Total153100.0100.0

INFERENCE It can be seen that 74.5 % of the sample strongly favors brand name as an important factor that affects purchase behavior of consumer

There are 25.49 % that agree to this point. Thus it can clearly be seen that everyone in the sample is affected by the brand image during their purchase.Q4. HAVE YOU HEARD ABOUT IKEA SWEDEN ENTERING INDIAN BRANDED FURNITURE MARKET?

Have you heard about IKEA Sweden entering Indian branded furniture market ?


ValidYes4328.128.128.1

No11071.971.9100.0

Total153100.0100.0

INFERENCEThis tells us that around 72% of the sample is not aware of IKEAs future entry into Indian markets. Thus the level of awareness of IKEA is just around 28 % are aware of this brand.

Q5. IKEA IS A CONTEMPORARY FURNITURE RETAILER FROM SWEDEN. WILL YOU LOOK FORWARD TO THE OPENING OF IKEA SWEDEN STORES IN INDIA ?

IKEA is a contemporary furniture retailer from Sweden. Will you look forward to the opening of IKEA Sweden stores in India?


Validyes12581.781.781.7

no95.95.987.6

can't say1912.412.4100.0

Total153100.0100.0

INFERENCE It can be seen that although the amount of people aware about IKEA were few, the respondents who are looking forward to the opening of IKEA in India are a large percentage with 81.7% responding to yes as the answer.Q6. WILL IKEA'S SHOPPING EXPERIENCE LIKE IN STORE CAFES, WILL ENHANCE YOUR SHOPPING EXPERIENCE?

Will IKEA's shopping experience like in store cafes, will enhance your shopping experience?



Agree6542.542.558.2

Neutral2113.713.771.9

Disagree3824.824.896.7

Strongly Disagree53.33.3100.0

Total153100.0100.0

INFERENCE IKEAs in-store caf experience makes a pretty good factor to enhance the consumers shopping experience. Strongly agreeing to this factor are around 15.6% of the respondents

42.5% are agreeing to this factor affecting them. However there is almost 25% of the sample that is not affected by this kind of shopping experience.

Q7. FROM WHICH OF THE FOLLOWING STORES HAVE YOU RECENTLY BOUGHT FURNITURE?


ValidDurian53.33.33.3

Godrej5737.337.340.5

Gautier85.25.245.8

Home Centre- Lifestyle5234.034.079.7

Home Town - Big Bazaar2415.715.795.4

Style Spa74.64.6100.0

Total153100.0100.0

INFERENCE Godrej tops the responses with 57 followed by Home Centre Lifestyle that has 52 positive responses

Durian has the least preference of only 5 positive responses. Gautier and Style Spa also have few responses. So here we can see that international brands have a negative response.

Q8.ACCORDING TO YOU WHAT ARE THE MOST IMPORTANT FACTORS YOU LOOK FOR IN A FURNITURE BRAND? Design Discounts & Offers After Sales Services Variety Pricing Maintenance Quality Statistics

DesignDiscounts/OffersPricingSales ServiceVarietyMaintenanceQuality

NValid153153153153153153153

Missing0000000

Mean1.271.241.111.601.561.621.08

Median1.001.001.002.002.002.001.00

Std. Deviation.444.430.315.491.498.487.270

INFERENCE Here we can see that the mean value that is lying in the lower side of 1.08 and 1.11 due to yes responses are quality and pricing respectively. The standard deviation is also less for quality and pricing and is high for variety.

Thus in this case where the major number of responses is for yes, we can say that variety is not a very important factor during purchase.

Q9. WOULD YOU BUY FURNITURE ONLINE?

Would you like to buy furniture online ?


ValidYes1610.510.510.5

No7549.049.059.5

Can't Say6240.540.5100.0

Total153100.0100.0

INFERENCE The results suggest that around 41% people are confused about purchasing furniture online and 49% are not interested in buying furniture online. The self examination and look and feel of a product is more prevalent among people can be the reason.

Only 11% of the people were ready to buy furniture from the online sites

Q10. IF YOU HAVE TO BUY FURNITURE ONLINE, WHICH ONE WOULD YOU PREFER?If you have to buy furniture online, which one would you prefer?


ValidPepperFry42.62.62.6

FabFurnish2717.617.620.3

Jabong6139.939.960.1

Snapdeal5938.638.698.7

HomeShop1821.31.3100.0

Total153100.0100.0

INFERENCEThe data shows that majority of the responses favored Snapdeal with 38.5% and Jabong with around 40%. Very few people knew about high end online furniture stores like FabFurnish.

Q11. LIGHT WEIGHT DESIGNS LEAD TO LESS USAGE OF WOOD IN IKEAS FURNITURE. WILL THIS ENVIRONMENTAL FRIENDLY ASPECT PLAY A ROLE IN YOUR PURCHASE BEHAVIOR?



Agree2315.015.017.6

Neutral5535.935.953.6

Disagree5938.638.692.2

Strongly Disagree127.87.8100.0

Total153100.0100.0

INFERENCE: It can be seen that the majority of the responses suggest that the light weight environmentally friendly aspect of furniture products by IKEA wont affect consumer behavior.

Here the data shows that 35.9% people are neutral towards such an attribute and around 39% disagree to such a factor affecting the purchase.

Q.11 ARE U READY TO PAY MORE FOR ENVIRONMENTALLY FRIENDLY PRODUCTS?

Are you ready to pay more for such environmental friendly products ?


Validyes2315.015.015.0

no10166.066.081.0

can't say2919.019.0100.0

Total153100.0100.0

INFERENCE A clear conclusion has been reached as 66 % of the respondents have replied in a negative way to this question. Thus they are not willing to pay more for environmental friendly products.

Thus IKEAs image of an environmentally friendly company may not mean much to the consumers unless the price and quality of products is favorable.

Q12. WHAT STYLE OF FURNITURE DO YOU PREFER THE MOST ? Contemporary Antique Traditional Detachable

What style of furniture do you prefer the most ?


ValidContemporary6039.239.239.2

Antique1.7.739.9

Detachable2717.617.657.5

Traditional6542.542.5100.0

Total153100.0100.0

INFERENCE : The data suggests that majority of the respondents prefer traditional furniture style that accounts for around 42% of the sample.

It is followed closely by contemporary style comprising of 39.2% of the population. So IKEA can hope for a good enough response. However it may have to incorporate some traditional element for the Indian consumer.

Q13. WOULD YOU TRAVEL TO BUY FURNITURE FROM A MAJOR BRANDED FURNITURE STORE THAT IS LOCATED IN THE OUTSKIRTS OF YOUR CITY?

Would you travel to buy furniture from a major branded furniture store that is located in the outskirts of your city?


Validyes3724.224.224.2

no11071.971.996.1

can't say63.93.9100.0

Total153100.0100.0

INFERENCE: A large percentage of the sample disagreed to the question and was not ready to travel to the outskirts of the city to buy furniture, as can be seen from the chart that 71.9% said no.

Thus if IKEA plans to open huge stores near highways as the acquisition of land is cheaper in the outskirts, it may lead to a decrease in the customer base unless the area is populated enough.

Q14. WHICH OF THE FOLLOWING AFTER SALES SERVICE DO YOU PREFER ?1. Delivery at doorstep2. On site repairs3. Guarantees and warranties 4. Easy return policy

Which one of the following after-sales services is most important for you ?


ValidDelivery at doorstep7146.446.446.4

On site repairs2919.019.065.4

Guarantees and warranties4328.128.193.5

Easy return policy106.56.5100.0

Total153100.0100.0

INFERENCE : The delivery at door step service with around 46% yes responses, was most agreed upon by the respondents as furniture is mostly preferred to be delivered rather than transported by self in India.

It was followed by guarantees and warranties that made up 28% of the responses.

The least selected option was of easy return policy comprising of only 6.5% of the sample responses.

Q.15 WHAT IS THE MOST APT LOCATION OF A BRANDED FURNITURE STORE ACCORDING TO YOU ?What is the most apt location of a branded furniture store according to you ?


ValidMalls12078.478.478.4

Local Markets3321.621.6100.0

Total153100.0100.0

INFERENCE: Malls stand out as the clear winner with 78.43% of the responses.INDEPENDENT SAMPLE T TESTS TEST1Here the dependent variable is taken as the annual income of the respondent. The grouping is done on the basis of the responses to the question: are you ready to pay more for environmental products?Hypothesis:Ho: There is no significant difference between the group means H1: There is a significant difference between the group means

Group Statistics

Are you ready to pay more for such environmental friendly products ?NMeanStd. DeviationStd. Error Mean

What is your annual incomeYes232.48.665.139

No1012.21.804.080

Independent Samples Test

t-test for Equality of Means

dfSig. (2-tailed)Mean Difference

What is your annual incomeEqual variances assumed122.137.270

Equal variances not assumed38.134.100.270

INFERENCE: From the table we can see that the Sig (2-tailed) value is greater than p value (0.05) i.e. 0.137 and 0.100 both are greater than the p value of 0.05. Thus we can say that there is no significant difference between the group means. That means we are accepting the null hypothesis H0 as there is no significant difference because of income on the readiness to pay more for environmental friendly products



Std. Error Difference95% Confidence Interval of the Difference

LowerUpper

What is your annual incomeEqual variances assumed.180-.087.627

Equal variances not assumed.160-.054.595

TEST 2Here the dependent variable is taken as the annual income of the respondent. The grouping is done on the basis of the responses to the question: will IKEAs shopping experience like in-store cafes enhance your shopping experience?Hypothesis:Ho: There is no significant difference between the group means H1: There is a significant difference between the group means

Group Statistics

Will IKEA's shopping experience like in store cafes, will enhance your shopping experience?NMeanStd. DeviationStd. Error Mean

What is your annual incomeStrongly Agree301.70.651.119

Disagree432.58.587.089



dfSig. (2-tailed)Mean Difference

What is your annual incomeEqual variances assumed84.003-.532

Equal variances not assumed72.550.002-.532


Std. Error Difference95% Confidence Interval of the Difference

LowerUpper

What is your annual incomeEqual variances assumed.175-.880-.184

Equal variances not assumed.163-.856-.208

INFERENCE: From the table we can see that the Sig (2-tailed) value is less than p value (0.05) i.e. 0.003 and 0.002 both are less than the p value of 0.05.

Thus we can say that there is a significant difference between the group means. That means we are rejecting the null hypothesis H0 as there is a significant difference because of income on the shopping experience factor

CROSSTABULATIONSCROSSTABULATION 1:A cross-tabulation among the following questions was performed. Brand Name an important factor for purchasing furniture ? Have you heard about IKEA Sweden entering Indian branded furniture market ?

The aim was to find out whether there is a relation between the brand name factor and the awareness about a brand like IKEA entering Indian contemporary furniture market .

Is Brand Name an important factor for purchasing furniture ? * Have you heard about IKEA Sweden entering Indian branded furniture market ? Crosstabulation

Have you heard about IKEA Sweden entering Indian branded furniture market ?Total

yesno

Is Brand Name an important factor for purchasing furniture ?Strongly Agree3084114

Agree132639

Total43110153

INFERENCE: There is no relation to the awareness about IKEA and brand name being an important factor. It can be seen that all respondents have answered in positive with respect to brand image.

However the number of people unaware about IKEA is more, that is 110.

Thus even though brand image is an important factor, IKEA turns out to be a brand people are not much aware of.

CROSSTABULATION: 2A cross-tabulation among the following questions was performed. IKEA is a contemporary furniture retailer from Sweden. Will you look forward to the opening of IKEA Sweden stores in India? What style of furniture do you prefer the most ? What is your age group?

The aim was to find out whether there is a relation between the taste in style of furniture and age group as well as the curiosity in looking forward to the IKEA stores to be launched in India.

IKEA is a contemporary furniture retailer from Sweden. Will you look forward to the opening of IKEA Sweden stores in India? * What style of furniture do you prefer the most ? * What is your age group? Crosstabulation

Count

What is your age group?What style of furniture do you prefer the most ?Total

ContemporaryAntiqueDetachableTraditional

Young agedIKEA is a contemporary furniture retailer from Sweden. Will you look forward to the opening of IKEA Sweden stores in India?yes64414

no2002

can't say42410

Total126826

Middle agedIKEA is a contemporary furniture retailer from Sweden. Will you look forward to the opening of IKEA Sweden stores in India?yes29116652

no00011

can't say10023

Total30116956

Old agedIKEA is a contemporary furniture retailer from Sweden. Will you look forward to the opening of IKEA Sweden stores in India?yes2353159

no0066

can't say0066

Total2354371

TotalIKEA is a contemporary furniture retailer from Sweden. Will you look forward to the opening of IKEA Sweden stores in India?yes5812541125

no20079

can't say5021219

Total6512760153

INFERENCE: We can see that the middle aged and old aged people are more into contemporary style as compared to the young age group that mostly comprised of people between 18-24 years of age. The amount is less as students and young professionals tend to purchase less furniture on their own.

Middle aged and old aged people are more into furniture purchase for house renovations, office purpose. Thus it can be seen that most prefer contemporary furniture. Thus 29 out of the middle aged respondents prefer contemporary style of furniture and these are the ones who are most looking forward to the opening of IKEA stores in India.

Similarly with the old-aged group, the majority of 56 who are looking forward to the opening of IKEA stores prefer contemporary designs. Thus there is a significant relationship among the three groups.

CROSSTABULATION 3A cross-tabulation among the following questions was performed. Which one of the following after-sales services is most important for you ? Should branded furniture be sold online ? What is the most apt location of a branded furniture store according to you ?The aim was to figure out the relationship between the preference of online shopping of furniture and the location preference of retail stores. The crosstab would also help understand if there is a relation between after sales services like on site repairs , home delivery or return policies with the stated preferences.The table can be seen on the next page.

What is the most apt location of a branded furniture store according to you ?Should branded furniture be sold online ?Total

Strongly AgreeAgreeNeutralDisagree

MallsWhich one of the following after-sales services is most important for you ?Delivery at doorstep23224664

On site repairs614112

Guarantees and warranties41910134

Easy return policy244010

Total1456428120

Local MarketsWhich one of the following after-sales services is most important for you ?Delivery at doorstep34007



Total3913833

TotalWhich one of the following after-sales services is most important for you ?Delivery at doorstep53624671



Easy return policy244010

Total17655516153

INFERENCE :From the table we can see that Those who are interested in online shopping and agree to it i.e. around 56 respondents, on the likert scale are the ones who prefer the delivery at doorstep after sales service the most i.e. 32 respondents.

Those who prefer local markets are the ones that have least interest in the online shopping of furniture as compared to those who are affected by the mall culture in India who is ready to experiment.

Also the easy return policy is the most favored by those who prefer or agree to the selling of branded furniture online.

CROSSTABULATION 4A cross-tabulation among the following questions was performed. Will IKEA's shopping experience like in store cafes, will enhance your shopping experience? What is your age group? The aim was to see how the concept of in-store cafes in the furniture stores of IKEA will be perceived by the Indian consumer according to his/her age group.

Will IKEA's shopping experience like in store cafes, will enhance your shopping experience? * What is your age group? Crosstabulation

Count

What is your age group?Total

Young agedMiddle agedOld aged

Will IKEA's shopping experience like in store cafes, will enhance your shopping experience?Strongly Agree1414230

Agree8222656

Neutral46818

Disagree0142943

Strongly Disagree0066

Total265671153

INFERENCE:Here we can see that the Contemporary design is much more preferred as compared to the rest

INFERENCE : It can be inferred that those who agree to the fact that in-store cafes will enhance their shopping experience are mostly young and middle aged that accounts for around 80 respondents.

Old aged section are the ones that disagree with the fact that this factor will in any way enhance their shopping experience. The reasons could range from elder children who would not crave for fast food as well as lesser time being spent to shop.

CONCLUSION FINDINGSThe following results were inferred from the research.1. IKEA Sweden is not a brand most people are aware of. However most people are looking forward to the entry of the brand in India.2. Indians are not affected by eco-friendliness. Going green is still a new concept.3. The uniqueness of IKEA products i.e. environmental friendliness is not a major factor that affects the purchase behavior of consumers.4. Online furniture shopping is still in its nascent stage.5. We can say that pricing and quality if high, will attract customers to IKEA.6. Location plays an important factor for any branded furniture store.7. Ambience of a store is not an essential factor that affects purchase behavior.8. Brand Image is an important factor for the consumer.

RECOMMENDATIONS1. If IKEA plans on opening stores in the outskirts due to cheaper land rates, it can have a negative impact on its target market.2. In store cafes are a major feature in the IKEA stores overseas. However this wont be available to Indian consumers due to some restrictions. However IKEA may not be affected by this as such a shopping experience did not get a very enthusiastic response.3. Thus IKEAs strategy of not launching an online shopping website is a good decision.4. If IKEA wants to try out the online section, it may tag up with the popular websites that most people are aware of like Jabong.5. Given its low cost pricing and good designs as well as quality, if IKEA includes good after sales service, it can become a major hit among the Indian consumers.

REFERENCES

Aspfors, E. (2010, May 17). Customer perception of service, store image and product . Retrieved February 05, 2014, from Thesus: http://www.theseus.fi/bitstream/handle/10024/16719/Aspfors_Emma.pdf?sequence=1Furniture Industry. (n.d.). Retrieved February 12, 2014, from Economy Watch: http://www.economywatch.com/business-and-economy/furniture-industry.htmlFurniture Market and Opportunities. (n.d.). Retrieved March 02, 2014, from IBEF: http://www.ibef.org/download/Furniture_170708.pdfIKEA bargains its way into India. (2013, January 22). Retrieved March 05, 2014, from First Biz: http://www.firstpost.com/economy/IKEA-bargains-its-way-into-india-what-does-this-mean-for-the-rest-597418.htmlIndian Retail Market. (2011, September). Retrieved February 10, 2014, from Deloitte: http://www.deloitte.com/assets/Dcom-India/Local%20Assets/Documents/Indian_Retail_Market.pdfKaushik, M. (2012, December 23). IKEA to comply with riders on india investment proposal. Retrieved February 02, 2014, from Business Today: http://businesstoday.intoday.in/story/IKEA-to-comply-with-riders-on-india-investment-proposal/1/190414.htmlM Gomathi Imaya, D. P. (2013, September). Furniture Market in India - An Overview. Retrieved March 12, 2014, from The Global Journals: http://www.theglobaljournals.com/ijar/file.php?val=MjIyMw==Mookerji, N. (2013, May 16). We've tried to understand India's needs: IKEA India chief. Retrieved February 12, 2014, from Rediff: http://www.rediff.com/money/interview/interview-weve-tried-to-understand-indias-needs-IKEA-india-chief/20130516.htmPeople and the Environment. (2008, April). Retrieved March 05, 2014, from IKEA: http://www.IKEA.com/ms/en_US/about_IKEA/pdf/IKEA_SER_08_GB.pdfRebecka Isaksson, M. S. (2006, June). The IKEA Experience - Bachelor Thesis. Retrieved 10 February, 2014, from Epubl: http://epubl.ltu.se/1402-1773/2006/162/LTU-CUPP-06162-SE.pdfSalisbury, P. (2011, October 19). Behind the Brand: IKEA. Retrieved February 10, 2014, from The Ecologist: http://www.theecologist.org/green_green_living/behind_the_label/1098324/behind_the_brand_IKEA.htmlSustainability Report. (2011, September). Retrieved February 20, 2014, from IKEA: http://www.IKEA.com/ms/en_US/about_IKEA/pdf/sustainability_report_fy11.pdfTroian, D. (2011). Furniture Industry: The consumers furniture preferences in different markets. Retrieved March 10, 2014, from Academia: http://www.academia.edu/1502656/The_consumer_perception_of_design.Case_study_furniture_sector#Velchev, N. (2012, June). Similarities and Differences in the Image Perceptions of IKEA in the Minds of Its Current Customers. Retrieved March 05, 2014, from Pure: http://pure.au.dk/portal-asb-student/files/45793089/THESIS_FINAL.pdfWelcome Inside 2012. (2012). Retrieved February 01, 2014, from IKEA: http://www.IKEA.com/ms/en_US/pdf/yearly_summary/ys_welcome_inside_2012.pdf

APPENDIXQUESTIONNAIRECONSUMER PERCEPTION ON FEASIBILITY OF NEW ENTRANT LIKE IKEA IN INDIAN CONTEMPORARY FURNITURE MARKET1.How often do you buy furniture in a year?1. Once2. Twice3. Thrice4. More than thrice2.What kind of furniture have you bought in the past?1. Bedroom 2. Kitchen 3. Living room4. Dining room5. Office Furniture6. Outdoor Furniture7. Childrens room3.Is Brand Name an important factor for purchasing furniture?1. Strongly Agree2. Agree3. Neutral4. Disagree5. Strongly Disagree4.Have you heard about IKEA Sweden entering Indian branded furniture market ? 1. Yes2. No5. IKEA is a contemporary furniture retailer from Sweden. Will you look forward to the opening of IKEA Sweden stores in India?1. Yes2. No3. Cant Say6.Will IKEAs shopping experience like in store cafes, enhance your shopping experience?1. Strongly Agree2. Agree3. Neutral4. Disagree5. Strongly Disagree7.Is Durability of furniture is a major factor that will affect your purchase?1. Strongly Agree2. Agree3. Neutral4. Disagree5. Strongly Disagree8. Which of the following branded furniture stores are you aware of?1. Durian2. Godrej3. Gautier4. Home Centre- Lifestyle5. Home Town- Big Bazaar6. Style Spa

9. From which one the following stores have you recently bought furniture?1. Durian2. Godrej3. Gautier4. Home Centre5. Home Town6. Style Spa10. According to you what are the most important factors you look for in a furniture brand?1. Design2. Discounts and offers3. Pricing4. After Sales Services5. Variety6. Maintenance7. Quality11.Do you prefer international brands of furniture?1. Yes2. No3. Cant Say12.Would you like to buy furniture online ?1. Strongly Agree2. Agree3. Neutral 4. Disagree5. Strongly Disagree

13.Which of these online furniture sites are you aware of ?1. Pepperfry2. FabFurnish3. Jabong4. Snapdeal5. Homeshop186. Others14. If you have to buy furniture online, which one would you prefer?1. Pepperfry2. FabFurnish3. Jabong4. Snapdeal5. Homeshop186. Others15.Should branded furniture be sold online?1. Strongly Agree2. Agree3. Neutral4. Disagree5. Strongly Disagree16.Light weight designs lead to less usage of wood in IKEAs furniture. Will this environmental friendly aspect play a role in your purchase behavior?1. Strongly Agree2. Agree3. Neutral4. Disagree5. Strongly Disagree17.Are you ready to pay more for such environmental friendly products ?1. Yes2. No3. Cant Say18.Does the customer friendly staff of a branded store play an important role in your buying decision?1. Strongly Agree2. Agree3. Neutral4. Disagree5. Strongly Disagree19.What style of furniture do you prefer the most ?1. Contemporary2. Antique3. Detachable4. Traditional20.How important is the location of a Furniture store?1. Very Important2. Important3. Not Important4. Not at all Important21.Would you travel to buy furniture from a major branded furniture store that is located in the outskirts of your city?1. Yes2. No3. Cant Say22. Which one of the following after-sales services is most important for you ?1. Delivery at doorstep2. On site repair3. Guarantees and Warranties4. Easy Return Policy23. What is the most apt location of a branded furniture store according to you ?1. Malls2. Local Markets3. Outskirts 24.What is your age group?1. Young2. Middle-Aged3. Old-Aged25.What is your annual income?1. 0-5 lakhs2. 6-11 lakhs3. 12 lakhs and above26.What is your occupation?1. Govt Service2. IT/Business Professional3. Own Business4. Unemployed5. Self EmployedPlease provide your name:Please provide your location:

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Feasibility of Ikea in India - Market Research 2014

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