Hello, Hej, Namaskar from Ikea — how Ikea expanded its kingdom using Glocalization

Prologue:

When someone talks to you about Ikea what are some initial thoughts that come to mind? Inexpensive furniture? Great cafeteria? Perhaps, those beautiful demonstration rooms set up like a living space to give you an idea of how your home could look like? Yes, I had the same thoughts in mind when someone spoke to me about Ikea. That’s really what you see when you walk in but have you ever wondered the brains behind putting this together or for that matter putting this together across the globe? Today I’d like to introduce you to the concept of glocalization — a way of thinking of international companies to serve local consumers.

Topic Introduction:

Being born and brought up in India, when I heard Ikea was expanding to set up locations in India, I always wondered how Ikea would “adapt” to the economic and psychological situation of growing economies like India. For instance, Ikea boasts about easy to assemble furniture that works in countries like the United States, since labor is so expensive. However, India is a country of ~1.5 billion people and labor is inexpensive. The situation isn’t too different when you take Ikea’s offering of its fantastic food items. How would it “adapt” to a country like India?

Well it worked and it worked really well. All of this can be attributed to Glocalization, Glocalization is about thinking about the changes to a firm both globally and locally and making sure you take into consideration the amount of each that should be applied to the strategy. It is how you can use both the universal phenomenon that’s happening around the world and also the local trends to make a unique offering for that market alone. Takes into consideration the social, political and economical status before coming up with the strategy. This isn’t a concept that’s new, we have been recipients of glocalization since the beginning of time. Thinking back to when McDonalds started operations in other parts of the world, Nestle is another excellent example with its Maggi line of products.

Conceptual Framework:

The concept comes from the Japanese word dochakuka, which means global localization. It had referred to the adaptation of farming techniques to local conditions. It became a most commonly used word when Japanese business adopted it in the 1980s. Glocalization challenges the notion that says just because it worked everywhere else it should work here too, or the one size fits all mentality. In reality it does not and Glocalization helps explore the balance that must be stricken for a harmonious coexistence.

Glocalization makes your products more appealing in an increasingly competitive market where there are people from all over the world fighting for their share in the market. Another wonderful opportunity that many companies like Ikea, McDonalds have today is that they have become household names in countries with heavy immigration and thus being popular back home even before they launch. Even with that kind of popularity, Ikea took ~3 years to do its market research before investing its capital in India.

How Ikea took the concept and put it into action :

Pressure cookers and Idli makers along with Billy Bookcases: Ikea did not just take the Billy Bookcases and Hemnes dressers to attract the masses. They had the perfect blend of belan, pressure cookers and Idli makers which are a staple in all the Indian homes you go to, thus showing how you can have them all co-exist in the same home. This was an excellent display of Indo-western culture.

Use of Teak, Mahogany or Mindi: Teak and Mahogany are generally associated with luxury and good quality material in India. Ikea studied the homes extensively that came up with using Teak and Mahogany in their furniture to make it more “Indian”. Not just this, offering this in addition to other kinds of wood also introduced a whole range of products that’s appealing to people with different tastes.

Multi Use-case furniture for everyday living: Indians as a whole are very well known for entertaining and family gatherings. We prefer inviting people home for a get-together rather than meeting them for dinner outside in a restaurant. Ikea combined two wonderful ideas here — designed an expandable furniture for when we have guests over but at the same time you can fold it back to fit in a small area of space (I am talking about the expandable sofas here). Ikea also invested in locally sourcing materials for cushions, wood and also textiles. This not only created job opportunities for many artisans but it also created a trusted network where the multinational conglomerate wants to form a bond with the local people for a long standing relationship.

Source:ikea india pictures — Bing images

Assembly and delivery available: Indians are not much into Do-it-Yourself (DIYs) for assembling their furniture. This is mostly due to the availability of cheap labor. Ikea invested even more space into its warehouses to offer assembling services right at the place of purchase. They offer to assemble and deliver the furniture within a day for a small additional cost and that is a huge win given they are able to choose the furniture they like and get it assembled too. One of the reasons to not pre-assemble is that they can hold more inventory in the unassembled form but another angle to this is also to give the option to the end user on whether they’d like to DIY which happens to be the economical option or they can always choose the in-house assembly.

I would like to point out a few things here:

• Their delivery “autos” are excellent — they have locally sourced again for design ideas and makes head turn and smile as they deliver

Source:ikea india pictures — Bing images

• They have people around the warehouse offering interior design ideas — with the investment into Livspace from Ikea you can see the idea behind the investment come to fruition in India where Interior design suggestions are given and major renovation projects undertaken with 3D modeling etc.

Millennial population being more global and mobile: With so many of the Millennials being more mobile and not wanting to settle for big heavy furniture and looking for constant change in their interiors I think Ikea landed at the right place at the right time and is definitely here to stay and grow.

A few things to consider as you think about glocalizing your business:

Strike the right balance : Balance is key, if you over do the local trend or over do the foreign, you lose!

Know your consumer segment: Have the right personas built out in your mind and you have a winner

Customer experience is key: Be it in the digital world or warehouses, right from acquisition to return you have to have the right experience to win over your customers.

Do not lose out on translation: Be sure to get the right word at the right time. One mix up can lead to a lot of heartburn or carpet burn in this instance.

The nexus beyond:

Companies like Starbucks, McDonalds, Subway, Nestle (Maggi) and Bata have been getting this concept right in practice for decades. It takes a lot of effort, time and money to get this right the first time but getting it right definitely pays off even if it takes a few tries and that has been proven by the companies listed above.