Ikea in Russia :

• Settlement: Arrived in 1991 / First store 2001 (Kimkhi, Moscow)
• Nowadays: 11 stores
• Why: Few companies offered attractive products for low prices
• Market analysis / Knowledge: No special marketing research / IKEA policy « Living is better than analysing» (representative said)
• Market situation: Economic crises
• Difference: Stayed in Russia
• Finance : 10 years = benefits / 15 years = Invest Russian benefits abroad

IKEA

in

Russia

SWOT Analysis

Strenghts

• Image – Presence (11 stores, Malls)
• Price
• Fully owned ventures =Control
• Values-Skills =Transfer
• Strong management style

(training – resp)

• Trends/needs creater (accessories)

Threats

Weaknesses

• 11 stores = not enough?

• Ikea was unkown
• Market data = uncertain / hard to assess
• Transport in Russia
• Custom fares
• Local suppliers
• Buying power
• Low price = bad image
• Russian priorities

Opportunities

• Russia = BRICS
• New shopping exp (Touch, try, atmosphere)
• New products
• Small accomodations
• Governenent = trust

Malorie Vitel: x00124117

Marie Grussi-Wahl: x00124098

Edouard Patou: x00124108

Russia

General information

• Russian federation
• Putin
• Moscow
• Member of UNO
• Saint Petersburg, Novosibirsk
• 143.7 million inhabitants (2013)
• Largest country in the world
• Low population density

Philosophy:

“Create a better everyday life for the many people.”

Business idea:

“Offer a wide range of well-designed, functional home furnishing products and prices so low that as many people as possible will be able to afford them.”

The values called “the Ikea way” are related to:

• history
• product range
• distribution system
• management style
• human resource ideas

The Company

Ikea in the world

• Swedish leading home furnishing company
• 1943
• 345 stores / 42 countries (248 in Europe)
• 2013: 17 stores incl Qatar and Lituania.
• +84 000 employees
• Ingvar Kamprad
• CEO: Peter Agnefjäll
• Private foundation/not on the stock market
• Products: good function and design at low prices

Answer :

• Focus on Russian consumer behaviour
• No special marketing research.
• Practice rather than theory
• Changed inhabitants’ behaviour
• Lack of information
• Push strategy (bring product to customer because new brand and consumption way) rather than competitive strategy.
• Low and variable purchasing power consideration
• Firm's settlements (new shopping experience + Malls) = Positive impact and harmony with context

In what respects do you think that IKEA's market behaviour in Russia has been

different due to the fact that Russia is an emerging market ?

History:

Conclusion :

Entering a new market:

Consideration of factors

• Cultural differences
• Way of consumption
• Market trends...

appropriate approach (adaptation or standardization)

1991-1995: lowest point

• Large inflation rate
• Important level of unemployment
• Closure of Russian factories
• Decreasing population

1998: Russian monetary policy collapsed

2000: Russia started to rebuild itself

• Dependent oil and gas exports
• Abundance of Natural resources
• Russian rubles
• 9th largest economy by nominal GDP
• GDP 2.097 million in 2013
• 72th in term of business in the world,
• Inflation rate up to 15% in January of 2015
• One of the fastest-growing economies in the world
• Economy is expected to reach $3.18 trillion by 2018
• Economic performance suffered during the global financial crisis but recovered in 2010 and 2011
• Petroleum and iron and steel = leading industries

• Vladimir Putin
• Corruption
• Democratic Federal state with a republican form of government
• Power: Nuclear weapons + energy supplier

References

http://countryeconomy.com/countries/russia

http://www.bbc.com/news/world-europe-17839672

http://fr.slideshare.net/

http://www.russianembassy.org/page/general-information

http://www.ikea.com

Case 4.3: Ikea entering Russia

• Life expectancy: 65 years men / 76 women (2012)
• Diversified population
• Religion: Russian Orthodox Church
• Unemployed January 2015 => 4.18 million
• Security issues

• Development of:

Energy efficiency

IT

Nuclear energy

Pharmaceutical

• R&D
• Info and com

Market trends

• Low consumption & individual income levels
• No retailing tradition
• No clear consumer habits
• Low price and quality: only few businesses

Ingvar:

founder’s first name

Elmtaryd:

Farm where he grew up

Agunnaryd:

Home village

Kamprad :

founder’s last name