Having been analyzing the Brazilian market for few years, the Swedish company, Ikea, has finally shown real interest in starting its first commercial activities in the country.
The Swedish company, Ikea, is about to arrive in Brazil. As one of the major players in the furniture industry and interior decoration, the brand is known worldwide for modern design and low prices. Even with locations in 34 different countries, the Swedish brand will find some difficulties in Brazil, such as:
- competitive market
- taxation difficulties
- logistic difficulties.
The brand will also have to differentiate itself to win the Brazilian consumer.
Expansion Project: Towards Emerging Markets
For the last past years, Ikea has been showing interest in emerging countries. The success in Russia and China has brought Ikea’s eyes to India and Brazil. Of the five largest Ikea stores in the world one is located in Russia and three are in China.
In India, the company has already received the local government's authorization to start a plan that aims to open 25 stores with an investment of almost 2 billion USD in the country. While in India, the Ikea process of market entrance is more advanced, in Brazil the situation is a bit different.
True or False?
Ikea has been established in the country for more than one year with an office of 20 workers in Curitiba, but its entrance in the Brazilian market has been a target of speculation since 2009. Even now, with the company analyzing its arrival in this emerging economy, no data exists for the opening of the first Brazilian store and the brand has already announced that its entrance in the retail sector won’t be immediate.
Even though the Brazilian project is less advanced, the confirmation of Ikea’s interest in the national market must be considered an important change in the company's rhetoric, which had always denied any type of plan for Brazil. Latin America had been studied by Ikea for at least three years, when its first store in the region was opened in the Dominican Republic and in Puerto Rico.
Business Developer for Brazil
Ikea started a selection process for choosing a business developer for Brazil in the commercial area, that must work at the office located in Curitiba. The brand is searching for a business developer to optimize the sale possibilities and to improve the suppliers performance in the country.
The Consumer Acceptance
One of the main challenges of Ikea in Brazil would be the consumer receptivity to the brand’s concept of “assemble your own furniture”. Throughout the world, the store is known by offering items that associated design, simplicity and low prices and for that, the brand offers less services. Which means that, basically, everything that is sold by Ikea - from table lamps to wardrobes - must be assembled by the consumer itself.
Since in Brazil, the national furniture stores, like Etna and Tok & Stok, usually delivery items already assembled to the consumer’s home, the new Ikea’s concept will have to be accepted by the Brazilian consumer.