Getting Glocal: Ikea Makes Itself at Home in China - and Vice Versa

You sense you're doing something right when the biggest complaint you get in a new market like China is that the food you serve was made there rather than imported from Sweden.

Ikea's new stores are being overwhelmed by customers who dont just buy, they are so comfortable - some marketing types might say 'engaged' - that they fall asleep on the beds and sofas, eat meals they have brought in on the retailer's dining room sets and leave their children in the playpens. And they do so with the company's encouragement.

Ikea has come to master the strategy known as going 'glocal.' Being a global business but acutely attuned to local needs, wants, customs and desires. Serving Swedish meatballs with chopsticks? No problem. Taking stock furniture components and reconfiguring them to suit local tastes, space constraints and price expectations? Not so easy, but Ikea is figuring out how to make it work.

It helps that the company has had a lot of experience with global expansion and is more relaxed than some of its rivals about adapting to the mores of its new market rather than reflexively imposing its own. Even more importantly, Ikea understands that shopping is entertainment. That its customers want not just to find good prices, but want to feel comfortable; understood, valued, appreciated. The key is delivering Swedish quality at prices the Chinese can afford. The concept is simple, but the details of managing a global supply chain are not. Making it work is what creates the differentiation crucial to success. JL

Patti Waldmeir reports in the Financial Times:

What modern institution in China provides food, housing, love and babysitting, all under one roof? The Communist party may have dashed the Maoist “iron rice bowl” to the ground, but Ikea is stepping in to take up the slack.

The world’s largest furniture retailer not only invites Chinese consumers to nap on its beds and snack on its dinnerware; it lets pensioners hold matchmaking sessions over free coffee in its canteens, and even provides day care for the only grandchild, to make the whole Eat Drink Man Woman thing go that much more smoothly.

And Swedish capitalism can boast something that Chinese communism never quite managed: not just style, quality and low prices but also meatballs. When Ikea opened its new store in a Shanghai suburb last week, a sale on meatballs drew crowds estimated by police at 80,000 a day at the weekend, and provoked at least one patron to pass out, and another to vomit, while queueing on the 41st day of more than 35C heat. But those able to snag a spot in the cattle car-style lifts, or ride the interminable escalators to the start of the traditional Ikea maze, got more than just a smorgasbord. They got the benefits of globalisation, with Chinese characteristics.

For Ikea seems to have figured out “glocal”, as it applies to the country – in a way that has eluded foreign retailers such as Best Buy, Home Depot, Media Markt and most recently Tesco (all of whom either bailed on China or gave up on trying to crack the market alone).

Pretty much everything in the store looks eerily familiar to any western shopper: I quickly spotted my own bedside table and chest of drawers, and the finger paints my children used as toddlers. But it’s displayed in a way that’s far more Shanghainese than Swedish. It’s like a massive Chinese doll’s house filled with Swedish furniture, and arranged to make the best of mainland property prices.
Irrationally exuberant prices for apartments in the gritty northern Baoshan District, where the new store is located, mean local families get by with an average of just 50 sq m to 60 sq m of living space for mum, dad, only child and sometimes grandparents. Newlyweds and young professionals in the area may average no more than 25 sq m for their whole flat.
So Ikea set out to show just how much blonde furniture, sleek cabinetry, kitchen gadgetry and computer hardware can be packed into such a real-world doll’s house – and still allow it to appear spacious. And economical: a complete living room for less than Rmb3000 ($490) and kitchens from Rmb1,700 – something even those reaching for the lowest rungs of the middle-class ladder could probably afford.

Most of all, however, Ikea wants its 6.5m “neighbours” from Baoshan and the surrounding areas to imagine actually living in these rooms – so it invites them to make themselves at home. Soon there are toddlers jumping on the beds – or tucked up in them reading picture books. Every dining room suite has families clustered around it, some munching snacks they have brought in. “Customers move right into our homes, they nap on our furniture – it’s beautiful, it inspires them,” says one store manager on the day of the opening. The only displays not meant to be interactive, apparently, are the loos: they are closed off with Plexiglas lids that helpfully point out the location of proper toilets. Do Ikea staff ever wake the napping neighbours? “Not unless we need to close the store,” says a manager, adding: “If they don’t buy something this time, they will next time.”

This “theme park” atmosphere could not be less like shopping for furniture elsewhere in Shanghai, points out Shaun Rein of China Market Research, a connoisseur of consumerism in the country. Directly across the street at the vast Red Star Macalline mall – which stocks sofas by the city block and beds by the football field – shopping is an altogether more serious business: spending big chunks of capital on big impressive furniture. No wonder the foot traffic is all going to Ikea.

Gimmicks such as the free coffee, the matchmaking corner and the napping build a brand the Chinese can love – even if, like consumers the world over, they also love to grouse about how tacky it is. But does good neighbourliness bring big profits? Who knows: Ikea is private, and it isn’t saying. But Best Buy, Home Depot and Tesco are certainly not provoking traffic jams with their new stores in the country. Eat, drink, sleep, love, spend: it seems as likely to work as anything else in China.