Assumption:

This is the only Ikea store in the city and within 100km radius of the store

Bangalore. Population of the city is 1.2 Cr

We are estimating total furniture pieces and not categorywise. This includes buying big things like Sofa etc. as well as small items like Curtain etc.

If needed the categorywise estimation could also be made

Households are the main buyers. Office supplies is supporting category. Buyers from closeby cities.

Excluding bachelors buying for themselves as the volume might be negligible

Entire demand can be met by a single store

Approach:

No. of households –> Types of the households who could buy –> Buying frequency –> Total furniture pieces that could be bought in the city in a year –> Early adopters (Because this is a new store, most people may not know the brand). This is the TAM –> Penetration that Ikea can hope to have  –> Size that could be achieved in a year –> Size that could be achieved in a month –> Add the addtional category of buyers

Estimation:

Bangalore has a population of 1.2 Cr. Avg. of 4 members per house –> 300mn households

Types of households: (a) Owning a big house (10% = 30mn), (b) Owning a small/medium house (20% = 60mn), (c) Renting a house (40%=120mn), (d) renting / owning small houses that cant have furnishing (30%, this category is excluded).

Frequency of buying: (a) 3 pieces/yr –> 90mn (b) 2 pieces/yr –> 120mn (c) 1 piece/yr –> 120mn = Total 330mn

Innovators ~ 10%. TAM = 33mn

Total penetration that Ikea can hope to have: 20% in 5 years ~ 6.6mn. In one year ~ 1.2 mn

Total buying from households in Bangalore = 100 thousand pieces

Auxiliary users:

Office Supplies

Roughly for every 20 households there is one office space. Applying the same proportion, Total buying for office supplies = 20 thousand pieces

Customers from nearby cities

Bangalore has smaller 5 cities in the 100km radius. Buyers from those cities would be around 10% of the households of the city = 10 thousand

Total target sales for the first month = 100 + 20 + 10 = 130 Furniture/Furnishing pieces

Possible areas of significant error:

No. of Households that can’t afford furnishing is underestimated.

Frequency of buying: Maybe significantly different from the real numbers.