Ikea Invades America

* IKEA’s low cost structure has been the very core of its success. It’s low-cost and high-quality strategy fits with the current state of the economy. Offering convenience factors within IKEA’s stores would fit well with IKEA’s low cost structure. It maintains its low-cost business model by creating a different furniture shopping experience. IKEA supplies customers with all possible materials needed to complete their shopping when they enter the store (that are, measuring

The rapidly growth in sales of IKEA in its own country thanks to its innovative new concept in furniture and its reinforcement with polish suppliers, during the 1950s and 1960s, gave to IKEA the option to consider in going further of Swedish borders. Thus, in 1963 was opened the first Store in Oslo capital of Norway. This first step was a guideline to continue the expansion process IKEA has started, and helped to strengthen the internal market in Sweden with the opening of the biggest store in Stockholm in 1965, and the second international store in Denmark in 1969.

This paper aims to demonstrate a detailed description of the elements of ‘IKEA’ company based on its famous name in the furniture industry.

The convenience that this division offer customers should give the organization a profitable and popularity boost, allow them to expand globally, and make the company a leader in innovation in its industry.

Local partners could help IKEA to understand better the customer’s behaviors in the host market. The psychic distance would be reduced and consequently IKEA could adapt its products, its stores layout following its local partner advices. Traditionally IKEA used to push Swedish design into the new markets without considering the local needs. If they could find a local joint venture understanding well the local needs they could provide more suitable products.

IKEA is rumored to be a very standardized retailer, i.e., a certain set of marketing strategies is used that are the same around the world. This indeed sets IKEA, operating on markets in Europe, US as well as Asia and Australia, apart among international retailers. Often the theoretical conclusions in international

It also needs to increase its marketing efforts by printing and distributing more catalogues. IKEA should learn more about demographics of market segments in Canada since management feels that the IKEA concept appeals to a much wider group than the existing target market. In addition, IKEA can increase the frequency of catalogues distribution. E.g. quarterly or semi-annual distribution. Despite the increase in costs that comes from printing more catalogues, IKEA can reduce its marketing expenditures on magazines advertisement and other means of promotion.

As IKEA stores are located away from the urban areas, many customers may only patronize the stores during weekends. Hence, the store may be relatively quiet during the weekdays and highly packed with shoppers over the weekends. In the case of IKEA, although it adopts the self-service concept in their stores, it actually still maintains a high level of contact with their customers. To ease and facilitate consumer’s shopping, IKEA provides catalogues, measuring tapes, shopping list and pencils. In addition, IKEA stores are designed to have a ‘family shopping experience’ with customer services and facilities such as a restaurant, day care facilities and a Swedish shop. Parents can leave their kids in a supervised play area, or keep their children with them in pushchairs provided (Slack, Chambers and Johnston, 2007). The key point about IKEA is that it is different to the rest of its industry. In typical furniture stores similar products are grouped together and the final delivery of products to customers may take several weeks.

IKEA is the largest furniture chain in the world, and in 2011 the Swedish company operated over 270 stores in 25 countries. In 2011 IKEA sales soared to over $35 billion, or over 20% of the global furniture market. Most of its stuffs believed IKEA will massive growth throughout the world in the coming decade because IKEA could provide what customer wanted: good design, and good made contemporary furniture with an affordable price. In one word, IKEA’s global approach focuses on simplicity, attention to detail, cost consciousness, and responsiveness in every aspect of its operations and behavior. (Jones, 2013)

The stores have restaurant, childcare facilities and plenty of parking. Customers can drop off their kids at the playroom and have delicious meal when they are tired. All of these not only provide customer with a comfortable shopping environment but also let them make an ‘IKEA trip’ and enjoy the fun of buying. Besides, IKEA’s distinctive show rooms help creating differentiation. Products are strategically placed in different small spaces like rooms which allow customers imaging this furniture in their own home. This makes everything looks more attractive.

The IKEA Group, one of the world’s top furniture retailers, has emerged as the fastest-growing furniture retailer in the US. Its unique business strategy has given it its strengths for its success today. However, like all strategies, IKEA’s strategy has its own flaws that can pose as weaknesses. IKEA also has a lot of opportunities in the marketplace such as expansions of their company and threats such as competitors in the same industry.

As pointed out in Ikea's mission statement, the company is in business to produce high quality products at a low cost. This would support a

A strategy is said to be a plan that is made for the long term success of a product or brand. It is extremely important to have a strategy in order to figure out a direction towards which any company is able to focus all its resources efficiently and achieve desired outcomes. Formulating effective strategies is a considerably long process in itself that combines analysing several factors, situations and issues that are already present in a company and looking to improve on them alongside trying to implement various innovations and ideas to collectively create a direction towards which they can move and direct the resources available to them.

At the outset, it may be useful to characterise IKEA in terms of the characteristics of demand (also known as the four Vs, see Slack et al. p 20). First, IKEA is clearly a high volume operation – as indeed most international retailers are – which lends to systematising operations but which implies capital intensive processes and therefore cost considerations will be crucial. Second, IKEA offers a large number of products (up to 14000 depending on the country/store) so there is high variety in the

IKEA’s strategy before the mishaps in America could be characterized as going against the norm charting their own path to success using low priced manufactures to secure lower selling prices aimed to target those who were of older age and of middle class standing. Their new strategy was to target those of a younger demographic, young married couples, college students, and 20-30 something singles. By reemphasizing design, promoting through hip quirky advertisements, and encouraging consumers to do away with their old furniture, IKEA revenues doubled in a four-year period. IKEA today has adapted somewhat of a local customization strategy where their store layouts will resemble that of many local household layouts as proven by their success in China where they failed to expand beforehand. They also keep their prices extremely low in some areas as China by sourcing a large percentage of products in the area of operation.