How is the IKEA operations design different from that of most furniture retail operations?
IKEA is known as one of the world’s largest furniture retailer that focuses highly on cost control, operational process and product development. IKEA differentiates itself from most furniture retailers by offering a wide range of well designed array of home furniture at very attractive prices that remain affordable to a large group of diverse customers. There are some unique features of IKEA as compared to most furniture retail stores (IKEA, 2012)
‘Self – Service’ (minimal service or influence from sales person)
Details of all products are made ubiquitous in the showroom thus making sales assistance unnecessary which this in return helps to
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As all sales are done on ‘self-serviced’ manner, it may not create a great shopping experience as compared to most retail stores where sales person are able to cater a more specific and unique first-hand experience to all customers to create loyalty.
Lastly, IKEA being the largest furniture retailer require a lot of natural material such as wood, which may harm the global environment (IKEA, 2012).
Reference
IKEA (2012) Our Vision and Business Idea. Available at: http://www.ikea.com/ms/en_SG/about_ikea/the_ikea_way/our_business_idea/index.html (Accessed 29 January
The services and products offered by IKEA provide value to its customers in various ways. For one, the products and services are very affordable. The products and services are not priced highly and therefore, the average customer can enjoy them. At the same time, the products are of high quality. From IKEA’s slogan “low prices but not at any price”, it is clear that the company prices its products lowly but that does not mean that the quality is compromised. IKEA satisfying its customer’s needs through providing them value for their money as they provide quality products that will last for a long time, and at affordable costs. The fact that the company has set the minimum acceptable standards for its wood, implies that it is also keen on quality and on the environmental impact of its action of making furniture ( Edvardsson, Enquist & Hay, 2006).
IKEA is considered to be a low cost, high quality producer in the furniture industry, therefore it is important to
IKEA is the worlds largest furniture retailer (in 2002), with sales approaching 12 billion dollars. They operate in 22 countries and have 154 full service distribution stores. IKEA is a highly differentiated service and product provider, emphasizing high-quality product at the lowest prices via non-traditional positioning strategies. In order to provide these low costs, the product came with virtually no customer service and put it together ' and transport yourself ' directions. In addition to these "strictly self-service" outlets, IKEA offered various amenities including, Swedish cafes and playgrounds for kids.
The high level of customer involvement is one of the key features of the IKEA concept. With their unique self-serviced warehouses, customers are required to collect their flat-packed items before proceeding to checkout. Customers are also involved in the assembly of their purchases after transporting them home in their private car. Because the company’s furniture are designed to be shipped disassembled and sold to the customer flat-packaged boxes IKEA saves a lot on shipping costs. As one of the company’s mantras said; “We don’t want to pay to ship air”.
IKEA’s vision is to design a better life at home. Making it affordable as possible so that many people could have admirable furnishing. IKEA use function, quality, design and value to obtain their customer needs. IKEA learn to synchronise the contingency of the supplier and needs of the customers. Using that strategy to sustain the low prices. In order to gain a good condition of a product, IKEA go in for highly automated production. Together with mass producing and keeping long-term relationship with the supplier, IKEA is able to prolong their vision and aim to serve their customers. (Ikea.com/sg)
Ikea is a multinational group of companies operating on a global scale in the furniture industry, offering a wide range of ready to assemble (Do It Yourself) furniture, appliances, and accessories worldwide. The company is well known and recognized for its modern designs, functionality of their products, quality services, and their eco-friendliness. Within the competitive market, Ikea aims at being better than its competitors in the market, and offers the best standards of services to its customers, as well as a wider range of products for low prices.
IKEA's strategy is derived from environmental conditions; the Swedish company's understanding before customers want functional furniture, the attractive and modern design, and affordable, with immediate availability. The furniture has lost its status as a heritage object, to become a universal object of consumption.
They have integrated this concept in every business decision and global strategy, and have never strayed from the original objective of IKEA. The pioneer of IKEA’s concept was the standardized process of providing customers with disassembled furniture to be arranged at home also known as the ready-to-assemble kit. This helped increase storage and maintain large inventories at the store, which in turn eliminated warehousing costs and permitted the consumers to obtain ownership of their purchase on the same day itself. Involving customers in the value chain was a historic move by IKEA as it drastically reduced costs on every level. IKEA’s shoppers are half-consumers and half-producers because they have to self-assemble their purchases. Even though IKEA provides assistance, the customers prefer to order, carry and transport their own goods. The concept of flat packaging has further encouraged self-handling of purchases. It has also improvised storage capabilities and further reduced shipping costs. This new store model allowed IKEA to have its staff focus on boosting rapid movements of consumers and in store displays, rather than handling and delivering huge, bulky furniture items. The self-service strategy has become popular amongst the shoppers as well as IKEA’s competitive
IKEA is the largest furniture retailer around the world. The current leadership position of the company provides considerable advantages in terms of the economies of scale and at the same time creating an entry barrier for new competitors. It is ready to achieve the target of EUR 50 billion annual sales by 2020.
Ingvar Kamprad, an entrepreneur, founded the Swedish furniture company IKEA in 1943 (Chu, 2013). Kamprad was only 17 years old when he founded the IKEA company. He named the company after the initials of his first and last name and the first letter of the farm and hometown he grew up in (Bhasin). In the years following, the Swedish furniture giant has grown to 328 stores in 28 countries as of August 2015. This includes 1.9 billion visits to IKEA.com, 771 million store visits, 213 million catalogs printed in 32 languages and 155,000 co-workers across 6 continents. According to IKEA’s website, their vision is “To create a better everyday life for the many people”. An interesting fact about IKEA is that its furniture production consumes one percent of all the wood produced on earth (Bhasin). The site goes on to explain how they optimize their entire value chain to provide affordable quality to their customers. IKEA expanded into China and other countries so that they could continue to attain their goal of creating “a better everyday life for the many people”. A unique aspect with IKEA is their product packaging. The product is a flat package, so it is easy for the consumers to take the product home and assemble it themselves.
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)
Even though there have been many changes in the economy Ikea has been able to regulate the changes with their success in obtaining the lowest production prices. The company continues to provide high quality furniture that goes with their original concept of stylish furniture for a low price. Ikea offers all kinds of products that cater to most any lifestyle and budget. Ikea still mostly operates their business in the European market. Consequently, they are able to reach more customers in different countries based on the location of their production and distribution centers. Even with the many changes to the economy Ikea has managed to stay in business with their low pricing by developing different products that is in demand by
“Trends come and go, but combining a low price with good design and function never goes out of style” – This quotation tells us a lot about IKEA, a world-wide leading Home Furnishings brand, which was originated in Smaland, Sweden in 1943. Since then, IKEA has officially opened its stores in more than 30 countries, including Singapore.
IKEA established itself as the largest furniture retailer in Sweden by the early 1970s by reinventing the wheel of furniture manufacturing at that time. Majority of furniture manufacturers in Sweden produced expensive products with designs that were basic or passed down generation to generation, additionally other manufacturers stores where located in downtown congested areas. IKEA’s strategies which consisted of low cost low priced furniture, brave intricate designs, self-assembly,
Today’s marketplace is constantly changing and requires a completive advantage which includes giving excellent service which satisfies customers. Most businesses are based customer based and most business that deliver a service rely on their frontline employees to make a link between the customer and the organization. Research has found that good customer service is essential for a relationship between the customer and a business.