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The IKEA approach
Kevan Scholes*
‘In times when many nations and people face economic challenges our vision of creating a better everyday life for the many people is more relevant than ever. To make it possible to furnish functionally, individually and sustainably – even when the economy is tight.’
This was Mikael Ohlsson, IKEA’s Chief Executive, speaking in 20121 while reporting a sales increase of 6.9 per cent (to b25.2 billion), profits of b3 billion and share gains in most markets. At the same time average prices had fallen by 2.6 per cent. IKEA had become the world’s largest home furnishings company with 287 stores in
26 countries and employing 131,000 people.
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Multinational furniture retailers (like IKEA) all of whom
were…show more content… He felt that the success of IKEA was built on a clear and detailed understanding of the furnishing market and
IKEA’s success criteria:
‘IKEA’s success has grown from stability and consistency regarding the big picture but with lots of action and innovation in the detail (evolution rather than revolution)’4 . . . (IKEA’s five success criteria were):
1. Design, function, and quality at low prices; 2. Unique
(Scandinavian) design; 3. Inspiration, ideas and complete solutions; 4. Everything in one place; 5. “A day out”, the shopping experience . . . You may well say that they are similar to those of most companies. The difference, in my opinion, is that IKEA is much better at delivering on these customer needs than are other retailers . . . Most competitors focus on one or at most two of these customer needs. High-street shops focus on design and inspiration. Out-of-town low-cost retailers focus on price. Department stores focus on choice.
The real strength of IKEA lies in the combination of all five.5
IKEA’s competitive strategy
Dahlvig explained IKEA’s approach to competition:
‘You can choose to adapt your company’s product range to the markets you are operating in, or you can choose to shift the market’s preference towards your own range and style.