IKEA is known globally for its innovative yet low priced furniture. The clean and functional design of their furniture makes IKEA almost immediately recognizable. A broad range of home furnishing, kitchen, and accessories are sold in their warehouse-like stores. Since its foundation in the ‘40s, IKEA has grown to become the “largest furniture retailer in the world with 328 stores in 28 countries and revenues of $36 billion dollars” (Hill & Hult p.353). After years of trial and error, IKEA finally established a winning strategy.
A unique in-store experience, worldwide customization, and slow growth makes them the success they are today.
One thing that sets IKEA apart from its competitors in the in-store experience. When entering the store, Shoppers can expect to spend hours browsing the wide range of products available. This is due to the maze-like layout of IKEA’s stores. Unlike other stores, shoppers must zig-zag through every department before they are able to check out. It is often believed that IKEA uses such a floor plan, forcing customers to move along a certain path, to promote impulse purchasing.
The complex yet strategic layout is known to make customers feel as if they need to go ahead and buy a product instead of going through the hassle of coming back later.
Another thing that sets IKEA apart from its competitors is their worldwide customization. Unknown to many, the products sold by IKEA vary around the world. After entering the United States in the late ‘80s, IKEA soon learned the importance of market customization.
The small European style that the company was used to, did not match the taste and preference of Americans. Adapting locally and revamping their designs for American consumers resulted in accelerated sales and company growth. In a world with so many different cultures, it is important for companies to be able to adapt and accommodate its consumers. Different markets need different styles, and while this may be time-consuming and complex, business who take the time and effort to do so will reap the benefits.
The last thing that sets IKEA apart, and most importantly makes them a success, is their slow growth. When looking further into the history of the company it is noted that it took quite some time for entry into the U.S. (1985) and China (1998). Entering into the U.S. was not easy for the foreign retailer. The company faced what was said to be a “painful learning experience” (Hill & Hult p. 354) in doing so. Not only would they face differing costs and competition, IKEA would face its biggest setback, market strategy. It took quite some time to understand the local needs and wants, followed by furniture customization. This took a few years to accomplish, pushing back entry into China. Although IKEA seemed to “learn their lesson” with the U.S, they faced a unique set of problems in China. There was a large pool of competition that could easily recreate their designs for lower cost. Understanding the local market needs, altering one’s strategies to meet those needs, and still make a profit is a complex task. To successfully achieve all these things takes time and IKEA has done so, resulting in a presence in 28 countries.
Globally, IKEA is almost instantly recognizable. Their innovative yet low priced furniture is sold in 28 countries around the world and produces a revenue of $36 billion dollars. Becoming the largest retailer in the world was no easy task for the company and took years of painful setbacks. Its formula of success is comprised of developing high-quality furniture, at a reduced cost, while also building up and improving supplier productivity. Adapting to local tastes and preferences allows IKEA to meet the needs of all consumers and ultimately strive as a top competitor around the world. A unique in-store experience, worldwide customization, and slow growth makes them the success they are today. After years of trial and error, IKEA finally has a winning strategy.