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Journey of IKEA in US

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This presentation describes the journey of a Swedish Company - IKEA in a very different furnishing market of United States

Publicada em: Varejo
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Journey of IKEA in US

  1. 1. 2015 Facts & Figures Source: IKEA Website 172,000 Employees 33.8 B Sales (Euro) 884 million visits 11 M m2 Retail Space 300+ Stores Worldwide Ingvar Kamprad, at the age of 17, founded IKEA in 1943. From matchboxes to household goods to furniture, IKEA kept on expanding it’s product line. Ingvar Kamprad Elmtaryd Agunnaryd
  2. 2. Affordable solutions for a better living As-Is Section IKEA Museum IKEA Cafe IKEA Child Essentials Kitchenware Huge Floor Space
  3. 3. The INCEPTION • Discontinue all products and focus on low price furniture • In 1953, the first furniture showroom is opened in Almhult, Sweden. The INNOVATION • Due to pressure from competitors they started making their own furniture • Price reduction motives led to design for flat packaging The INAUGRATION • 1958, the first IKEA store is opened in Almhult • In 1965, the monumental IKEA store in Stockholm is inaugurated
  4. 4. Strengths • Attractive product design • Market leadership • Solid financial position • Vast, yet focused product range Weaknesses • Weak presence in Asia • Damaged reputation due to a series of incidents • Competitive advantage difficult to sustain • Lack of flexibility due to its size Opportunities • More emphasis on CSR • Increasing presence in developing countries • Formation of strategic collaborations • Adding premium range of products into portfolio Threats • Social treads (building online help to guide customer) • Market forces (lower prices and economic scale) • Economic factors (price strategy) SWOT
  5. 5. New Product Development Process Product- Strategy Council Group of Senior Managers IKEA’s Product Lineup Priorities Consumer Trends Globe- Trotting Council Members Product Manager Product’s Target Retail Price Matrix Overseen by Consisted of Who Establishes Based on Identified by Then Decides Using Product Strategy
  6. 6. Product Strategy The Matrix Price Range / Style Scandinavian (Sleek Wood) Modern (Minimalist) Country (Neo-Traditional) Young Swede (Bare Bones) High Medium Low 3 Basic Price Range & 4 Basic Styles Within each price range the company would survey the competition to establish a benchmark and then set its own price point 30% to 50% lower than those of its rivals. For each Product Type – A Separate Matrix  Set Retail Prices  Identify Gaps in Product Lineup
  7. 7. Product Strategy In some cases, different product components would be sourced from different suppliers. These different pieces will come together in the store only when customer would select each pieces individually. High Quality / Expensive Material: On visible and stress prone surfaces/areas Low Quality / Cheap Material: On less visible surfaces and areas which were less likely to undergo stress Target Retail Price of Proposed product is established Selecting Manufacturer • IKEA worked with 1800 suppliers in 50+ countries Balance Cost-Efficient Labor with Company’s Product Quality Standards Lookout: Building supplier relationships in developing countries Encourage internal competition among suppliers Focus: Cost Efficiency
  8. 8. Product Strategy Design – Handled in-house via Internal Competition Company’s furniture was designed to ship disassembled. All products were transported ‘Flat’ => Flat-Packaged Boxes High Volume usage Savings on shipping costs Products retail price could remain low
  9. 9. Low Price with Meaning Quality home furnishing products at affordable prices  Low prices are the cornerstone of the IKEA vision, business idea and concept.  The basic thinking behind all IKEA products is that low prices make well- designed, functional home furnishings available to everyone.  The vision is to create a better everyday life for the many people. Democratic Design Form follows Function Low prices with Meaning Good Design + Good Quality + Good Price
  10. 10. IKEA wants to be viewed as:  Affordable  Do-It-Yourself  Having Well-Designed, Functional Products  Innovative  Entire Family-Friendly Brand Positioning Statement To, working middle class families, IKEA is a brand in the furniture retailing category that manufactures stylish furniture at an affordable price because their vision is to create a better everyday life for many people  The above positioning statement incorporates the original IKEA business idea which has successfully positioned the brand as a leader in value-priced, practical design.  Additional verbiage identifies an international customer focus driven by localized style and taste.
  11. 11. Brand Mental Map
  12. 12. Brand Personality
  13. 13. Profile of Competitive Brands Key point of difference for IKEA is that none of IKEA’s competitors offer as broad a range of styles, types and quality levels within every category of home furnishings as IKEA!
  14. 14. American Market Case goods & Upholsted Furniture 90% Top 10 Retailers 14.2% Two types of Stores Low end • Walmart • Cheap Shops High end • Luxurious stors • Jordan Furniture Types Of Stores
  15. 15. Various payment options easy credit High touch sales consultants Offered interior design services Huge inventories Variety of styles Substyles Quality and service Sales people educated customers on Grains of wood, construction techniques, longevity & durability One goal: To make customers believe the products which they buy will last a lifetime
  16. 16.  Americans are reluctant to buy new furniture  Change their spouse often but not furniture  Every retailer offered free delivery services or sometimes additional fee  They offer to set up the new furniture in customer’s home and discarded the old ones  Customer should wait for a few weeks but everything will be done during that day.
  17. 17. IKEA Invaded America Opened first store in Philadelphia in 1985 Challenges Faced In America Sofas and beds were not soft enough Portion sizes were too small Americans had a not to let go mentality Product dimension in cm not inches An Average American?
  18. 18. Shopping at IKEA Showroom • Make yourself at home • Talk to the sales staff • They are proud of their prices Before you go • Make a list of everything you need Market Hall • Many speciality shops gathered together IKEA Restaurant • Feeling Hungry? IKEA For Kids • You Shop, Kids Play • Children’s Furnishing • Care and feeding of children Self Service Area • Flat is Good • Trolley’s for everyone Everything but barter • You can use any mode of payment
  19. 19. People visit an IKEA Store for the first time
  20. 20. 2003 to 2016  IKEA launched its e-commerce portal  IKEA expanded to other European countries, Asia Pacific and Middle East.  It currently has over 375 stores in more than 50 countries
  21. 21. IKEA - Revenue over the years Source: IKEA Website
  22. 22. UVP Good Quality Low Price Glocal Design Family Time Unique Store Layout Choice
  23. 23.  Suburbs & large cities  Shops for a Bargain  Prefers Inexpensive but durable furniture with good design  People who are working in cities other than their hometown  Middle and Upper-Middle income families  Fun, Funky & Aspirational  Slow shoppers that plan full day visits  Expect minimal customer service Customer Persona  IKEA understood that ‘One size doesn’t fit all’  IKEA officials conduct workshops, seminars and house visits to understand customer habits and preferences  15 homes in Mumbai, Bangalore and Delhi have been given IKEA products for a test run  It took 6 years for IKEA to start its inaugural store in South Korea due to extensive customer analysis  IKEA had to lower its price by almost 50% in China so as to match the price of the local furniture retailers
  24. 24. 2 1 5 4 0 1 2 3 4 5 6 0 1 2 3 4 5 6 Price Design Design Vs. Price walmart office depot ethan allen IKEA Brand Perceptual Map (IKEA)
  25. 25. IKEA – The Road Ahead  €50 Billion Revenue and 500 stores by 2020  Expand presence in emerging markets such as China & India  Enter new markets such as Brazil, South Africa & Nigeria  IKEA bought a 23 acre plot in Navi Mumbai for 400 crores and will build a 4,00,000 sqft store  IKEA purchased a 13 acre plot in HITEC City, Hyderabad and will build a 4,00,000 sqft store  IKEA is planning to purchase a 3,50,000 sqft land in Borivali, Mumbai for 900 crores  It plans to open 25 stores in India by 2025 IKEA in India

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