IKEA INVADES
AMERICA
HARVARD BUSINESS SCHOOL
SEPTEMBER 14, 2004
SUMMARIZED BY
OKTA
Company Milestone :
1943 founded by 17-years old Ingvar Kampard
1949 opened his first furniture showroom
1951 designed its own low-priced furniture
1956 began testing flat packages
1958 opened its store in Almhult Sweden
1965 Opened its flagship store in Stockholm
which became IKEA prototype retail outlet.
2002 the world’s most prominent furniture
retailer
2022 466 IKEA stores operating in 63 countries
IKEA PRODUCT STRATEGY
The new product development was overseen by a product-strategy council, which consisted
of a group of senior managers who established priorities for IKEA’s product lineup.
After a product priority was established, then here is the process of the development :
A product developer
would set the product’s
target retail using the
company’s matrix.
Selecting
Manufacture to
produce the
products
IKEA’S
engineers
determine the
material
Design process
Flat-Packaged
Boxes in
Shipping
Process
Low Price with Meaning
In the early years of IKEA, the design was
quite horrible, but then the company
adopted a more distinct design aesthetic.
The company corporate slogan “Low Price
with Meaning” commit to offer tasteful,
cleverly designed products that did not
make customers feel cheap.
Most of IKEAS’s customers were realized
that the product was not built for longevity,
but they were delighted by their unique
combination of form, function, and
affordability.
Shopping at Ikea
• IKEA always educate their customers to take
measurements spaces customers want to fill
with furniture and ensure the space in
customer’s car.
•
Customers was not only expected to transport
their purchases home, but they were also
expected to assemble their purchases on their
own.
•
If customers preferred to shop without their
children, they could drop their kids off at the
company-operated childcare facility in IKEA
stores. If they got hungry, they could stop by the
IKEA restaurant.
Furniture Retailing in US
▪
In the United States, the market of furniture
retailing was highly fragmented and there was a
wide dichotomy between low-end and high-end
retailers.
▪
The low- end include general discount retailers
such as Walmart, Office Depot, and Costco. The
environment in these stores were generally dreary
and dingy, a haphazard and inconsistent product
display, and poorly managed inventories.
▪
In contrast, most high-end specialty retailers offer
luxurious store environment with images of
affluence, prosperity, and comfort. These retailers
include Ethan Allen and Thomasville, Jordan’s
Furniture which also offered interior design
service.
▪
IKEA
Invades
America
IKEA’s success in America had not come easily.
In 1985, the company discovered that Americans did not like their products, most of
their products did not fit American appliances
▪
The company was relying on market research to adjust its product lineup and
merchandising.
▪
At the same time, IKEA had launched a high-profile advertising campaign designed to
get Americans to change their furniture often, not only once in a lifetime.
▪
Their American customers described as a person who travel abroad, liked taking risk,
like fine food and wine, had a frequent flyer plan and was an early adopter of consumer
technologies.
▪
IKEA
Way of Retails
▪
IKEA keep improve and innovate their way of retails.
▪
Nowadays, they not only have large traditional retail outlet in sub-urbans area, but they already start
developing city center stores with smaller space, improved capabilities for online shopping channel
throughout the world, as well as home deliveries and design services.
▪
A city center stores located in shopping centers with additional function as new meeting point.
▪
Popular pop-ups are time-limited stores designed to really connect with consumers.
▪
IKEA shops – small, and with a focus, meaning small stores that focus on a locally-adapted segment of the
IKEA range.
▪
“IKEA Planning Studio” a meeting point where customers can get support for more complex purchases, like
kitchen and bathroom projects
Opinions &
Recommendations
▪
IKEA did learn from their failure in entering
American markets. Every time they enter new
market, their executives searched and experienced a
local life. The team live and activities in a local way
until they found out the root of the local.
▪
A city center stores as a new entry point is suitable
for the Millennials and Gen Z who are still single or
newly married couple. They live within the city
centers, usually don’t drive a car in their daily
activities, and keep changing their furniture from
time to time.
▪
Once they become a larger family with children, they
choose to shop in larger IKEA stores which has
various product, and they can do many activities
within the IKEA stores with their children. This
shopping activities similar to their leisure activities,
spending quality time with family.
THANK YOU