308-270-1
IKEA: The Japanese Misadventure and Successful Re-entry
This case was written by Indu P, under the direction of Purkayastha D, ICMR Center for
Management Research (ICMR). It was compiled from published sources, and is intended to be
used as a basis for class discussion rather than to illustrate either effective or ineffective
handling of a management situation.
2008, ICMR Center for Management Research
ICMR, Plot # 49, Nagarjuna Hills, Hyderabad 500 082, India
Email: info@icmrindia.org.
www.icmrindia.org
case centre
Distributed by The Case Centre
www.thecasecentre.org
All rights reserved
North America
t +1 781 239 5884
f +1 781 239 5885
e info.usa@thecasecentre.org
Rest of the world
t +44 (0)1234 750903
f +44 (0)1234 751125
e info@thecasecentre.org
Purchased for use on the Business Project Plan, at Foreign Trade University.
Taught by Van Hoang Dinh, from 6-Jun-2023 to 31-Aug-2023. Order ref F479807.
Usage permitted only within these parameters otherwise contact info@thecasecentre.org
Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I
ICMR Center for Management Research
308-270-1
“The Japanese market and consumers were not ready for IKEA, and IKEA was definitely not
ready for Japan at the time [in the 1970s and 1980s]… Now we have done the major markets in
the world why shouldn’t we be in the second-biggest retail market in the world?”1
- Tommy Kullberg, CEO, IKEA, Japan, in 2006.
“Multinational companies entering Japan often don’t spend enough time to understand the nature
of the competition here, which is usually fairly fierce, and the so-called unique needs of Japanese
consumers. The key challenge for IKEA will be to translate their very globally successful concept,
the type of design they offer and their retail format, into an acceptable Japanese way.” 2
- David Marra, Principal, AT Kearney3 in Tokyo, in 2006.
“You would think that Japan would be the absolutely perfect market for IKEA. If they can crack
the whole service concept ... so that there is less work for Japanese shoppers, then I think they
have a better chance to succeed this time.”4
- Elen Lewis5, Business Journalist, in 2006.
IKEA GIVES JAPAN ANOTHER TRY
During the second week of April 2008, the monorail commuters on the Kobe Portliner Monorail,
Japan were in for a surprise. When the monorail chugged in that morning, instead of the usual grey
and steel colors, the monorail’s exteriors were painted in bright colors with different motifs like
flowers, checks, etc. More surprises were in store as they entered and found bright and stylish
upholstery and curtains inside. The revamp, they later learnt, was a part of the promotional
campaign by Swedish furniture retailer, IKEA Group6 (IKEA) to publicize the opening of its third
outlet in Port Island, Japan on April 14, 2008.
IKEA is one of the largest furniture manufacturers and retailers in the world and is well known for
its stylish and innovative furniture designs.7 Almost all IKEA’s products can be dismantled and
packed in flat packages, making them easy to transport. IKEA began its international forays in the
1960s, and by 2008 it had a presence in around 35 countries8 across the world.
1
2
3
4
5
6
7
8
Sachi Izumi, “IKEA Assembled for another Go at Japan,” www.thestandard.com.hk, April 8, 2006.
“Size Matters as IKEA Returns to Japan,” www.thelocal.se, April 16, 2006.
A T Kearney Inc. is a US-based management consulting firm.
“IKEA Tries to Furnish Japan, Again,” www.uk.ibtimes.com, April 24, 2006.
Elen Lewis is the author of the book Great IKEA! A Brand for All the People.
Inter IKEA Systems B.V. located in the Netherlands is the owner and franchisor of IKEA concept. The
IKEA concept focuses on the company’s commitment to product design, consumer values and solutions.
According to the company: “IKEA concept: At the IKEA store you pick up what you want, take it home
and put it together yourself. You do a little work so you don’t have to pay someone else to do it for you.
And we design our products so they can be made at a low price and then constantly work to push this
price even lower.”
In addition to furniture, IKEA also sold utility items such as utensils, hooks, clips, stands, etc.
Including countries where it operated through franchisees.
2
Purchased for use on the Business Project Plan, at Foreign Trade University.
Taught by Van Hoang Dinh, from 6-Jun-2023 to 31-Aug-2023. Order ref F479807.
Usage permitted only within these parameters otherwise contact info@thecasecentre.org
Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I
IKEA: The Japanese Misadventure and
Successful Re-entry
308-270-1
Though IKEA was highly successful in most of its international markets, when it came to Japan,
its first venture was unsuccessful. IKEA entered the Japanese market in the 1970s, and exited the
country in 1986. At that time it had entered the country through a partnership but the venture was
not successful. According to Tommy Kullberg (Kullberg), former president and CEO of IKEA
Japan KK (IKEA Japan), “We just were not ready to handle the very demanding Japanese market,
and the Japanese customer was not ready for IKEA, and to drive things home and put it together
themselves. It was a failure, no doubt about it.”9
IKEA decided to re-enter Japan in the early 2000s and after thorough ground work opened its first
store in 2006 in Funabashi. The store was highly successful and IKEA opened two more stores, in
2006 and 2008. On re-entering the market Kullberg said, “This time we have done our homework.
We have been doing a lot of market research to understand how things work in Japan.”10
Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I
Ingvar Kamprad (Kamprad) established IKEA in 1943 at the age of seventeen. He came up with
the name IKEA by combining the first letters of his name (Ingvar Kamprad), followed by the first
letters of the farm and village he grew up in (Elmtaryd and Agunnaryd). Kamprad started a small
business by buying and selling pens, Christmas cards, matches, cigarette lighters, nylon stockings
and other items in bulk. He sold these items to the residents of Smaland11 at a reasonable price, but
still made healthy profits. In 1945, Kamprad started promoting his business through mail order
catalogs as conducting individual sales calls became impossible.
In 1947, furniture entered IKEA’s product line for the first time as armchairs were introduced. IKEA’s
furniture became very popular and the line was extended to include more products. In post-war
Sweden, the demand for inexpensive furniture grew and IKEA was able to cater to this need. However,
due to problems with the Swedish manufacturers, Kampard began procuring furniture from Poland and
found that it was much more cost-effective to do so, and he could even sell the furniture at a lower
price. By 1951, furniture sales had increased to the point where Kamprad decided to discontinue all
other products and concentrate solely on selling furniture that was stylish and low priced at the same
time. In the same year, the first IKEA furniture catalog was published.
In 1953, the first IKEA showroom was opened in Älmhult. The showroom allowed customers to
see, touch, and feel the items they were ordering, so that they could assure themselves of their
quality. The sales during the year were worth SKr12 3 million. In 1955, IKEA began designing its
own furniture, after suppliers boycotted IKEA owing to pressure from IKEA’s competitors. That
year IKEA’s sales were at SKr 6 million. In 1956, the company introduced its best and most
successful innovation – furniture that could be dismantled. This concept had its origin in an
observation by an IKEA employee that a table could easily fit into a car if its legs were removed.
This would not only make transporting furniture easy, but also prevent damage due to bad
transportation. Inspired by the idea, IKEA started designing its own furniture, featuring items that
could be easily dismantled and packed into flat packages. This made it convenient for buyers to
carry the furniture home. Besides, it also reduced the overall cost of the furniture, as buyers had to
assemble the items themselves at home using instructions provided by the company. The first
flatpack product that IKEA introduced was Lövet Table.
In 1958, the first IKEA store was opened in Älmhult. The store occupied an area of 6700 square
meters. The company’s sales rose to SKr 40 million by 1961. In 1963, IKEA ventured overseas by
opening its first overseas store in Olso, Norway. In 1965, the first suburban store was opened on
9
10
11
12
“IKEA Tries to Furnish Japan, Again,” www.uk.ibtimes.com, April 24, 2006.
“Quote of the Day,” Japan Today, April 10, 2006.
Smaland literally means ‘Small Country.’ It is a province in southern Sweden.
SKr - Swedish Krona.
3
Purchased for use on the Business Project Plan, at Foreign Trade University.
Taught by Van Hoang Dinh, from 6-Jun-2023 to 31-Aug-2023. Order ref F479807.
Usage permitted only within these parameters otherwise contact info@thecasecentre.org
BACKGROUND NOTE
308-270-1
the outskirts of Stockholm. The store occupied over 45,000 square meters and was circular in
design. The store was hugely popular and the service personnel at IKEA found it difficult to attend
to all the customers. This led to IKEA opening warehouses where customers could serve
themselves. IKEA ventured into Denmark in 1969.
Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I
In 1982, IKEA Group was formed, with Stichting INGKA Foundation, based in the Netherlands as
its owner (Refer to Exhibit II for the ownership structure of IKEA).
In 1984, the IKEA Family, a customer club, was launched. By 1985, IKEA had 60 stores across
the world and had 10,000 employees. In 1986, Kamprad officially retired as Group President, but
continued to play an active role as Senior Advisor. Anders Dahlvig (Dahlvig) took over from
Kamprad as President. In the late 1990s, the company introduced ‘Children’s IKEA’, a range of
children-focused furniture. The company worked extensively with child psychologists as well as
children themselves to make the range completely suitable for the target market. Extensive testing
was done before this range of furniture was commercialized.
By 1999, IKEA had 50,000 employees and a presence in 29 countries through 158 stores. In 2002,
IKEA started the IKEA Recovery Project. In more than 100 stores in Europe, returned products
were repaired wherever possible. In 2005, the company employed over 84,000 people in 205 stores
across 32 countries.
As of August, 2007, IKEA had 245 stores in 24 countries. IKEA had a product line of about
12,000 items. During the year IKEA recorded sales of € 19.8 billion and employed over 118,000
people across the world. It planned to open 23 new stores in 2008 (Refer to Table I for IKEA’s
sales figures)
Table I
Sales of IKEA
Year Sales (in € Billion)
1997
5.4
2003
11.3
2004
12.8
2005
14.8
2006
17.3
2007
19.8
Adapted from IKEA, “Facts & Figures IKEA Group 2007,” www.ikea-group.ikea.com.
Although IKEA had expanded its operations into varied socio-cultural environments across the
globe, it had not lost its ‘Swedish’ identity in its business operations. The company’s logo was
carefully designed to reflect the colors of blue and yellow – Sweden’s national colors. All IKEA
stores were painted in yellow and blue.
4
Purchased for use on the Business Project Plan, at Foreign Trade University.
Taught by Van Hoang Dinh, from 6-Jun-2023 to 31-Aug-2023. Order ref F479807.
Usage permitted only within these parameters otherwise contact info@thecasecentre.org
By 1973, seven stores were opened across Scandinavia and sales were at SKr 480 million. But sales
stagnated owing to low population growth in Scandinavia. So Kamprad decided to explore nonScandinavian countries in order to sustain growth. The first such venture was Switzerland, where an
IKEA store was opened in 1973 in Zurich. IKEA’s simple and contemporary designs gained immediate
acceptance in Switzerland. In 1974, IKEA entered Germany, opening a store in Munich. Despite
opposition from the German retailers, IKEA gained popularity and in the next five years opened 10
new stores across West Germany. During the late 1970s, IKEA opened stores in Austria and the
Netherlands. Subsequently, IKEA ventured into other markets such as the US, Canada, Australia, and
France (Refer to Exhibit I for the details of IKEA’s International Expansion).
308-270-1
Most of the furniture items had Scandinavian names. Bookshelves, media storage, coffee tables
were named after places in Sweden. Norwegian places were used to name beds, wardrobes and
hall furniture. Bathroom fixtures and accessories were named after Scandinavian lakes and rivers,
while garden furniture were named after islands in Sweden, and carpets were named after places in
Denmark (Refer to Exhibit III for a list of IKEA’s product names). IKEA operated with the idea,
“to offer a wide range of well-designed, functional home furnishing products at a price so low that
as many people as possible will be able to afford them.”13
Over the years IKEA has acquired a worldwide reputation, particularly for its store ambience.
“[IKEA] has been one of the biggest success stories of globalization… I struggle to think of any
other retailers that attract that sort of excitement, those near-riots,”14 said Bryan Roberts, a research
manager at Planet Retail15.
Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I
THE JAPANESE MISADVENTURE
IKEA first entered Japan in 1974 through a joint venture with a Japanese company as part of its
plans to expand globally. However, even after twelve years in the country, IKEA could not gain a
foothold in the market and decided to exit Japan in 1986.
There were several reasons for IKEA’s debacle. With its limited international exposure, IKEA
failed to customize the products according to the requirements of the Japanese. Its distribution
system in Japan was not developed and it could not cater to the needs of the Japanese. The stores
were too small to display the products as IKEA wanted them to be displayed. At that time IKEA
was obtaining products from Europe to sell in Japan, as it did not have any operations in other
Asian countries to form the supply network.
In the seventies, Japan was experiencing phenomenal economic growth and the Japanese were
investing in luxury products that were priced high. They were of the view that products low in
price meant they were low in quality too. With its low prices, IKEA created the impression of a
low end furniture retailer in Japanese minds. The Japanese were also used to being attended to in
shops and did not appreciate the idea of assembling their own furniture.
Analysts felt that the main reason for IKEA’s failed venture was differences that cropped up with
its joint venture partners. In most foreign markets IKEA had operated alone, but in Japan, IKEA
chose to partner with a local company. From the beginning, the partners had differences and the
Japanese partner was not convinced that IKEA’s idea of providing furniture at low and affordable
prices would work in Japan.
Analysts cited another reason for IKEA’s poor showing in Japan. Japanese culture did not
encourage people to spend money, time and effort on furnishing their homes. Instead Japanese
chose to spend on items like cars, bags and dresses – things that could be displayed outside their
homes, and were associated with status (Refer to Exhibit IV for the details of housing in Japan and
the purchasing habits of the Japanese).
13
14
15
www.ikea.com.
“IKEA Thinks Small as it Makes Attempt to Furnish Japan Again,” Shanghai Daily (accessed from
http://en.ce.en), April 24, 2006.
Planet Retail is a London, UK-based consulting firm.
5
Purchased for use on the Business Project Plan, at Foreign Trade University.
Taught by Van Hoang Dinh, from 6-Jun-2023 to 31-Aug-2023. Order ref F479807.
Usage permitted only within these parameters otherwise contact info@thecasecentre.org
IKEA’s products are designed by a team of around 80 designers that include full-time designers
and freelancers. Right at the design stage, care is taken to ensure that the products can be packed
flat, so that they can be easily transported and assembled. Flat packaging enabled IKEA to reduce
logistics costs. The items are on display in IKEA stores and the customers can choose the item
they need and pick it from a warehouse attached to the store. In most countries customers assemble
the products themselves.
308-270-1
Dahlvig commented: “I think last time in the 1970s it was way too early to come to Japan. I think
it was a big mistake probably for IKEA to launch in Japan that early. And it was the right decision
to leave and wait until we are ready.”16
IKEA decided to re-enter the market in 2001 and established IKEA Japan KK in 2002 with
assistance from the Japan External Trade Organization17. The second time around IKEA was
careful and took its time to understand the market so that it could adopt strategies to suit the needs
of the Japanese.
Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I
IKEA JAPAN: THE SECOND COMING
IKEA sent some officials to start the ground work and carry out the initial set up process in 2002.
Gordon Gustavsson (Gustavsson), who had been with IKEA since the 1980s was chosen for the
task. His main task was to set up the first store in the country and make it operational. Earlier
Gustavsson had played a major role in setting up IKEA stores in China. Another person who
played a prominent role in setting up IKEA’s Japanese operations was Kullberg, who joined IKEA
in March 2002. He had been in Japan since 1988 and was associated with several companies in
Japan. He was also a commercial counselor at the Swedish embassy. IKEA was not in a
tremendous hurry to get started and spent a lot of time getting to know the market. Kullberg said,
“We have to take the time that is necessary to get ready in the proper way. We are facing the most
quality-oriented customers in the world so it’s got to be right from the beginning.”18
After joining IKEA, Kullberg met several people who were involved in IKEA during the 1980s.
Through the interactions he learnt that in the seventies, it had been premature for IKEA to enter the
market, and Japan too had not been ready for the IKEA concept of self-help. He said, “Back then,
the Japanese market was not ready for IKEA. We didn’t have the support to adapt products and
respond to requests from the Japanese side.”19
IKEA was of the view that the first time around, it had not given enough consideration to the
wants of Japanese consumers and so it decided to conduct a thorough study of the Japanese
markets before it opened the stores this time. As a part of the study, officials from IKEA visited
more than hundred Japanese homes. According to Lars Petersson 20 (Petersson), CEO and
President, IKEA Japan, “We have been to many, many homes, well over 100 homes, and we know
very well how Japanese people are behaving, what things are important for people at home, how
they cook their food, how they store their things, how they even take their bath, how life at home
16
17
“Japanese Flock to IKEA,” www.thelocal.se, April 24, 2006.
JETRO, Japan External Trade Organization is a Japanese government related organization that works
towards promotion of mutual trade and investment between Japan and other countries in the world.
18
Lisa Twaronite, Ariana Nobles, “IKEA Set for Another Launch into Japanese Market,” www.investors.com, July 22,
2004.
19
“Quote of the Day,” Japan Today, April 10, 2006.
Petersson joined IKEA in 1983 and was the Marketing Manager of IKEA Japan from September 2005. In
September 2006, he replaced Kullberg, who resigned.
20
6
Purchased for use on the Business Project Plan, at Foreign Trade University.
Taught by Van Hoang Dinh, from 6-Jun-2023 to 31-Aug-2023. Order ref F479807.
Usage permitted only within these parameters otherwise contact info@thecasecentre.org
After IKEA exited the country, by the late 1980s, Japan’s economy was booming; the demand for
designer goods and high priced goods grew rampantly. This was followed by more than a decade
of economic gloom, which was known as the ‘lost decade’. At this time in the 1990s, the attitude
of Japanese consumers shifted and they acquired a greater appreciation of good bargains - their
former tendency to equate good quality with high price declined. Japanese manufacturers started
looking at different ways of pushing to prices and some furniture retailers like Tokyu Hands
introduced the concept of prepackaged furniture, which had to be assembled by customers. At the
same time, emphasis on home comfort was also growing, and several stores offering furnishings
and accessories had emerged.
308-270-1
goes on.”21 IKEA also glanced through more than 25,000 pictures of typical Japanese homes.
Kullberg was looking forward to introducing the Japanese to the IKEA experience. He said,
“Japanese and Swedish designs have much in common: clean, simple designs made with wood and
other natural materials, as well as a focus on living beautifully and comfortably in small spaces.”22
Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I
IKEA wanted to make a mark in the furniture market in Japan and help people explore new
possibilities in designing and furnishing their homes. “In fact, we’re confident we can expand the
home furnishing market in Japan. We hope to satisfy needs and possibilities people haven’t seen
before,”23 said Dahlvig.
Before deciding on the prices, IKEA checked all the major competitors in the country, and tried to
maintain prices at a lower level. The items were priced competitively. A set of living room
furniture including sofas, TV panel, bookshelves, rocking chair and coffee table was available for
around ¥ 85,00024. A square side table was priced at ¥ 2,500 and a mug was priced at ¥ 75. Most of
the customers were of the view that the prices at IKEA were competitive to those offered by
MUJI25.
OPENING NEW STORES
Most foreign retailers entering Japan preferred to lease stores but IKEA bought land to develop its
stores. Analysts were of the view that this reflected IKEA’s long term view for the country. IKEA
initially planned to enter cities with a population of more than one million. IKEA’s prime
consideration was location of its stores and also, the proximity to public transport systems.
Another consideration was the availability of ample space for parking.
For the first store IKEA identified a site which was earlier the world’s largest indoor ski slope,
SSAWS, which had closed down in 2002. It was highly popular and was well connected. IKEA
planned to complete the construction and open the new store by September 2005. But it could not
open the store as planned as the construction was delayed by several months for unexpected
reasons. In Tokyo, builders generally sprayed water for several weeks on dry soil before beginning
construction in order to prevent cloud dust at the site. IKEA opted to sow grass on the site to save
time. However a new problem cropped up as the grass attracted rare migratory birds. The birds
settled down and began nesting on the site, delaying the construction. Then IKEA decided to
postpone the construction for some time, till the birds left. This move was appreciated by analysts
and environmentalists. They said that any other listed company would have gone ahead with the
construction in order to please shareholders. IKEA, being a privately held company chose to delay
its operations. They were also of the view that it reflected the environmentally conscious nature of
the company. Thus, even before the first store was constructed and opened, IKEA became popular
in the neighborhood.
21
22
23
24
25
“IKEA Tries Turning Japanese,” Nightly Business Report, www.pbs.org, December 1, 2006.
“Furnishing the Future,” Invest Japan, No.3, 2003.
“Japanese Give IKEA 2nd Shot,” www.iht.com, April 25, 2006.
1 US$ = ¥ 106.77 (Japanese Yen); 1 € = ¥ 166.155 as of June 12, 2008.
Ryohin Keikaku Co., Ltd. or Mujirushi Ryohin (meaning no brand goods) or MUJI is a Japanese retail
company.
7
Purchased for use on the Business Project Plan, at Foreign Trade University.
Taught by Van Hoang Dinh, from 6-Jun-2023 to 31-Aug-2023. Order ref F479807.
Usage permitted only within these parameters otherwise contact info@thecasecentre.org
This exercise helped IKEA to understand the Japanese way of living and the problems the
Japanese faced in arranging furniture and storage within their homes. IKEA formulated its strategy
for Japan: it was to be based on ‘small space living’. The product range in Japan was decided
accordingly. IKEA decided that large sofas which were among the best sellers in the US and
Europe should not be brought into Japan at all. Instead, furniture to suit the small apartments and
homes in Japan – two-seater sofas, storage boxes to save space, sofa beds etc. - should be included
in the product range.
308-270-1
Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I
The five floor store occupied an area of 40,000 square meters and had parking space that could
accommodate 2,200 vehicles. The store displayed around 8,500 items from IKEA’s collection of
over 10,900 items. It featured 73 furnished rooms, each the size around 4.5 tatami 28 or 6 tatami the size of a typical room in Japan, which is smaller than the average room in the US or Europe.
The rooms were targeted at different groups of customers. One room was decorated to reflect the
tastes of Japanese teenagers; another was decorated keeping in mind gaming enthusiasts. Some of
the rooms were modeled after single room apartments which were common in Japan, especially
among students and young professionals. There were 4 settings which depicted a Japanese home.
Kitchens were provided with lot of storage space, to cater to the demands of customers. The store
also had a self-service restaurant that could seat 700 people and a play area for children. It had 32
checkout counters.
On the first day over 35,000 people visited the store and in the first five weeks the store attracted over 1
million visitors. The visitors were extremely pleased with the range of furniture as well as the prices.
One of the customers Fukuko Fukamachi said, “I had an image that Scandinavian furniture was
expensive. But I was so surprised that prices were cheaper than I thought.”29 Some customers
commuted for several hours to reach the store and were not complaining. “I knew there was a store
opening closer to us soon, but I wanted to come today,”30 said a housewife from Tokyo.
The restaurant at the IKEA store offered Swedish delicacies along with some Japanese cuisine. As
the IKEA Funabashi store was located in an industrial area, without many restaurants around,
IKEA chose to serve coffee, sandwiches and snacks in its restaurant. The restaurant was located at
the entrance of the store to enable even non-shoppers to visit it. At Funabashi IKEA sold ice cream
at around ¥ 50, while the price of ice cream in Japan was at ¥ 100. This was another way IKEA
tried to attract customers to its store.
The second store, IKEA Kohoku, was opened on September 15, 2006 in Yokohama, Kanagawa.
The store had 69 fully furnished model rooms. The store was spread across 40,000 square meters,
on four floors. Learning from its previous experience of opening the first store in Funabashi, where
the customers had to endure traffic jams, IKEA requested the local police to deal with possible
traffic snarls. It also planned to use the parking available at a stadium close by, to accommodate
extra vehicles. During the opening of the Funabashi store, many items were sold out and several
customers could not get what they wanted. IKEA made arrangements to avoid this occurring again.
The store manager Eva-Lotta Sjostedt said, “As for items running out, we are trying our best to
have everything in stock. We have greater storage now that we have two store locations and a
container ship is waiting at the port just in case.” 31 To cater to the first two stores, IKEA built a
distribution center in Yachio in Chiba.
26
27
28
29
30
31
First largest being the store at Beijing.
Kerry Capell, “Ikea’s New Plan for Japan,” BusinessWeek, April 27, 2006.
Tatami refers to traditional Japanese mats made of straw. In Japan room size is measured by the number
of tatami. One tatami is equal to 0.9 m X 1.8 m.
“Japanese Flock to IKEA,” www.thelocal.se, April 24, 2006.
“Crowds Flock to IKEA Megastore in Japan,” www.msnbc.msn.com, April 24, 2006.
Toshiya Fujii, “IKEA to Open 2nd Store in Yokohoma on Friday,” http://archive.japantoday.com,
September 14, 2006.
8
Purchased for use on the Business Project Plan, at Foreign Trade University.
Taught by Van Hoang Dinh, from 6-Jun-2023 to 31-Aug-2023. Order ref F479807.
Usage permitted only within these parameters otherwise contact info@thecasecentre.org
IKEA opened its first store on re-entry at Funabashi, Chiba Prefecture, east of Tokyo on April 24,
2006. The store at Funabashi was IKEA’s 207th store worldwide and was the second largest store
outside Sweden.26 The store was opened by the store manager Gustavsson, in a traditional Swedish
ceremony that involved cutting a log. IKEA was confident of being able to meet Japanese
expectations. According to a spokeswoman of IKEA Japan “The market has changed a lot since
IKEA entered Japan the first time. Japanese consumers are more interested in designing the look of
their homes by themselves rather than having it done for them.”27
308-270-1
The third store was opened in 2008 and was located in Port Island – an artificial island connected
to the main city by monorail. The store occupied around 40,000 square meters. It had over 50
furnished rooms. The store gained instant popularity and attracted so many visitors that IKEA had
to restrict entry especially during weekends and national holidays. Customers visiting the stores on
those days had to queue for more than 2 hours to get into the stores. To prepare customers for the
crowding at the stores, IKEA set up a telephone number which the customers could call before
coming to the store. IKEA started a shuttle service to pick up customers. On weekdays there were
two buses per hour and three buses per hour picked up the passengers on weekends.
Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I
IKEA’s Swedish identity was also reflected in its stores’ HR policies and practices and corporate
culture. For instance, IKEA’s management style was characterized by informality, openness and
caring which reflected the typical values of Swedish nationals. At the store level, there were only
three levels of hierarchy between store manager and ‘co-workers’ as employees were called. The
employees in Japan were paid much higher compared than employees in other Asian countries like
China. For example, the department manager in IKEA Japan was paid almost 15 times more than
the person holding a similar position in IKEA China. IKEA Japan had around 1,300 employees
from 11 nationalities as of 2008.
IKEA provided employees ample free time, free refreshments and other facilities. Just a hundred
meters away from the Funabashi store, IKEA had day-care facilities for employees’ children.
IKEA’s childcare facility is a combination of nursery and kindergarten. By March 2008 there were
around 45 children in the facility.
IKEA functioned in two shifts. The first shift started at 8 am while the store opened at 10 am. The
employees spent these two hours arranging the furniture brought in by the logistics department the
previous night. Each IKEA store had a division that was responsible for display and decoration in the
store, and the furniture was arranged in consultation with the department. They discussed how the new
products needed to be presented and how the products bought by customers were to be replaced.
At 9 am a joint meeting was conducted for employees from all the departments. During the
meeting, the details of the previous day’s sales were announced along with the plans for the day.
At the same time, the name of the person who will be the store manager for the day was also
announced. After the meeting all the employees went back to their designated areas.
It was mandatory for all the employees to wear IKEA uniforms which varied according to the
department they worked in. For instance, employees in logistics and supply chain departments
wore dark blue uniform, employees in the decoration and display department wore uniforms in
gray and blue color, the other staff working in the store wore uniforms of yellow and blue color
and those in the restaurant wore white and blue uniforms.
Every day at around 4 pm a list of products that were to be delivered to the store the next morning
would arrive. The managers made plans for the next day and decided on how to rearrange the
existing products to accommodate the new products.
Most of the employees in IKEA stores were Japanese. Some people of other nationalities who
could converse in Japanese were also employed. At the IKEA headquarters in Japan, people who
could speak English were chosen. IKEA gave preference to women, and around 60 percent of all
staff and 30 percent of the managers at IKEA Japan were women.
At the stores, some of the employees called IKEA Ambassadors, gave customers individual
attention to introduce them to various aspects of Swedish lifestyle and the Swedish way of living,
according to IKEA’s philosophy. They also helped the customers in choosing the right furniture.
IKEA Ambassadors were employees who worked in different sections of the store, but who had
volunteered to educate the customers about Swedish culture. According to analysts, these
interactions helped IKEA build strong relations with its customers.
9
Purchased for use on the Business Project Plan, at Foreign Trade University.
Taught by Van Hoang Dinh, from 6-Jun-2023 to 31-Aug-2023. Order ref F479807.
Usage permitted only within these parameters otherwise contact info@thecasecentre.org
STORE AND EMPLOYEE MANAGEMENT
308-270-1
LOCALIZATION STRATEGIES
Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I
Though outwardly each store appeared like any other IKEA store around the world, the company
claimed that in no other market it had carried out so many adjustments as it did for the Japanese
market. Before IKEA entered the market, do-it-yourself was considered to be one of the main
obstacles for IKEA. In order to address the issue, it provided services like home delivery and
assembly. Except for fragile items, plants and foods, IKEA delivered all the other items to the
customer’s home. Assembly services were provided for larger furniture such as shelves,
wardrobes, etc. The assembly services were provided at around ¥ 20,000 a piece - and as IKEA
itself admitted, sometimes, assembly costs were more than the cost of the item itself. It also
offered services to remove old furniture from the houses of IKEA customers.
Most of the products sold in Japan were imported and transported from different countries around
the world by sea or air. Of all the products sold in Japan, 68 percent were procured from Europe
and 30 percent from Asia. These items were first shipped to the distribution centers in Kuala
Lumpur and Shanghai before they were sent to Japan.
For the Japanese market, IKEA reduced the size of the furniture without modifying the design as it
was of the view that Scandinavian designs were well suited to Japanese homes. For instance, the
bookshelves were made smaller, to be accommodated in rooms with lower ceilings. The kitchens
and living rooms were similar to those in other IKEA stores across the world, but were smaller,
allowing for the space crunch in Japan. The furniture was made in such a way that every nook and
corner in a room could be put to use. All door knobs, washbasins etc, were placed low in line with
the prevailing systems in Japan. However, IKEA chose to retain the height of kitchen counters and
some other furniture.
In order to make the Japanese understand how to furnish small homes, the IKEA store in
Funabashi, displayed models of four apartments, each 30 square meters in size. They were
furnished with sofas that could be used as beds and storage shelves in kitchens and foldable
furniture. The customers especially liked the space saving options provided by IKEA.
The rooms where the furniture was displayed were made taking into consideration the size of
rooms in Japan, which were much smaller compared to those in the other countries. The
measurements of the rooms were in tatami, which the Japanese found easy to understand.
The kitchen appliances were designed in accordance with the local requirements, which specified
that the appliances, including taps, sinks, dish washers etc., should be of Japanese make and the
cabinets had to be earthquake safe. The kitchen shelves were endowed with a locking system that
locked automatically in case of an earthquake. This prevented damage to expensive ceramic ware.
The kitchen sinks and fish grills were made in Japanese style.32
As Japanese customers preferred having personal attention and good customer service, the IKEA
stores had more customer service personnel compared to stores in any other country. Due to high
costs of operations in Japan, the prices of some of the items were higher compared to the other
countries in Asia.
32
“Crowds Flock to IKEA Megastore in Japan,” www.msnbc.msn.com, April 24, 2006.
10
Purchased for use on the Business Project Plan, at Foreign Trade University.
Taught by Van Hoang Dinh, from 6-Jun-2023 to 31-Aug-2023. Order ref F479807.
Usage permitted only within these parameters otherwise contact info@thecasecentre.org
IKEA maintained some level of standardization. The products, and their quality were standardized
across the world. The stores around the world looked similar, and all the furniture had to be
assembled by the customers. IKEA had same culture all across its stores. IKEA chose to maintain
some level of standardization as it wanted to give its consumers a Swedish experience and it
believed that excessive localization would not allow it to maintain its exclusivity and would
become just one of several such stores in the country where it operated. IKEA was of the view that
reasonably priced products of good quality were an advantage in any market of the world.
308-270-1
Due to IKEA’s popularity, several Japanese traveled to the stores from far flung places like Kyoto.
Some of the customers were not clear as to how to shop at IKEA, as they were used to shopping at
smaller stores where attentive customer service was provided. “The shopping system is not
something Japanese customers are used to. So it needs more explanation signs which customers
can easily recognize,”33 said Kayoko Ito, a 29-year-old office worker.
Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I
PROMOTIONAL STRATEGIES
Before opening new stores, IKEA adopted a buzz marketing campaign, in the radius of 15
kilometers of the new stores. For its first store, IKEA converted a street in the main shopping
district of Tokyo into an open air exhibition. IKEA displayed fourteen rooms, each of the size 4.5
tatami or 6 tatami. Each of these was fitted with IKEA’s furniture, showing how small spaces
could be transformed using products from IKEA. The rooms were decorated in different themes
that included art gallery, restaurant at home, kids’ room, music room, and some of the rooms were
decorated in floral designs, wild animal designs, etc. The campaign aimed at making the Japanese
understand that IKEA would help them bring change into their homes and to present the fact that
IKEA understood the Japanese way of living.
The new method of advertising instantly caught the attention of not only customers, but also the media
-- and the event was covered extensively on local television channels, newspapers and Internet blogs,
etc. IKEA went in for OOH advertising (Out-of-home advertising) and installed billboards within a
radius of 15 kilometers from the first IKEA store. The campaign also included flyers, posters on buses,
balcony signage, posters on staircases in the railway stations, within the specified area. The campaign
was made by ADK Tokyo34 and won The Cannes Lion Gold award35 2007.
The opening event of IKEA’s first store in Japan was attended by the mayor of Funabashi, the Swedish
ambassador in Japan, and the governor of Chiba Prefecture. One of the local radio stations broadcasted
the event, which included face painting, traditional Swedish dances, clowns, etc.
To promote the new store opening in Kobe on April 14, 2008, IKEA decorated the train
connecting the Port Island to the City. The exterior of the train was painted in bright colors and the
interiors of the train were decorated with IKEA upholstery and curtains. The customers felt that the
train was like a moving IKEA showroom. The campaign generated lot of buzz and was extensively
discussed in the media and in blogs. This helped IKEA in reaching customers, who could see and
experience IKEA products away from the stores.
33
34
35
“Japanese Flock to IKEA,” www.thelocal.se, April 24, 2006.
ASATSU DK Inc. was formed in 1999 through the merger of ASATSU Inc. and Dai-Ichi Kikaku Co.,
Ltd. it is the third largest advertising agency in Japan providing services like traditional advertising,
outdoor advertising, planning and creative services, market research and other services. It has presence in
around 15 countries through 40 offices.
The Cannes Lions International Advertising Festival, held at Cannes, France, is one of the prestigious
international advertising festivals. The awards are presented under different categories like television,
print, outdoor advertising, direct marketing, technical achievement etc. In each category the winners are
given Gold Lion awards. In addition Lions are awarded for different sub categories.
11
Purchased for use on the Business Project Plan, at Foreign Trade University.
Taught by Van Hoang Dinh, from 6-Jun-2023 to 31-Aug-2023. Order ref F479807.
Usage permitted only within these parameters otherwise contact info@thecasecentre.org
To address these needs, IKEA provided a sign board at the entrance of the stores that explained to
customers how to shop at IKEA. It detailed the store layout, and instructions about picking up the
products. (Refer to Exhibit V for the sign board). It indicated the items shoppers would require to
shop at IKEA, which were provided at the entrance. IKEA provided the customers a pencil, a
shopping list, a cart, a yellow bag to carry the small things that customers might decide to buy, a
paper bag to carry the items home and a measure tape to take measurements of the furniture. The
customers could also borrow the catalogue at the entrance. The customers could walk into the store
and see the items displayed. Each of the displayed items had a tag attached to it with the details of
the shelf number where the item was available. The customers had to note the items they needed
and the quantity and also the shelf details. Then the items could be collected at the warehouse.
308-270-1
In order to make the Japanese realize the importance of spending more time at home, IKEA
launched an ad campaign when it opened the stores in the country. It displayed hoardings with
slogans such as ‘Home is the most important place’, ‘Stay home’, ‘Do you play with your kids?’
“Have you met with your kids today?”, “Stay at home today!” etc. to encourage people to enjoy
their time at home. Analysts were of the view that these advertisements pointed out the sore spots
in the Japanese society, where people work till late in the night and even on weekends. But these
advertisements proved to be highly controversial and some of suburban trains refused to display
them. But the ads helped IKEA to create a discussion on the topic among the Japanese.
Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I
IKEA also ran a loyalty program through which it provided its members several benefits. The
members of the IKEA Family membership36 were sent the magazine IKEA Family Live. Members
were provided special prices on some of the products and some items at the restaurant. On
weekdays, the members who visited the store got free coffee/tea. From time to time IKEA
conducted special seminars exclusively for members. These were conducted on different topics
like outdoor activities, cooking, Swedish life, etc. Through these seminars IKEA could interact
with its customers, and was able to get feedback from them.
In addition to this, IKEA relied heavily on its Website for promotions. It updated the Website
frequently. The Website had the details of promotional campaigns, new products in the offing, and
also pictures showing how homes could be decorated using IKEA furniture. The customer could
check if a specific product was available at the store, and there was a helpline called ‘Ask Anna’,
an automated online assistant, through which customers could learn about the products and
services offered at IKEA. IKEA’s Website in Japan received several thousand hits every day.
WHAT LIES AHEAD
For the year 2008, IKEA planned to open three more stores at Kobe, Osaka, and Saitama and also
open a distribution center at Yatomi Aichi. The distribution center, located in central Japan, was
chosen as IKEA had plans of expanding its stores from Kanto to Kansai. IKEA planned to open
around 12 stores by 2011 in Japan. In the long term, it planned to open 46 stores in the country. 37
Analysts who observed IKEA’s initial success and future plans in Japan were of the view that soon
Japan could surpass Germany and become IKEA’s largest market.
IKEA also had plans to start online shopping in Japan, as the people were highly tech-savvy and
transporting the furniture themselves was the major problem that most of the customers faced.
However, some analysts were not convinced about the long term prospects of IKEA. They cited
the cases of French retailer Carrefour38, British drug retailer Boots39, etc, who made a retreat from
the Japanese market. Carrefour sold its operations after 4 four years in the country. Another
retailer Wal-Mart40, was also finding the going tough in the country, and reported six continuous
years of annual losses in 2007. IKEA was also expected to face competition from local players
36
37
38
39
40
Customers could become members of IKEA Family by filling in an application form online or a form
available at any of the stores in Japan.
Anna Jonsson, “Knowledge Sharing at Micro Level: An Observation at IKEA Japan,” www.ehl.lu.se,
August 9-11, 2007.
France-based Carrefour is the second largest retailer in the world and operates globally through 14,900
stores,. For the year ending December 2007, Carrefour generated revenues of € US$ 92.27 billion.
Carrefour entered Japan in 2001 and made an exit in 2005.
The Boots Company PLC is a UK-based pharmacy chain.
The US-based Wal-Mart Stores Inc. is the largest retailer in the world with revenue of US$ 210.973
billion in 2007. In Japan it operates as Seiyu.
12
Purchased for use on the Business Project Plan, at Foreign Trade University.
Taught by Van Hoang Dinh, from 6-Jun-2023 to 31-Aug-2023. Order ref F479807.
Usage permitted only within these parameters otherwise contact info@thecasecentre.org
IKEA also invited journalists to visit its stores. The reports that it received from journalists and
through articles helped it get the required mileage in the country.
308-270-1
such as MUJI, which operated in Japan through hundreds of outlets and was highly popular for its
low prices and simple designs, and Nitori, which sold low cost furniture from countries like China,
Vietnam, Thailand, etc., in addition to Japanese furniture.
Some of the customers complained that IKEA had not localized to the extent necessary. The
posters that were displayed in the store were Scandinavian, right from the places to the people.
They have also complained that the Scandinavian names of the furniture items were difficult for
the Japanese to pronounce. A customer complained that the televisions in the stores were also
showing visuals of the Swedish countryside.
Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I
But, more than these retailers, IKEA considered Disneyland to be its main competitor, even in
Japan. According to Kullberg, “You don’t go there just to buy a chair. You go to see what’s going
on, what are the trends, to have some Swedish food and the kids can play around in the dedicated
area. In Sweden, if you have a spare Sunday, it’s common to spend the day there. I think it will be
like that here, too.”42
Analysts also expressed doubts about Japanese using IKEA furniture as it was usually used only
for few years, while Japanese used furniture for a long time. Typically Japanese purchased
furniture only thrice in their lifetime. Once when they moved out of their parental home, secondly
after getting married, and then after the children grew up. According to an analyst from Tokyo
Interior Co. Ltd.43, “IKEA, while having wonderful creativity, is light and for the low-end market - not ‘real’ furniture. The Japanese, having few natural resources, have a culture of using highquality products for a long time.”44
There was another opinion expressed about IKEA’s prospects on its re-entry. Japanese society had
undergone a lot of change after IKEA left the country, and the Japanese were no longer averse to
the idea of assembling their own furniture. IKEA itself had changed in the two decades it was
away from Japan, it had become more international, and was successful in other Asian markets.
IKEA’s furniture could appeal to the Japanese as its designs were modern, aesthetic, and in darker
colors. After a decade of recession, Japanese consumers had become cost conscious, and did not
mind shopping at discount stores, and no longer associated low price with low quality. According
to David Marra, from A T Kearney, Tokyo, “Japanese consumers are in the process of embracing
the concept of value.”45
Analysts felt that, more than anything else, IKEA had learned from its earlier failure and its later
success in Japan. As Petersson said, “I think to come to Japan (or Poland) thinking you are in just
another country is the start of the failure because there are a lot of local things you need to
understand. You need to have local people employed right from the start, at a high level, that
understand what this country is all about.” 46
41
Lisa Twaronite, Ariana Nobles, “IKEA Set for Another Launch into Japanese Market,” www.investors.com, July 22,
2004.
42
Chris Betros, “Everything under One Roof,” http:/archieve.japantoday.com, April 10, 2006.
Tokyo Interior Furniture Co. Ltd. is a Japan-based furniture retailer.
Yumi Wijers-Hasegawa, “Sweden’s IKEA Back in Japan after 20-year Hiatus,” The Japan Times, April
25, 2006.
Kerry Capell, “IKEA’s New Plan for Japan,” BusinessWeek, April 27, 2006.
Greg Lane, “Failed Businesses in Japan,” www.japaninc.com, September/October 2007.
43
44
45
46
13
Purchased for use on the Business Project Plan, at Foreign Trade University.
Taught by Van Hoang Dinh, from 6-Jun-2023 to 31-Aug-2023. Order ref F479807.
Usage permitted only within these parameters otherwise contact info@thecasecentre.org
Analysts were of the view that IKEA would not be able to affect those furniture dealers like
Otsuka Kagu that catered to the premium segment in Japan. At the same time medium and low end
furniture retailers could be adversely affected given the market conditions in the country.
According to Kiyoshi Mori, retail analyst at Okasan Securities, “The furniture market in Japan has
been failing. I don’t think that IKEA will increase the market much and its entrance into the
market will probably bring difficult times to domestic furniture retailers.”41
308-270-1
Exhibit I
No. of Stores
(As of Mid-2008)
Year of Entry
Country
1958
Sweden
17
1963
Norway
5
1969
Denmark
4
1973
Switzerland
7
1974
Germany
43
1976
Canada
11
1977
Austria
6
1978
The Netherlands
11
1981
Australia
3
1981
France
22
1984
Belgium
6
1985
USA
34
1987
United Kingdom
17
1989
Italy
13
1990
Hungary
2
1991
Czech Republic
4
1991
Poland
7
1995
Slovakia
1
1996
Finland
2
1996
Spain
11
1998
China
5
2000
Russia
11
2004
Portugal
2
2006
Japan
3
Stores run by franchisees
Australia (2), United Arab Emirates (2), Cyprus (1), Greece
(2), Hong Kong (3), Iceland (1), Israel (1), Kuwait (1),
Malaysia (1), the Netherlands (1), Romania (1), Saudi Arabia
(2), Singapore (2), Spain (4), Taiwan (4), Turkey (2).
Source: www.ikea-group.ikea.com.
14
Purchased for use on the Business Project Plan, at Foreign Trade University.
Taught by Van Hoang Dinh, from 6-Jun-2023 to 31-Aug-2023. Order ref F479807.
Usage permitted only within these parameters otherwise contact info@thecasecentre.org
Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I
IKEA – International Expansion
Purchasing
The IKEA
Group Support
Functions
Range
IKEA of
Sweden
Distribution
and
Wholesale
Retail
Franchising Agreements
Inter IKEA
Systems BV
308-270-1
Source: www.ikea.com
Purchased for use on the Business Project Plan, at Foreign Trade University.
Taught by Van Hoang Dinh, from 6-Jun-2023 to 31-Aug-2023. Order ref F479807.
Usage permitted only within these parameters otherwise contact info@thecasecentre.org
15
A total of nine staff units based in the Netherlands provide support functions to the IKEA Group companies. Inter IKEA Systems BV, is the owner of
the IKEA concept and trademark, and has franchising agreements with all the IKEA stores in the world. The IKEA Group is the biggest franchisee of
Inter IKEA Systems BV.
The IKEA group is owned by the Stichting Ingka Foundation, which is registered in the Netherlands and owned by the Kamprad family. Stichting
Ingka Foundation owns Ingka Holdings BV, the holding company for the IKEA Group. The IKEA Group consists of several companies from the
Swedwood Industry Group to various sales companies.
Industry
Swedwood
Group
INGKA
HOLDINGS B.V
STICHTING
INGKA
FOUNDATION
IKEA’S Ownership Structure
Exhibit II
Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I
308-270-1
Exhibit III
Beds
Meldal, Robin, Dalselv, Tovik, Loen, Malm, Noresund.
Bookcases And Storage Systems
Billy, Kilby, Enetri, Hensvik, Heri, Lack, Agerum, Gaxa,
Hejan Jutis, Benno, Expedit, Flarke
Chairs
Olga, Jules, Sixten, Roger, Patrik, Runar, Trassent.
Coffee Tables / Side Tables
Benno, Hol, Lack, Lesvik, Klubbo
Cookware
Slom, Reda, Burken, Koloni, Grunka, Idealisk, Trojka,
Mixa.
Lighting
Lock, Alikvot, Edsta, Pult, Nittio, Iresud, Fado.
Children’s IKEA
Vikare, Blimp, Ateles, Trofast, Glis, Apa, Nosa, Diktad,
Tassa Svans.
Sofas
Klippan, Tylosand, Ektorp, Karlanda, Lillberg, Ekeskog,
Fothult,
TV units
Bonde, Firel, Stormark, Liatrop, Liden, Expedit,
Armchairs
Poang, Lyby, Lillberg, Tullsta, Rolig, Pello, Emmabo,
Ektop, Stockholm, Karlstad, Klappsta, Pöang, Tirup
Source: www.ikea.com
16
Purchased for use on the Business Project Plan, at Foreign Trade University.
Taught by Van Hoang Dinh, from 6-Jun-2023 to 31-Aug-2023. Order ref F479807.
Usage permitted only within these parameters otherwise contact info@thecasecentre.org
Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I
An Indicative List of Names of IKEA’s Products
308-270-1
Exhibit IV
Housing in Japan and Purchasing Habits of Japanese
The total land area in Japan is 374,744 square kilometers. Japan is divided into 47 prefectures.
The population of Japan was 127,288,419 as of mid-2008.
The room at the entrance is at a lower level compared to other rooms. People entering the house
usually remove their shoes in front of the entrance. Appliances like refrigerator, stoves, ovens,
etc were placed in the kitchen. In traditional homes there is separate area for bath, washing and
for toilets; however in modern apartments, both are usually combined. With the growing
number of elderly people, products which provide them convenience are much in demand.
By the mid 2000s, interest in decorating homes was growing in Japan, spurred by magazines
and television programs which showed how to furnish and decorate homes.
Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I
Due to the high cost of housing, many Japanese prefer to take houses on rent. The ownership
rates are low in urban areas compared to rural Japan. Old houses are generally demolished and
new dwelling units are built in the same area.
Japanese did not usually invite guests home and socialized outside. They considered the home
to be a private place meant for the family, and a place to store one’s belongings. Most Japanese
considered home just a place to sleep and preferred to spend lot of time after work or college
away from home. Home furnishings were not popular in Japan, and the Japanese did not
consider it important, so they did not spend much on decorating homes. Instead they spent on
personal care, grooming, dressing, and on the latest cars and electronic gadgets.
The Japanese gave lot of importance to brands and were of the view that brands reflected
quality and associated the brand with prestige. Unlike the other markets in the world, where
defective products were sold at discounted prices, in Japan, consumers did not buy such
products and returned them to the manufacturer. The Japanese feel that any product sold in their
country should be of high quality and most companies do offer high quality products. Therefore
it is not feasible for new companies to differentiate their products on the basis of quality. Often,
quality is associated with price. Usually the demand for high priced products goes up when the
prices are raised a bit. At the same time the Japanese were value conscious and spent only when
they perceived that the product’s price is justified.
As of 2003, Japan was the second largest retail market in the world. Luxury goods are in high
demand in Japan and foreign brands like Louis Vuitton, Gucci, Prada, Chanel, etc. are very
popular. As of 2006, the home furnishings market in Japan was estimated to be worth US$42
billion.47
Compiled from various sources.
47
Kerry Capell, “Ikea’s New Plan for Japan,” BusinessWeek, April 27, 2006.
17
Purchased for use on the Business Project Plan, at Foreign Trade University.
Taught by Van Hoang Dinh, from 6-Jun-2023 to 31-Aug-2023. Order ref F479807.
Usage permitted only within these parameters otherwise contact info@thecasecentre.org
According to the Ministry of Internal Affairs and Communications, Japan, the average Japanese
house is around 90 square meters in area. Traditionally the Japanese do not demarcate rooms for
usage except for kitchen and the entrance area. All the furniture is usually portable and is stored
in one room and, depending on the necessity, the rooms are used for study, dining, attending to
guests, etc. In traditional homes, the living room is large and is divided using paper or wood
partitions which can be easily adjusted.
Source: www.ikea.com/jp
Purchased for use on the Business Project Plan, at Foreign Trade University.
Taught by Van Hoang Dinh, from 6-Jun-2023 to 31-Aug-2023. Order ref F479807.
Usage permitted only within these parameters otherwise contact info@thecasecentre.org
Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I
308-270-1
Exhibit V
Image of How to Shop at IKEA
18
308-270-1
References & Suggested Readings
1. Ikea Again Eyes Large Tokyo Store, Furniture Today, July 15, 2002.
2. Furnishing the Future, Invest Japan, No.3, 2003.
3. Ikea to Open Outlet at Vacated Indoor Ski Site near Tokyo, Kyodo News International,
September 18, 2003.
4. Oliver Burkeman, The Miracle of Älmhult, The Guardian, June 17, 2004.
5. Lisa Twaronite, Ariana Nobles, IKEA Set for Another Launch into Japanese Market,
www.investors.com, July 22, 2004.
6. Elen Lewis, Is Ikea for Everyone? www.brandchannel.com, March 28, 2005.
7. Kerry Capell, Understanding Ikea, BusinessWeek, November 8, 2005.
9. Sachi Izumi, IKEA Assembled for another Go at Japan, www.thestandard.com.hk,
April 8, 2006.
10. Chris Betros, Everything under One Roof, http:/archieve.japantoday.com, April 10, 2006.
11. Size Matters as IKEA Returns to Japan, www.thelocal.se, April 16, 2006.
Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I
12. IKEA Tries to Furnish Japan, Again, www.uk.ibtimes.com, April 24, 2006.
13. IKEA Thinks Small as it Makes Attempt to Furnish Japan Again, Shanghai Daily
(accessed from http://en.ce.en), April 24, 2006.
14. Japanese Flock to IKEA, www.thelocal.se, April 24, 2006.
15. Crowds Flock to IKEA Megastore in Japan, www.msnbc.msn.com, April 24, 2006.
16. IKEA Opens First Store in Japan since 1986, www.archive.japantoday.com, April 24, 2006.
17. Japanese Give IKEA 2nd Shot, www.iht.com, April 25, 2006.
18. Yumi Wijers-Hasegawa, Sweden’s IKEA Back in Japan after 20-year Hiatus, The Japan
Times, April 25, 2006.
19. Kerry Capell, Ikea’s New Plan for Japan, BusinessWeek, April 27, 2006.
20. Quote of the Day, Japan Today, April 10, 2006.
21. Toshiya Fujii, IKEA to Open 2nd Store
http://archive.japantoday.com, September 14, 2006.
in
Yokohoma
on
Friday,
22. IKEA Tries Turning Japanese, Nightly Business Report, www.pbs.org, December 1, 2006.
23. Anna Jonsson, Knowledge Sharing at Micro Level: an Observation at IKEA Japan,
www.ehl.lu.se, August 9-11, 2007.
24. Greg Lane, Failed Businesses in Japan, www.japaninc.com, September/October 2007.
25. Facts & Figures, IKEA Group, 2007
26. Karoi Ara, Fancy Day Care the Latest in Corporate Perks, www.asahi.com, March 11, 2008.
27. www.affarsvarlden.se
28. www.ikea.com
29. www.ikea.com/jp
30. www.ikea-group.ikea.com/
19
Purchased for use on the Business Project Plan, at Foreign Trade University.
Taught by Van Hoang Dinh, from 6-Jun-2023 to 31-Aug-2023. Order ref F479807.
Usage permitted only within these parameters otherwise contact info@thecasecentre.org
8. Ikea Opens in Japan, www.thelocal.se, April 7, 2006.