HISTORY :• Founded in 1943, in Sweden, by a man named Ingvar Kamprad• Initially offered items such as pens, wallets, picture frames, jewelry, etc.• In 1947, furniture was added to their product selection, followed by personally designed pieces in 1955
GENERAL INFORMATION:• Defined as a “lifestyle” furniture store• Known for selling disassembled furniture• Operates 253 stores, in 35 countries (with the majority being in Europe, the U.S., Asia, Canada, & Australia)• 70% of IKEA’s annual marketing budget is consumed by their catalogue
• fiscal year 2004-05, the company generated revenues of US$ 17.9 billion, a 15% increase over the previous fiscal year.• In fiscal year 2010, it sold $23.1 billion worth of goods, a 7.7 % increase over 2009.• The IKEA website contains about 12,000 products and is the closest representation of the entire IKEA range.
BUILDING IKEA• Kamprads humble beginnings had created a unique IKEA culture that was founded on respect for money and an innovative mindset.• He flew economy class, he would take the metro to work, drive a ten-year-old second-hand Volvo and avoid designer suits.
• This attitude trickled down to the co-workers, who would ensure minimal wastage and cost cutting at every level.• As a result, IKEA came up with products that were aesthetically designed and were still available at affordable prices.• This aspect greatly enhanced the brand image of IKEA, which was perceived as a company that believed in social equality
THE FOUNDER’S VISION Vision – “To create better everyday life for many people” Faster Better Cheaper
COMPLETE SHOPPING EXPERIENCE -• IKEA stores were usually located outside urban areas, isolated from other shops. This was done intentionally so that IKEA could create a complete shopping experience for customers.• IKEA products were beautifully crafted and appealing.• The blue-and-yellow buildings was generally 300,000 square feet in size and each store stocked about 7,000 items, from kitchen cabinets to candlesticks.
• IKEA targeted middle class customers worldwide.• IKEA made shopping easy for customers. For example, right at the entrance of the store, customers could drop their kids at the playroom which had many types of safe play equipment, and then shop on their own in a leisurely manner.
CONTROVERSY :• IKEA was criticized for traffic jams and overcrowding at its outlets, particularly at store openings which brought in frenzied crowds.• In September 2004, three people were crushed to death and sixteen were seriously injured in a stampede that broke out at IKEAs store opening in Jeddah, Saudi Arabia.• More than 8,000 people had gathered near the store for the US$150 gift vouchers, some of them having camped overnight.
RECOMMENDATIONS:• Maintain superior quality & image• Research countries thoroughly before entry• Expand the number of products offered in catalogues• Offer extra incentives to customers who shop from the catalogues
Q3:- IKEA customer seemed to have a “love hate” relationship with thecompany. Analyze the reasons for the same and also discuss whatapproach the company Needs to take to curb customer resentment ? IKEA have improved the amount of items presented for sale. Demographic changes such as the aged population, an upsurge in female workers and a failure in home meal planning mean that UK retailers are similarly concentrating on added-value products and services. One of the biggest concerns was whether IKEA would be able to retain the companys cultural values with its rapid growth and increasing graphic spread. The company over came this with good management, a strong work force and very strong company values. But perhaps the biggest concern was how the company would fair without Ingvar Kamprad. Kamprad responded to this concern by saying "The IKEA ideology is not the work of one man but the sum of many impulses from all the IKEA leadership. Its supporting framework is massive.
ANOTHER KEY FACTOR IN THE FURNITURE BUSINESS WOULD BE TO ACQUIRE THE ABILITY TO PURCHASE LOW-PRICED MATERIALS AND TO CHECK IF THERE ARE LESS EXPENSIVE QUALITY ALTERNATIVE MATERIALS AVAILABLE. DEVELOPING LONG-TERM RELATIONSHIPS WITH SUPPLIERS IS ANOTHER FACTOR THAT WOULD INCREASE THE PROBABILITY OF BEING SUCCESSFUL IN THE FURNITURE INDUSTRY. DESPITE THESE SIMILARITIES, IKEA REALIZED THAT TO STRENGTHEN ITS PRESENCE IN THE GLOBAL MARKET, IT WAS NECESSARY TO LOCALIZE. COMPLETE SHOPPING EXPERIENCE