Ikea Case Study

Introduction

IKEA is the world's most successful mass-market retailer. They sell

Scandinavian-style household furniture and goods. They have 230 stores in 33 countries.

They average 410 million shoppers per year. IKEA's business model is to provide

furniture sold as a kit from low-cost suppliers and assembled at home at low prices. In

total they have 1,500 suppliers in more than 50 countries. Furniture is sold in stores, via

a catalogue, and also a website. The stores are large, warehouse style, and they are self-

service. IKEA also provides its customers with a restaurant which overlooks the store.

This allows customers to relax and take a break from shopping without leaving the store.

Case Study 2-2

IKEA provides contemporary designs, low prices, crazy promotions, and enthusiasm to

its customers. They target the global middle class. The middle class is targeted because

IKEA offers furniture that is modern but at low prices. The customer is able to bring

furniture home without paying shipping fees because it is sold in flat packaging which

requires assembly IKEA has room to grow, as the account for only 5 to 10 percent of the

furniture market in the countries that it operates. In this case, IKEA's positioning

strategies included opening up new outlets worldwide. They provided a playroom where

children can be dropped off while parents could shop. They offered items where prices

started at only $2.00. The store has a restaurant, to keep shoppers going. IKEA aims to

cut cost on its products by offering an average of 2 to 3 percent each year. They package

there items in flat packaging where customers are able to transport the items home where

they will need to assemble them. The flat packaging provides for a cost savings and also

for customers to drive home with their purchases and without needing to pay for shipping

cost. IKEA is working to expand in the United States and has its concerns because they

did not listen to the consumer. The U.S. stores did not offer the full IKEA experience,

prices were high, and stores were not in good locations. They offered products in

centimeters rather than inches, appliances did not fit and glasses were too small for the

American buyer. IKEA was beginning to offer products in US measurements, lowering

prices and establishing new large stores. IKEA is also looking to expand in Japan, where

it once stumbled. They did not provide the customers in Japan with what they were

looking for.

Current Positioning and Growth Strategy

IKEA has recently seen an increase in net profits while other furniture companies have

not. IKEA continues to make improvements to their products while lowering the price.

They also continue to improve on the flat packaging they provide which lowers cost for

transportation and makes it easier for the customer to take home themselves. They also

make