2015 Facts & Figures

172,000
Employees

Ingvar Kamprad, at the age of 17, founded IKEA in

1943. 300+ Stores 33.8 B Sales
Worldwide (Euro)
From matchboxes to household goods to furniture,
IKEA kept on expanding it’s product line.

11 M m2
884 million
Retail
visits
Space

Ingvar Kamprad Elmtaryd Agunnaryd

Source: IKEA Website
 As-Is Section IKEA Cafe

Affordable solutions for a better living

Kitchenware Huge Floor Space

IKEA Museum IKEA Child

Essentials
The INCEPTION The INNOVATION The INAUGRATION
• Discontinue all • Due to pressure from • 1958, the first IKEA
products and focus on competitors they store is opened in
low price furniture started making their Almhult
• In 1953, the first own furniture • In 1965, the
furniture showroom is • Price reduction monumental IKEA
opened in Almhult, motives led to design store in Stockholm is
Sweden. for flat packaging inaugurated
Strengths
• Attractive product design
• Market leadership
• Solid financial position
• Vast, yet focused product range
SWOT
Opportunities
• More emphasis on CSR
• Increasing presence in developing countries
• Formation of strategic collaborations
• Adding premium range of products into
portfolio
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
Threats
• Social treads (building online help to guide
customer)
• Market forces (lower prices and economic
scale)
• Economic factors (price strategy)
Product Globe-

Strategy New Product

Development
Process
Trotting
Council
Members
Product
Manager

Then

Overseen by Identified by Decides

Product- Consumer Product’s

Strategy Trends Target Retail
Council Price

Consisted of Based on Using

Who Establishes
IKEA’s
Group of
Product
Senior Matrix
Lineup
Managers
Priorities
Product Price Range / Scandinavian Modern Country Young Swede
Strategy Style (Sleek Wood) (Minimalist) (Neo-Traditional) (Bare Bones)

High

The Matrix
Medium
3 Basic Price Range
& Low
4 Basic Styles

Within each price range the company would survey the

 Set Retail Prices
competition to establish a benchmark and then set its own
 Identify Gaps in
price point 30% to 50% lower than those of its rivals.
Product Lineup
For each Product Type – A Separate Matrix
Product Focus: Target Retail Price of Proposed product is established
Strategy Cost Efficiency
In some cases, different product Selecting Manufacturer
components would be sourced from • IKEA worked with 1800 suppliers in 50+ countries

different suppliers. These different

pieces will come together in the store
only when customer would select each Balance Cost-Efficient Labor with Company’s Product
Quality Standards
pieces individually.

High Quality / Expensive Material:

On visible and stress prone Lookout: Building supplier relationships in
developing countries
surfaces/areas

Low Quality / Cheap Material:

On less visible surfaces and areas Encourage internal competition among suppliers
which were less likely to undergo stress
Product Design – Handled in-house via Internal Competition
Strategy
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

 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 Good Design

+
Form follows Function Good Quality
+
Low prices with Meaning Good Price
 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.

IKEA wants to be viewed as:

 Affordable
 Do-It-Yourself
 Having Well-Designed, Functional Products
 Innovative
 Entire Family-Friendly
Brand Mental Map
Brand Personality
 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!
 American Market
Case goods & Top 10
Two types of
Upholsted Retailers
Stores
Furniture 90% 14.2%

Types Of Stores

Low end
• Walmart High end
• Cheap Shops • Luxurious stors
• Jordan Furniture
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
 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.
IKEA Invaded America An Average American?
Opened first store in Philadelphia in 1985

Challenges Faced In America

Sofas and beds
were not soft
enough

Product
Portion sizes
dimension in
were too small
cm not inches

Americans had
a not to let go
mentality
 Before you go Everything but barter
• Make a list of • You can use any mode
everything you of payment
need

Showroom
Self Service Area
• Make yourself at home • Flat is Good
•
•
Talk to the sales staff
They are proud of their Shopping • Trolley’s for
everyone

at IKEA
prices

IKEA For Kids

IKEA Restaurant • You Shop, Kids Play
• Feeling Hungry? • Children’s Furnishing
• Care and feeding of
children
Market Hall
• Many speciality shops
gathered together
People visit an IKEA Store for the first time
 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
IKEA - Revenue over the years

Source: IKEA Website

 Good
Quality

Low
Choice
Price

UVP
Unique
Glocal
Store
Design
Layout
Family
Time
Customer Persona
 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
 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
 Brand Perceptual Map (IKEA)
Design Vs. Price
6

5 5

4 4
Price

3
0 1 2 3 4 5 6

2 2

1 1

Design walmart office depot

ethan allen IKEA

IKEA – The Road Ahead IKEA in India
 €50 Billion Revenue and 500 stores by 2020  IKEA bought a 23 acre plot in Navi Mumbai for
400 crores and will build a 4,00,000 sqft store

 Expand presence in emerging markets such

as China & India  IKEA purchased a 13 acre plot in HITEC City,
Hyderabad and will build a 4,00,000 sqft store

 Enter new markets such as Brazil, South  IKEA is planning to purchase a 3,50,000 sqft
Africa & Nigeria land in Borivali, Mumbai for 900 crores

 It plans to open 25 stores in India by 2025