IKEA’s Transformation

After being affected significantly in China

Group 3 – The Balance

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Agenda
01 IKEA BACKGROUND
Before making changes in China

02 FACTORS
For IKEA’s transformation

03 IKEA’s
TRANSFORMATION
In China, a potential market

04 THE RESULT & THE LESSON

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IKEA BACKGROUND
01 Before making changes in China
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VALUE PROPOSITION
01 Good quality, stylish furniture at low prices

STORE LOCATION STRATEGY

02 The suburbs next to highways so accessing by car is easy and
03 convenient.
PRICE
02 04 03 Low price so that everyone can afford
0
01
5
LOGISTICS STRATEGY
04
Flat-back principle: All parts of a furniture item are split and
combined into a flat box to optimize the logistics activities and
costs

0 CUSTOMER SERVICE & MARKETING

5 Do-it-yourself principle: Customers have to assemble the furniture
parts from the flat pack themselves with an instructing brochure.
This principle surprisingly gives customers exciting experience to
make their own furniture
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02 Impress
FACTORS in CHINA
PUSHING IKEAHERETO CHANGE
TITLE EXAMPLE
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ECONOMIC FACTOR
o Buyers’ great bargaining power due to China’s low cost culture
o IKEA was viewed as a luxury brand by Chinese consumers
whose average income couldn’t afford

LEGAL FACTOR
o Many legal implications and trade barriers for foreign
companies to enter Chinese market.
o Lack of IP laws in China which may not protect IKEA’s
products from being counterfeit

CULTURAL FACTOR
o Chinese consumers always favor high quality, western-styled
products. IKEA’s low prices make them confused about the value.
o Store opening in suburban requires well-established public
transportation system as most Chinese consumers don’t own a car.
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The IKEA’s
03 TRANSFORMATION
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STAGE 1: Penetrating into Chinese customer’s mind and

Positioning their products

01 • IKEA used “flat-pack” campaign concentrating on middle class.

=> Applying multinational strategy in investigation customer’s
preferences, indirectly came to customer’s mind- IKEA is a model of
modern Western interior style which Chinese should follow.

STAGE 2: Flexibly adapting to cultural differences

• Educating Chinese consumers of “Choosing IKEA’s products make their home on the
02 Western style”. 
• Changing in size, color, shape, material,… to fit the majority of customer by directly discussing
with consumers
• Creating a special impression with customers
• Reducing prices to increase competition. In 2011, the average price is only 50% of 10 years
ago.
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RESULT and LESSON

04 From IKEA’s Transformation
 Result
10

R
1998 : entered into Chinese market
The first retail store opened in Shanghai.

2004 after adjusting the business model :

• Defeated Home Depot – their rival
• Reached the fastest-growing revenue in their business history
- $169 million.
• Ranked 8/10 largest retail stores of IKEA globally
• Became a model of modern Western interior style in Chinese
market

Up to now:
• In China: 29 stores, ranked 4 globally, more than $2.9 billion
in revenue, occupies 1.4% market share in China.
• Worldwide: 422 stores in more than 50 markets, spread to
227 citites, $45 billion in global revenue (2019)
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Lesson

L
IKEA’s core value : the “Design for masses”
IKEA products are for everyone everywhere.

Quality and convenient products at the best prices.

Close to buyers and consumers

IKEA designers often work close to buyers and product
developers to gain a better understanding of the product and
its production.
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Reference
1, IKEA China during the period of new Corona. https://www.youtube.com/watch?v=Nh6pQRYnIIg

2, Tens of thousands of people queue hours for new Ikea store in China. https://www.youtube.com/watch?v=KHVzeLFaeP4

3, “Why has IKEA been so successful in China that those people did not like to assemble products by themselves?”- Café.vn 2019,

4, Visit another IKEA store - IKEA -Ikea.com-2020; https://www.ikea.com/ms/en_JO/ikny_splash.html

5, Countries with the most IKEA stores -Worldatlas-Aug 2019

6, GLOBAL MARKETING MANAGEMENT - Dr John Lang - 12-01-2015

7, “Case analysis IKEA in China” ; https://www.academia.edu/6652225/Case_analysis_Ikea_in_China

8, “Couching tiger tames the dragon”;

https://www.businesstoday.in/magazine/lbs-case-study/how-ikea-adapted-its-strategies-to-expand-in-china/story/196322.html
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THANKS
FOR YOUR READING

GROUP 3 – THE BALANCE

1. Trịnh Huyền Linh
2. Huỳnh Hồng Loan
3. Nguyên Phú Lực
4. Phạm Lê Ngọc Mai