IKEA Invaded America

 Presented by
 Ankur Pisolkar(187)
 Anubhava Saxena (188)
 Bhavesh Singhal (191)
 Mukesh Gupta (210)
 Rajat Maheshwari (222)
 Vivek Jain (240)
 Ikea Background
1943 IKEA is founded by Ingvar Kamprad as a local
catalog company
1947 Furniture is introduced into the IKEA product
range.
Furniture produced by local manufacture
1951 The first IKEA furniture catalog is published
Soon discontinued with this business to
concentrate with low cost furniture segment.
1953 The furniture showroom is opened in Almhult
1955 IKEA begins designing its own furniture.
To reduce the effect of suppliers boycotting.
1956 IKEA begins testing flat packages.
Lower transportation cost and lower labor cost.
1958 The first IKEA store is inaugurated in Almhult.
largest furniture display in Scandenavia.
1965 The IKEA store in Stockholm is opened
45800 square meter of store with circular design
literally thousands of Swedes showed up on the
first day.
2002 Ikeas as worlds most prominent furniture retailer
revenue $12 billion
one of the most valuable brand
 IKEA’s Product Strategy
Overseen by a product-strategy council
established priorities for IKEA’s product lineup
After that a product developer would set the product’s target
retail price using what the company referred to as “the
matrix.”
The matrix

Scandenavia Modern Country Young

n (minimalist) (neo- Swede
high (Sleek traditional) (bare bones)
wood)
medium
low
 “The matrix” is used for
 Setting retail prices of product
 identifying gaps in the company product line
 After the retail price is set the description is circulated to
its suppliers and cost is reduced by
 outsourcing
 getting new suppliers from developing countries
 effectively using material
 transporting by squeezing into flat boxes
 redesigning
 Low Price with meaning
 Improvement of design

 Offering tasteful, cleverly designed products that did not

make customers feel cheap

 Unique combination of form, function, and affordability.

 IKEA shopping experience to be immensely appealing
 US Furniture Retailing: An
Overview
• $67 Billion sales in 2002
• Highly fragmented
• Divided between high end and low end retailers
• Low end Retailers
– Poorly managed stores
– Cheap furniture
– Limited design
• High end Retailers
– Luxurious store environments
– Offered various payment options
– Variety in design


–

 US Market: The Difference
• Lots of players, top 10 shared about 14% market


• Almost all retailers offered delivery services

•
• Divided in low end and high end retailers
•
• Americans bought furniture for LIFETIME
 IKEA in America
• Early Challenges
– American standards different from what IKEA
provided
– Different mindset and customer preference

• The Turnaround
– Paying attention to customer complaints
– Market research to adjust to requirements
– High profile advertising to change the American
mindset


–
–
 IKEA experience for
customers
• Huge Stores


• In-house Restaurants and Childcare Facility

•
• Self Service
•
• Product variety limited to the Matrix
•
• Providing tape, catalogs, shopping bags etc at entrance
 IKEA Brand: lasting
advantage
 Low-priced furniture
 Scandinavian design and style
does not make consumers feel cheap but rather
beautiful, convenient and well-designed
 Shopping convenience
a unique shopping culture that makes consumers feel
a “real Scandinavian design and style” when they shop
 “Low price with meaning”
“With meaning” for US market is different from the
other markets
Thanks!!