IKEA most successful mass-market retailer
IKEA is the world’s most successful mass-market retailer, selling Scandinavian-style home furnishings and other house goods in 230 stores in 33 countries and hosting 410 million shoppers per year. An acronym for founder Ingvar Kamprad and his boyhood home of Elmtaryd, Agunnaryd, and IKEA began operating in Sweden in 1943 and continues its original ethos based upon cost obsession fused with design culture. No design, no matter how inspired, finds its way into the catalog if it cannot be made affordable. With an aim of lowering prices across its entire offering by an average of 2% to 3% each year, its signature feature is the flat packed product that customers assemble at home (such as beds, chairs and desks), thus reducing transportation costs. Yet, unlike some peers, IKEA has sustainability at heart and, through an internal mantra of ‘low price but not at any price’ is a leading example of sustainable innovation and business growth. The company designs its own furniture, which is made by about 1,500 suppliers in more than 50 countries. It also sells online and by mail order with the print run for the 2006 catalog hitting 160 million – more than the Bible, so IKEA claims. Finding the right manufacturer for the right product is a key component of the company’s success. It once contracted with ski makers – experts in bent wood – to manufacture its Poang armchairs, and has tapped makers of supermarket carts to turn out durable sofas. Simplicity, a tenet of Scandinavian design, also helps keep costs down. For example, the 50 cents Trofé v comes only in blue and white – the least expensive pigments.
IKEA has a clear mission: selling a wide range of furniture and accessories at a reasonable price so that most people can buy them. By offering a wide range of assortment the key word is functionality, consumers can find everything under one roof. That‘s why you can find everything at IKEA.
The business philosophy of IKEA can be best described by four goals.
■ To create a highly efficient sales department.
■ Providing ideas for home furnishing.
■ To serve the costumers as well as they are served by a home furnishing shop.
■ Giving people the idea that shopping at IKEA is a day out for the whole family.
Since it was founded IKEA has always had concern for people and the environment. The IKEA vision to create a better everyday life for the many people‘ puts this concern at the-heart of the business. IKEA has responded to the public‘s rising concern for sustainability inits choice of product range, suppliers, stores and communication. It has also spotted business potential in providing sustainable solutions. IKEA‘s concern for people and the environment encourages it to make better use of both raw materials and energy. This keeps costs down and helps the company to reach its green targets and have an overall positive impact on the environment.
Global Brand which attract the key customer group which promises same quality worldwide. A strong concept – based on offering a broad range of well designed, functional products at affordable prices. Increasing use of renewable materials – IKEA plans to use 100% clean energy by 2020. IKEA believes in having long-term partnerships with its suppliers.
IKEA has to acknowledge and recognize its weaknesses in order to improve and manage them. This can play a key role not only in helping it to set objectives but also to develop new strategies.
IKEA’s weaknesses may include:
The size and scale of its global business is very challenging to standardize its products. This can represent a weak relationship in IKEA’s supply chain, affecting consumer views of IKEA’s products.
Keep balance between low cost products and good quality. IKEA also wants to differentiate itself and its products from competitors. IKEA believes there is no concession between being able to offer good quality products and low prices.
IKEA must improve communication with its consumers and other stakeholders about its environmental activities. The scale of the business makes this a difficult task. IKEA produces publications in print and online, carries out major TV and radio campaigns to enable the business to communicate with different target audiences.
IKEA has an original approach to deal with customers: it employs the self-serving method.Customers chose their products, take them out of the shelves and assemble them at home on their own. Although this approach is quite unusual in the furniture business the customers are willing to do that because of the low prices, the easy to handle and storable flat packages and simple constructive furniture. With this limited customer service IKEA safes sales staff and customers don‘t have to wait long to be served.
IKEA’S founder Kamprad had once written in a manifest that the true IKEA spirit is still founded under enthusiasm, on our constant will to renew, on our willingness to assume responsibility and to help, on our humbleness before the task and on the simplicity in our 74 IKEA tries to give employees a family friendly feeling. There is no to the outside noticeable hierarchy among workers, so e.g. managers also have to stock shelves and all design team enjoy complete autonomy in their work but are expected to design new appealing products 10 regularly. This corporate culture of IKEA is built upon the philosophy of sustainable development and a continuous strive for improvement in all areas of the value chain which effective way to shape the industry to better fit IKEA‘s future strategies. Due to the uniqueness of IKEA’s strategic positioning, being the largest competitor in its field, the firm has the advantage of setting the phase of the industry. Cost is another part of corporate culture; the culture emphasizes efficiency and low cost which is not to be achieved on the expense of quality or service.