Ikea Invades America

Case Study: IKEA invades America                                                                                        [pic 1]

Company Background:

IKEA was founded in 1943 by Ingvar Kamprad in Almhult, Sweden. Initially the company sold basic household goods at discount prices but by 1951 Kamprad decided to focus only on low priced furniture. In 1953 Kamprad opened the first showroom in Almhult. In 1955 IKEA began to design its own furniture. The new cash and carry model freed IKEA and its customer from having to arrange delivery. Furthermore, flat packaging reduced the cost of transportation. The core mission of IKEA was “Selling Stylish Furniture at Low Prices”.

After the remarkable success in home country, IKEA expanded further into Europe and US market. The chain opened its first US Store in Philadelphia in 1985. Even though Americans were delighted by the low prices, IKEA still faced a big Obstacle with regards to consumer preferences. To grab the US market IKEA had to make some changes but the company’s hallmark “the distinctly Scandinavian Design” will remain constant. Apart from providing the customer the low price with meaningful products, the customer also facilitates the customer experiences by providing plenty of parking spaces, restaurants, and childcare facilities.

Still IKEA’s expansion strategy has remained conservative. The company has moved slowly through carefully researching new store locations. IKEA’s goal was to have 50 stores in the United States market by 2013. In 2017, there are 44 stores operating by IKEA in United States of America.

Product Strategy: Vision Statement “Low Price with Meaning”.

Product:

Low priced furniture store.

Most of the products has a Scandinavian design and style makes the company unique from other traditional furniture makers.

Concept of flat packaging which made it easier for consumer to transport the furniture home.

Can be assembled and disassembled easily.

IKEA designs its own furniture too.

IKEA gives importance to the quality of the products.

There are around 10000 various products of IKEA to choose for their customers.

Price:

 IKEA became famous due to low price furniture concept.

It tends to pass its cost savings to its customer through various innovations in packaging.

It should be the favorite destinations for the price conscious customers.

Place: 

In 2002 IKEA operated 154 stores in 22 countries and served 22 million customers.

This is a clear indication of how successful a company is in terms of its location. Location of the store is very important to reach out to the customers.

Looking at the percentage of sales of the furniture category at United States there are many opportunities of growth for IKEA in North America. If an IKEA store is close to the consumer it helps in enhancing the consumer perceived values.

Promotion:

Besides advertising campaign, the consumer can visit the actual IKEA stores which is also part of their promotional strategy. This assist the customer to get a broader view on the range of the products.