We had a stimulating class discussion in MKTG 675 on the U.S. "invasion" of the Swedish giant furniture store: IKEA.
IKEA's key success factors include:
In the highly fragmented U.S. furniture retailing market, it seems that any company wanting to secure and command a strong market share will face a wide spectrum of competitors, from Ethan Allen at the upper-end to Wal-Mart at the lower-end.
The U.S. market is also quite atypical from IKEA's known European markets: they want bigger and more comfortable furniture. They also require the dimensions to be adapted to their own standards: inches and cup sizes, rather than centimeters and liters.
The most challenging issue for IKEA remains an ingrained behavior in the U.S.: Americans fall in love with their furniture and are unlikely to switch to a "commitment-free approach to furniture."
With this status quo (IKEA's traditional practices and American attitudes and behaviors), IKEA's goals of opening 50 stores across the U.S. by 2013 could be more challenging than expected. Growth in the United States will be enabled by the following:
Works Cited:
Moon, Youngme (2004). IKEA Invades America. Boston: Harvard Business Publishing.
Zatel. IKEA. Retrieved February 2nd, 2013, from: http://www.memecenter.com/fun/105936/Ikea
IKEA's key success factors include:
- Low prices
- Differentiated products
- Large product line
- Original store ambience: child care, Swedish food/restaurants
- Strong customer involvement in shopping and assembly
In the highly fragmented U.S. furniture retailing market, it seems that any company wanting to secure and command a strong market share will face a wide spectrum of competitors, from Ethan Allen at the upper-end to Wal-Mart at the lower-end.
The U.S. market is also quite atypical from IKEA's known European markets: they want bigger and more comfortable furniture. They also require the dimensions to be adapted to their own standards: inches and cup sizes, rather than centimeters and liters.
The most challenging issue for IKEA remains an ingrained behavior in the U.S.: Americans fall in love with their furniture and are unlikely to switch to a "commitment-free approach to furniture."
With this status quo (IKEA's traditional practices and American attitudes and behaviors), IKEA's goals of opening 50 stores across the U.S. by 2013 could be more challenging than expected. Growth in the United States will be enabled by the following:
- Adding the Voice of the Customer into their new product development strategy. When the case study was written in 2003, it seems that IKEA was presenting itself as the Apple Inc. of furniture retailing. However, strong negative reactions to their way of doing things had IKEA adapt its offering to cater the U.S. market's idiosyncrasies.
- IKEA should accept that the Swedish way is not necessarily the only way. The furniture retailer should acknowledge divergent trends and practices and learn to accommodate and even include them in their value proposition.
One example of such a possible change for IKEA would be to streamline floor plans and make it easier for customers to jump between departments. Another way would be to increase the number of salespeople on the floor to
Works Cited:
Moon, Youngme (2004). IKEA Invades America. Boston: Harvard Business Publishing.
Zatel. IKEA. Retrieved February 2nd, 2013, from: http://www.memecenter.com/fun/105936/Ikea
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