Case Study of IKEA: Growth Of A Global Retail Giant

ikea bbc news

If you haven’t heard of Ikea, you’re probably living under a rock. 

Ikea, the Swedish furniture company, is a household name. Its helps design and sell ready to assemble furniture, home accessories and more.

Founded by Ingvar Kamprad in 1943, he had the roots of a furniture dealer. Grown from local Swedish soil, he spent years occupying the local market before expanding operations globally.

To give some idea of its global expansion footprint, here are some facts:

  • First Store Outside Sweden: Norway 1963
  • First Store in APAC: Japan 1974
  • First Store in the US: Plymouth Meeting in Philadelphia in 1985.

As of November 2018, there are 424 IKEA stores in 52 different countries around the world.

Pretty impressive right?

But how did Ikea manage to expand whilst others like Walmart, Tesco and more have failed?

Let’s explore why others have failed firstly.

Overall there were will always be a multitude of reasons on why each one failed but the one major reason for failure for most of them was the lack of cultural awareness. 

Many companies, especially global US ones have failed when they go overseas (or at least into certain markets) because they take their winning strategy in their local market and try to apply it to another country.

Examples:

Best Buy tried to sell complex electronics products to the Chinese market when the market there was still buying basic technologies such as CDs and DVDs (and these are still popular today!).

Walmart tried to sell the American Dream…in Germany. It doesn’t take a rocket scientist to work out why that didn’t work.

IKEA is a great example of how to meet local cultural customs

Although its branding shines bright outside the store, in every interior, there are subtle changes tailored to accommodate cultural differences in every country.

Here are some awesome examples:

China — Entire Sections on Balconies in Showrooms

Balconies are very common in Chinese homes. Especially in areas where space is limited, balconies are often an area for extra storage or at least a chair or two.

Depending on the location in China (north or south), balconies are used not only for drying clothes but can be used for food storage as well.

Source: ikea.cn/cn/en/catalog/categories/departments/outdoor/

Korea — Super ‘Single’ Sized Bed

When Ikea was first opening its store in Korea in 2004, it did market research on product designs and the market.

It ended up finding out that Korean’s bedrooms sizes were much smaller than Americans. This resorted them designing a ‘super single’ sized bed which was bigger than your normal average single but perfect for the bedroom sizes of Korea.

Source: https://ikea.today/ikea-brings-together-swedish-korean-design/

But what else beyond cultural reasons?

So we know that Ikea hit all the cultural tick boxes but it takes more than that to succeed at the growth of what Ikea has managed to achieve.

Ikea also nails many other factors around its products, targeting and of course the problem they are trying to solve.

Ikea solves the problem of buying furniture

Although Ikea has changed its products depending on markets, its innovation around flat packing furniture is still applicable globally.

Furniture historically has been a long term process with lots of anxiety and hair-pulling involved.

Not only does it cost a lot of money, the thought of finding the right design and then needing to put it together afterward resulted in people putting it off.

Ikea, instead, made this process easy. 

According to analyst Shoulberg:

“They created products that were nicely designed, if not particularly durable, that were intended to be used immediately… and disposed of when they wore out or, more likely, when the user had moved on to a different taste level or purchasing strata,” he writes. “It’s a seminal change in the home business and one that conventional furniture stores are still trying to come to grips with.”

Not only this but Ikea kept it affordable whilst not being too cheap at the same time.

All of this solves a big problem as Ikea not only helps you pick out the right designs by giving you the visualization tools you need but the ability to assemble it in less than a day with affordable pricing.

It hits the right generation and demographic

To be fair, when you go to an Ikea store, you don’t really see many grandmas and grandpas.

More than often, you see young couples and families on the hunt for their next collection to their home.

With its showrooms and clean, aesthetic looking designs, it appeals to a younger demographic and that is exactly the target audience they go for.

This demographic tends to have more stylistic choices, buys with their eyes and most importantly, have disposable income (which can make for impulse decisions!)

Get the job done today

Along with the demographic point, Ikea reinforces an attitude of getting things done today.

As mentioned earlier, Ikea solves an age-old problem of buying furniture. You can visualize, buy and assemble it all in one day.

When you go “I need to furnish my living room today”, Ikea most likely pops in your head as a location of where to get things.

In some countries, they even have on-site assembly depending on the cultural differences of each country. 

Ikea stores are a destination

Ultimately, Ikea is a place to visit the showroom and even grab a bite to eat (hence their cafeterias).

Source: https://www.blogto.com/restaurants/ikea-restaurant-toronto/

Big department stores are often a place for consumers to shop and browse but Ikea is the one place in mind when people want to look around for furniture.

More than often, even if you’re not buying, you’re there for home inspirations all the way to buying a hot dog.

When you’re at an Ikea, you know why you’re there. 

This makes it an incredible global iconic brand and why they have managed to expand globally so successfully.

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