IKEA Invades America

TEAM NO.-9

TEAM MEMBER-

ROHAN PATIL(121343)

SIDDHARTHA NAGORI(121351)

SUPRAV TALUKDAR(121354)

SURAJ GUPTA(121355)

VARUN SINGH(121358)

ABOUT IKEA Founded in 1943, by Ingvar Kamprad.

Named after Kamprad’s initials and family farm( Elmtaryd) and village ( Agunnaryd).

IKEA’s vision : Democratic Design: Low price with meaning.

First inaugural store was launched in 1958 in Almhult,Sweden.

The 45800 sq. feet flagship store was opened at Stockholm in 1965.

Positioned as a low-priced furniture store.

Shifted from selling furnitures made by other manufacturers to selling its own manufactured furnitures.

ABOUT IKEA Product Strategy:

• Product/Price matrix

• Strong supplier relationship.

• Cost efficiency in engineering and design.

• Transportation: “We don’t want to pay to ship air.”

Scandinavian(sleek wood)

Modern(minimalist)

Country(neo-traditional)

Young Swede(bare bones)

highmediumlow

STYLE

SHOPPING AT IKEA

Typical floor space : 15000-35000 sq. meters.

Store Layout carefully designed with childcare facilities, restaurants, etc.

At the entrance, small stationary items are kept along with shopping carts.

The stores are self-service.

Delivery and assembly of furniture was customer’s responsibility.

Apart from furniture, other household items are also sold with range of 10000 products.

Many products feature bold colours and whimsical names.

US MARKET SCENARIO BEFORE IKEA ENTERS

Market consisted of following categories:• Case goods and upholstered (45% each)

• Other categories (10% ) .

Retailer Category• Low end retailer.

• High end retailer.

Customer Perception• Unwillingness to buy new furnitures.

• Purchased high quality and long life furnitures focussing on comfort.

Delivery service scenario:• Sometimes free, sometimes for a fee.

• Delivery time could run for weeks.

US MARKET SCENARIO BEFORE IKEA ENTERS

IKEA INVADES AMERICA !!!! First store opened in Philadelphia in 1985 was not a success due to:

• Uncomfortable furnitures.

• Not at par with American consumer standards.

Adjusted product lineup to customer taste.

Launched advertisement “ UNBORING” campaign to change stereotypical customer perception about their furniture.

IKEA changed the perception of its product among consumer’s mind from cheap to product with quality and aesthetics but at affordable price.

Fastest growing furniture retailer.

Doubled revenue from $600 million in 1997 to $1.27 billion in 2001.

By 2002, US was IKEA’s third largest market(11%) with second largest number of stores(14) after Germany(30).

IKEA INVADES AMERICA !!!! In 2003 IKEA plans to add 9 more stores.

By 2013, IKEA aims to have 50 stores in America.

Strategy:

• Should set up its stores where there is a larger number of its target population.

• Should try to appeal to a larger audience.

• Should diversify from its Scandinavian design and style.

• Launch stand alone restaurants with interior designed with its furniture and where product catalogs are available. This will increase the number of touchpoint and brand visibility.

• Launch an IMC campaign which focuses on the style and fashion statement of its furniture. It will ensure frequent purchases as styles and fashions change.

• Focus on online platform with virtual online stores.