2015 Facts & Figures

Source: IKEA Website

172,000 Employees

33.8 B Sales (Euro)

884 million visits

11 M m2

Retail Space

300+ Stores Worldwide

Ingvar Kamprad, at the age of 17, founded IKEA in1943.

From matchboxes to household goods to furniture,IKEA kept on expanding it’s product line.

Ingvar Kamprad Elmtaryd Agunnaryd

Affordable solutions for a better living

As-Is Section

IKEA Museum

IKEA Cafe

IKEA Child Essentials

Kitchenware Huge Floor Space

The INCEPTION

• Discontinue all products and focus on low price furniture

• In 1953, the first furniture showroom is opened in Almhult, Sweden.

The INNOVATION

• Due to pressure from competitors they started making their own furniture

• Price reduction motives led to design for flat packaging

The INAUGRATION

• 1958, the first IKEA store is opened in Almhult

• In 1965, the monumental IKEA store in Stockholm is inaugurated

Strengths

• Attractive product design• Market leadership• Solid financial position• Vast, yet focused product range

Weaknesses

• Weak presence in Asia• Damaged reputation due to a series of

incidents• Competitive advantage difficult to sustain• Lack of flexibility due to its size

Opportunities

• More emphasis on CSR• Increasing presence in developing countries• Formation of strategic collaborations• Adding premium range of products into

portfolio

Threats

• Social treads (building online help to guide customer)

• Market forces (lower prices and economic scale)

• Economic factors (price strategy)

SWOT

New Product Development

Process

Product-Strategy Council

Group of Senior

Managers

IKEA’s Product Lineup

Priorities

Consumer Trends

Globe-Trotting Council

Members

Product Manager

Product’s Target Retail

Price

Matrix

Overseen by

Consisted of

Who Establishes

Based on

Identified by

Then

Decides

Using

ProductStrategy

ProductStrategy

The Matrix

Price Range / Style

Scandinavian(Sleek Wood)

Modern(Minimalist)

Country(Neo-Traditional)

Young Swede(Bare Bones)

High

Medium

Low

3 Basic Price Range&

4 Basic Styles

Within each price range the company would survey thecompetition to establish a benchmark and then set its ownprice point 30% to 50% lower than those of its rivals.

For each Product Type – A Separate Matrix

Set Retail Prices Identify Gaps in

Product Lineup

ProductStrategy

In some cases, different productcomponents would be sourced fromdifferent suppliers. These differentpieces will come together in the storeonly when customer would select eachpieces individually.

High Quality / Expensive Material:On visible and stress pronesurfaces/areas

Low Quality / Cheap Material:On less visible surfaces and areaswhich were less likely to undergo stress

Target Retail Price of Proposed product is established

Selecting Manufacturer

• IKEA worked with 1800 suppliers in 50+ countries

Balance Cost-Efficient Labor with Company’s Product Quality Standards

Lookout: Building supplier relationships in developing countries

Encourage internal competition among suppliers

Focus:Cost Efficiency

ProductStrategy

Design – Handled in-house via Internal Competition

Company’s furniture was designed to ship disassembled.

All products were transported ‘Flat’ => Flat-Packaged Boxes

High Volume usage

Savings on shipping costs

Products retail price could remain low

Low Price with Meaning

Quality home furnishing products at affordable prices

Low prices are the cornerstone of the IKEA vision, business idea and concept. The basic thinking behind all IKEA products is that low prices make well-

designed, functional home furnishings available to everyone. The vision is to create a better everyday life for the many people.

Democratic Design

Form follows Function

Low prices with Meaning

Good Design+

Good Quality+

Good Price

IKEA wants to be viewed as:

Affordable

Do-It-Yourself

Having Well-Designed, Functional Products

Innovative

Entire Family-Friendly

Brand Positioning StatementTo, working middle class families, IKEA is a brand in the furniture retailing category

that manufactures stylish furniture at an affordable price because their vision is to

create a better everyday life for many people

The above positioning statement incorporates the original IKEA business idea which has successfully positioned the brand as a leader in value-priced, practical design.

Additional verbiage identifies an international customer focus driven by localized style and taste.

Brand Mental Map

Brand Personality

Profile of Competitive Brands

Key point of difference for IKEA is that none of IKEA’s competitors offer as broad a range of styles, types and quality levels within every category of home furnishings as IKEA!

American Market

Case goods & Upholsted

Furniture 90%

Top 10 Retailers

14.2%

Two types of Stores

Low end

• Walmart• Cheap Shops

High end

• Luxurious stors• Jordan Furniture

Types Of Stores

Various payment options easy credit

High touch sales consultants

Offered interior design services

Huge inventories

Variety of styles

Substyles

Quality and service

Sales people educated customers on Grains of wood, construction techniques, longevity & durability

One goal: To make customers believe the products which they buy will last a lifetime

Americans are reluctant to buy new furniture

Change their spouse often but not furniture

Every retailer offered free delivery services or sometimes additional fee

They offer to set up the new furniture in customer’s home and discarded

the old ones

Customer should wait for a few weeks but everything will be done during

that day.

IKEA Invaded America Opened first store in Philadelphia in 1985

Challenges Faced In America

Sofas and beds were not soft

enough

Portion sizes were too small

Americans had a not to let go

mentality

Product dimension in cm not inches

An Average American?

Shopping at IKEA

Showroom

• Make yourself at home• Talk to the sales staff• They are proud of their

prices

Before you go

• Make a list ofeverything youneed

Market Hall

• Many speciality shops gathered together

IKEA Restaurant • Feeling Hungry?

IKEA For Kids

• You Shop, Kids Play• Children’s Furnishing• Care and feeding of

children

Self Service Area

• Flat is Good• Trolley’s for

everyone

Everything but barter

• You can use any mode of payment

People visit an IKEA Store for the first time

2003 to 2016

IKEA launched its e-commerce portal

IKEA expanded to other European countries, Asia Pacific and Middle East.

It currently has over 375 stores in more than 50 countries

IKEA - Revenue over the years

Source: IKEA Website

UVP

Good Quality

Low Price

GlocalDesign

Family Time

Unique Store

Layout

Choice

Suburbs & large cities

Shops for a Bargain

Prefers Inexpensive but durable furniture with good design

People who are working in cities other than their hometown

Middle and Upper-Middle income families

Fun, Funky & Aspirational

Slow shoppers that plan full day visits

Expect minimal customer service

Customer Persona

IKEA understood that ‘One size doesn’t fit all’

IKEA officials conduct workshops, seminars and

house visits to understand customer habits and

preferences

15 homes in Mumbai, Bangalore and Delhi have

been given IKEA products for a test run

It took 6 years for IKEA to start its inaugural

store in South Korea due to extensive customer

analysis

IKEA had to lower its price by almost 50% in

China so as to match the price of the local

furniture retailers

2

1

5

4

0

1

2

3

4

5

6

0 1 2 3 4 5 6

Pri

ce

Design

Design Vs. Price

walmart office depot

ethan allen IKEA

Brand Perceptual Map (IKEA)

IKEA – The Road Ahead

€50 Billion Revenue and 500 stores by 2020

Expand presence in emerging markets suchas China & India

Enter new markets such as Brazil, SouthAfrica & Nigeria

IKEA bought a 23 acre plot in Navi Mumbai for400 crores and will build a 4,00,000 sqft store

IKEA purchased a 13 acre plot in HITEC City,Hyderabad and will build a 4,00,000 sqft store

IKEA is planning to purchase a 3,50,000 sqftland in Borivali, Mumbai for 900 crores

It plans to open 25 stores in India by 2025

IKEA in India