ikea retail management

1. Live your life. Love your home.
Presented by: Fenella Andrade
Mallesh Goudar
Nipun Jain
Sarah Choudhary
Masters in European Studies and Management (MESM) 2010-2012
Manipal Centre for European Studies
Manipal University, Karnataka, India

3. IKEA History
• In 1943, IKEA was founded by Ingvar Kamprad
• Based in Sweden
• World's largest furniture retailer
• World’s leading home furnishings retailer
• IKEA numbers 1,04,000 employees in 267
stores in 45 countries

4. SWOT Analysis
on
IKEA Home Furnishings

5. STRENGTHS
Brand Image
 IKEA ranked 41st among the best global brands
around the world in 2006 with a brand value of
$8,763
 strong internationally known brand attracting key
demographic customer groups
 strong brands enhance customer loyalty and lead to
repeat purchases

6. Cost Efficient
 Low price
 no compromise in quality
Unique business model
 own industrial group, Swedwood, which produces wood-based
furniture and wooden components
 its operations cover every step of production, from forestry, saw
milling and board manufacture to furniture
 efficient productions which enable it to maximize productivity and
minimize waste-generation
 own design group which can makes sure that their products matches
the trend of the industry

7.  Good relationship with suppliers
 Maintained long-term partnerships with its suppliers
 Ensures that the company has access to high-quality materials at
reasonable prices
 Marketing expertise
 Market positioning statement is “Your partner in better living.
We do our part, you do yours. Together we save money.”
 Market on its strengths – based on offering a wide range of well
designed, functional products at low prices
 Catalogue- 175 million copies sold in 55 editions and 27
languages (2007)
 Other promotions include their seasonal sales, internet deals and
television advertisements

8.  Flat packing that helps in management
Flat packaging, which reduces shipping costs, minimizes
transport damage, increases store inventory capacity, and
makes it easier for customers to take the furniture home
themselves, rather than needing delivery.
But the original reason for it was competitive pressure from
IKEA's competitors to their suppliers, who actually
boycotted IKEA, forcing IKEA to do it themselves.
 Easy to assemble
 One stop shopping
 Friendly atmosphere and store layout
 One stop shopping

10. Customer Service
• Restaurant in store
IKEA exit bistro
Swede Shop
IKEA Restaurant
• Child Care
Supervised Playroom
Baby Care Room
Food Warming Facilities
Children’s Meals
• Design Advice
Office Planning
Kitchen Planning
Home Furnishing Advice
• Store Atmosphere
Easily Located Products
Browse through showrooms and try out products
Delivery Services available or take home products immediately

11. WEAKNESS
IKEA has to acknowledge its weaknesses in order to improve
and manage them. This can play a key role in helping it to set
objectives and develop new strategies
Not enough distribution channels. For eg: There are only three retail
shops in Hong Kong
Problem of product recall due to faulty base. For eg: IKEA had
recalled Parodi and Apelsin glass cases
IKEA is a global company, so product standards are difficult to
maintain.Some countries where IKEA products are made do not
implement the legislation to control working conditions
Swedish designs not appealing to American customers
Limited Furniture Designs - IKEA had limited furniture designs which
could obviously not cater to a wide range of customer needs and
preferences

12. OPPORTUNITIES
IKEA are moving from International to global status
through the development of Asia and Eastern
European models
Targets all levels of the market, upper, middle and
lower classes
Sourcing from China is one opportunity. Sourcing
from low cost countries like China would reduce its
costs and enable IKEA to concentrate on increasing
its market share
Bright prospect of online sales

13. THREATS
If a company is aware of possible external threats,
it can plan to counteract them. By generating new
ideas, IKEA can use a particular strength to defend
against threats in the market.
With economic concerns over rising living costs and
depleting disposable income there is an overall threat to
the performance of the business in UK and American
markets specifically
The regulatory environments across the globe vary and
can affect how IKEA does business and its product
costs, especially the use of natural resources

14. PORTER’s 5 FORCE ANALYSIS
Threat of Buyers growing bargaining power
– There is a little power because of the existing low-
price options
– IKEA ensure that their customers in all aspects will
be satisfied for quality service they provide
– Focused their marketing approach on demands and
needs of the buyer
– IKEA uses their corporate responsibility as a good
public image to their customers
– IKEA Family -card as a membership

15. Threat of Suppliers growing bargaining power
IKEA has its thousands of suppliers that set standards in
delivering the materials
– Because of the low-pricing, IKEA’s profit margin
also affects the prices in raw materials than by
prices in labour
– IKEA has a wide network of 1300 suppliers.
They carefully select the manufacturer of its
products. The company has own production
factories and designers which makes it less
dependent on others
– Bargaining power of supplier could be threat for
the profit of the company

16. Threat of Substitute Products
– There is no specific product that can be a
substitute for the furniture but IKEA at least,
have to keep up with the latest trends, to
avoid becoming out of style
– Problems faced due to distribution channels

17. Threat of Intense Segment Rivalry
– The IKEA’s furniture competitors’ offers different styles
and functionality
• Conrin targets a new low cost in terms of furniture line;
Crate & Barrel offers a furniture in a box which is
subject in higher prices
• Ethan Allen aimed at a more upscale market
• Wal-Mart is equipped in a big box furniture that is
categorized under the general store must-have-items,
but don’t have much of a style
– IKEA is the most successful in delivering the complete
package for the customers that reflects on weak rivalries
– There will always be substitutes for furniture’s but IKEA
competes with price and there isn't competitors in same
price range

18. Threat of New Entrants
– IKEA stores do not reach many small towns
and this is an opportunity for the new
competitors to move into small and midsize
cities with smaller stores and less selection. But
not easier in city because new entrants have to
establish a vast supply chain and create a
unique brand name
– The furniture market is already highly
competitive - the risk of new entrants is not
extremely high - huge capital needed to start
the business

19. 5 c Analysis
• Company
• Collaborators
• Customers
• Competitors
• Climate/Context

20. COMPANY
• Product Line
– Kitchen ware
– Dinning
– Living room
– Bedroom
– Hallway
– Bathroom & Laundry
– Small storage
– Cooking

21. • Market Image
– Awards won by the company
• Leo Burnett Hong Kong win the Grand Kam Fan for
IKEA at the Hong Kong 4As Awards
• IKEA (Campaign of the Year)
• IKEA (Corporate Branding Campaign of the Year
• IKEA (Best Use of Online Media)
• IKEA Honoured With Eurobest 2010 Advertiser Of The
Year Award
• Award by Queensland Government’s Environmental
Protection Agency for IKEA’s Environmental initiatives
(2007)
• IKEA was named one of the 100 Best Companies for
Working Mothers in 2004 and 2005 by Working
Mothers magazine
• ranked 96 in Fortune's 100 Best Companies to Work For
in 2006 and in October 2008
• IKEA Canada LP was named one of "Canada's Top 100
Employers" by Mediacorp Canada Inc

22. • Culture
– Diversity and creativity
– Family like Quality
– Cost Conscious
– Openness
– Equality
– Competitiveness
– Eco Friendly
– Social Initiative
(main partners to IKEA Social Initiative are
UNICEF and Save the Children)

23. • Goals of the Company
– Implementing strategies in the organization
– Customer transportation and carbon
footprint
– Working with suppliers on compliance
– Communicating sustainability
accomplishments
– Integrating sustainability into core business
– Forestation and use of wood

24. COLLABORATORS
• Distributors
– They have 28 distribution centres in 16
countries that supply to IKEA stores.
– They have over 300000 distributors all around
the world

25. • Suppliers
– They possess the bargaining power
– IKEA prefers procuring their materials from low
cost countries like China to reduce their overall
cost

26. • Alliances
– Rainforest Alliance
The IKEA Group supports the Rainforest Alliance
to promote Forest Stewardship Council (FSC)
forest management certification in China by
educating foresters and stakeholders on the
principles of FSC certification. The project
provides key experts with the training, tools and
materials to conduct Rainforest Alliance
workshops in order to increase the level of
sustainable forestry awareness in China.

27. CUSTOMERS
• Market size
– First stores were opened in Norway and Denmark
– Germany - IKEA's biggest market ( 45 stores)
– United States (37 stores)
– France ( 28 stores)
– Presently IKEA has 316 stores in 45 countries
• Top 5 sales countries
Germany 19 %
USA 11 %
United Kingdom 11 %
France 9 %
Sweden 8 %

28. • Benefits and Cost
– Gain from good quality at low cost
– Stylish and varied designs
– Friendly atmosphere
– One stop shopping

29. COMPETITORS
• Products
– All home solutions
– Kitchens, bathrooms, sofas, chairs, beds and
textiles, rugs, floors, lamps, plants, and everything
in between
– Displayed to show design possibilities with IKEA
products
– Assembled by the customer

30. • Intratype Competition • Intertype Competition
– Crate and Barrel – Home Improvement
– Pier 1 Stores
– Pottery Barn • Home Depot
– Furniture retailers • Jerry’s
utilizing similar store – Department Store’s
layouts • Meier & Frank
• M.Jacobs • Macy’s
• Ashley’s Home – Discount Retailers
Furnishings
• Wal-Mart
• Ethan Allen
• Fred Meyers

31. • Market share
– Despite the challenging economic situation in the world, fiscal
year 2009 was a good year for the IKEA Group. The Group
opened 15 new IKEA stores and entered its 25th market, with the
new IKEA store in Dublin, Ireland. Sales increased to 21.5
billion Euro, which is an increase of 1.4 per cent compared to
last year.
– The IKEA Group operates 267 IKEA stores in 25 countries. In
addition there are 34 IKEA stores, that are owned and run by
franchisees outside the IKEA Group, in 16 countries/territories
– “It has been a challenging year in which we have had to adapt to
changed market conditions,” says Kerri Molinaro, President,
IKEA Canada. “We know that many of our customers have less
money to spend and our low price concept is therefore more
relevant than ever. Our customers have recognized that in tough
times IKEA has the better home furnishing offer.”

32. Presented By :
Fenella Andrade
Mallesh Gowdar
Nipun Jain
Sarah Choudhary
Live your life, love your home.