Today IKEA is progressing towards being one of the top furniture retailers in the world. In 2002, they served 286 million customers through 154 stores resulting in $12 billion in revenue. Although IKEA has several stores placed around the world, they are not always thought of as the most popular furnishing store in America. All the stores are self-service and are based on a do-it-yourself shopping experience. There are few contacts with customer service representatives within the stores, except for when the customer enters the transaction phase of their buying experience. IKEA is proud to find the most cost efficient manufacturers for their products to in turn sell for a lower price to their customers. By replacing quality with low prices, IKEA has to step out of the normal standard of what a traditional furnishing store offers and take part in what is called a reverse positioning marketing strategy. Examples of the things that IKEA lacks are customer contact with employees, deliveries, assembling purchases, quality of products, style and culture adjustment. Lack of American adaptation has hindered the growth of IKEA by preventing them from being as successful as they are in other countries. IKEA describes it’s customer as a person who adapts willingly to change, has a do-it-yourself mentality and is an early adopter of new technology. This person is most likely to be young, maybe a college student or a newly married couple that is living in an apartment or buying a starter home. This person dwells in a heavily populated area where land is abundant to accommodate the large-scale store and parking facilities. The products purchased are used for an array of household furnishings such as an entire kitchen, living room, bedroom, office and other décor. IKEA has many competitors including mass-volume furniture retailers such as Wal-Mart, Rooms to Go, and Ethan Allen1. In regards to size, all of the stores listed above out number the amount of IKEA stores in the U.S. However, IKEA beats its competitor stores on square-footage of the actual store. Compared to its competitors, IKEA is most like Wal-Mart because of their “everyday low price” and quality. Whereas Rooms to Go and Ethan Allen are more expensive with a focus on higher quality. Since there are many bargain shoppers in the U.S., we believe that IKEA has a great proposition to be profitable here. ______________________________________________________________________________ 1-
See Figure 1: Leading U.S. Furniture Retailers
IKEA’s competitors, Rooms to Go and Ethan Allen, have a different target market that is focused on a middle to upper-class society in which the consumer wants a long-lasting product and is willing to pay a higher price. Wal-Mart’s furnishing products consist of similar items that IKEA sells except for kitchen cabinets. Rooms to Go and Ethan Allen offer entire bedroom suites, living room and dining room furniture. You can also buy the accessories displayed within the store set-ups just like IKEA. These stores all offer assistance to help you make the right selection.
In regards to customer service in the U.S., consumers are use to having employees answer questions and guide you through your purchase. Whereas in IKEA stores the customer is expected to be prepared for their shopping experience by knowing what they want, have measurements and a way to transport their purchases home for assembly. In America, the consumers would rather pay extra for additional attention, assembly and delivery.
The European style that IKEA offers is very unique and doesn’t really fit into the American culture. For example, most Americans prefer several styles to choose from rather than just the four that IKEA offers. In one room the average consumer may have a modern style but in another room they could have contemporary furnishings. Americans prefer a lavishly decorated room with detail while the European style of furnishing is...
Please join StudyMode to read the full document