When Ikea opens a new store people come from hundreds of miles away to be one of the first in the door, people make tents and camp in the parking lot for days. Why does Ikea have the loyal customer base that no other retailer can achieve? People decorate their entire houses, or furnish their businesses in Ikea furnishings. Is it that Ikea offers good quality furnishings at a fair price? Is it that Ikea sells modern trendy furnishings, or that you can buy the glasses for you kitchen and the book shelves for your den at one time? Ikea incorporates all these things into their stores and marketing strategies, Ikea also is socially conscious, and promotes organizations like UNICEF. Besides getting a good price on a book shelf, customers are also promoting human rights, and advocating for children in impoverished countries.
The Ikea strategy has plenty of room to grow the retailer accounts for just 5% to 10% of the furniture market in each country in which it operates. More important, says CEO Anders Dahlvig, is that awareness of our brand is much bigger than the size of our company, that's because Ikea is far more than a furniture merchant. It sells a lifestyle to customers around the world. As long as consumers from Moscow to Beijing to Boston MA and beyond keep striving to enter the middle class, there will be a need for Ikea.
For the fiscal year ended Aug. 31, revenues rose 15 percent, to $17.7 billion, and estimates of Ikea's pretax operating profit at $1.7 billion. Ikea maintains these profits even while it cuts prices steadily. To keep growing at that pace, Ikea is accelerating store rollouts. Nineteen new outlets are set to open worldwide in the fiscal year ending Aug. 31, 2006, at a cost of $66 million per store, on average. CEO Dahlvig is keen to boost Ikea's profile in three of its fastest-growing markets: the U.S., Russia (Ikea is already a huge hit in Moscow), and China (now worth $120 million in sales). In the US... [continues]
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