The Ikea Business Model

Topics: IKEA, Price, Retailing Pages: 2 (371 words) Published: December 11, 2008
IKEA have a strong internationally known brand attracting key demographic customer groups. •The IKEA business model is unique in its construction and execution with little direct competition on a like for like basis. •Success has been driven from the price architecture offering value to the customer in innovative but functional products. •Despite the large shed operations IKEA operate there is a degree of specialist knowledge within key product areas where purchases are more considered and require assistance such as kitchen installations. Weakness

Whilst an international brand there is a level of reliance on European markets with 90% of the stores based in Europe and the balance across America, Middle East and Asia. •Although the model promotes low prices it has been identified there is an associated low level of customer service which couples this suggesting there is a need to work on service to ensure a complete shopping experience and ensure repeat business within the existing customer base. •As a reaction to marketplace movement the development of Ecommerce has been necessary to compete in a modern technological world however there is also a consideration this movement into multi channel retailing moves away from the fundamental vision of the customer being able to see and touch the product. Opportunities

IKEA are moving from International to global status through the development of Asia and Eastern European models. •Traditional product for IKEA has been within value, low price high volume product however the movement into mid and higher price points will see an opportunity to move the demographic base and increase the average basket value with less reliance on a limited demographic group. •Although there are negative associations within the development of the IKEA Ecommerce site there is an associated opportunity to achieve growth and increase levels of customer service as the additional transactional capability will...
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