Page 203 - Marketing Management

180 PART 3 CONNECTING WITH CUSTOMERS

different experience than most furniture retailers. The floor
plan is designed in a one-way format, so the consumer
experiences the entire store first, then can grab a shop-
ping cart, visit the warehouse, and pick up the desired
items in a flat box.
Many IKEA products are sold uniformly throughout
the world, but the company also caters to local tastes.
• In China, it stocked 250,000 plastic placemats with
“Year of the Rooster” themes, which quickly sold out
after the holiday.
• When employees realized U.S. shoppers were buying
vases as drinking glasses because they considered
IKEA’s regular glasses too small, the company devel-
oped larger glasses for the U.S. market.
• IKEA managers visited European and U.S. con-
sumers in their homes and learned that Europeans
generally hang their clothes, whereas U.S. shoppers
prefer to store them folded. Therefore, wardrobes for
the U.S. market were designed with deeper drawers.
• Visits to Hispanic households in California led IKEA to
add seating and dining space in its California stores,
thin wallets. We should take brighten the color palettes, and hang more picture
care of their interests.” IKEA adheres to this philosophy frames on the walls.
by reducing prices across its products by 2 percent to IKEA has evolved into the largest furniture retailer in
3 percent annually. Its focus on value also benefits the bot- the world with approximately 300 stores in 38 countries
tom line: IKEA enjoys 10 percent margins, higher than its and revenues topping €21.5 billion in 2009. Its top
competitors such as Target (7.7 percent) and Pier 1 countries in terms of sales include Germany, 16 percent;
Imports (5 percent). IKEA sources its products from multi- United States, 11 percent; France, 10 percent; United
ple companies all over the world rather than a handful of Kingdom, 7 percent; and Italy, 7 percent.
suppliers as many furniture retailers do. This ensures the
lowest price possible, and savings that are passed on to
the consumer. Today, IKEA works with approximately Questions
1,300 suppliers from 53 countries. 1. What are some of the things IKEA is doing right to
IKEA’s stores are located a good distance from most reach consumers in different markets? What else
city centers, which helps keep land costs down and taxes could it be doing?
low. The average IKEA customer drives 50 miles round-
trip to visit an IKEA store. Many stores resemble a large 2. IKEA has essentially changed the way people shop for
box with few windows and doors and are painted bright furniture. Discuss the pros and cons of this strategy.
yellow and blue—Sweden’s national colors. They save
energy with low-wattage lightbulbs and have unusually Sources: Kerry Capell, “IKEA: How the Swedish Retailer Became a Global Cult Brand,”
BusinessWeek, November 14, 2005, p. 96; “Need a Home to Go with That Sofa?” BusinessWeek,
long hours of operation; some are 24-hour stores. When
November 14, 2005, p. 106; Ellen Ruppel Shell, “Buy to Last,” Atlantic, July/August 2009; Jon
a consumer walks through an IKEA store, it is a very Henley, “Do You Speak IKEA?” Guardian, February 4, 2008; IKEA, www.ikea.com.