IKEA Invades America

Group 4, Section A Ajitesh Jaiswal (08P007)

Anuj Dharnidharka (08P013) Reeti Bhatia (08P039)

Siddharth Singh (08P048) Subhratosh Khan (08P050)

Varun Malik (08P053)

Overview

IKEA = Ingvar Kamprad Elmtaryd Agunnaryd

Founded in 1943 in south Sweden Motto - Affordable solutions for

better living

Revenues of $28.8 billion 280 stores across 35 countries 1,20,000 + employees

Ikea Concept

Involve customer in cutting costs Make furniture for the masses Low price with meaning Unassembled parts lead to low shipping

costs External suppliers and designers used

Product Strategy

Price Matrix used to determine products/segment

Establish price before design Cost determines material used Different materials for one product to cut

costs Matrix used to identify gaps in company

lineup and identify market opportunities

IKEA Stores

15,000-35000 sq.mts. Upon entry shoppers coerced into a

predetermined path Customers free to lounge on model

furniture Natural light to reduce costs Food courts located strategically Play area for kids

US Furniture Retailing

Market consisted of case goods, upholstered furniture, ready to assemble furniture and casual furniture

Market highly fragmented Top 10 furniture retailers responsible for just 14.2

% market share Low end retailers aggressively promote on basis

of price, environment reflects low price focus High end stores offer luxurious environments,

various payment options, compete on quality and service

IKEA invades US

Products did not fit American homes Adjusted its product lineup and

merchandising High profile ads to promote

commitment-free approach to furniture Doubled revenues from 1997 to 2001 In house restaurants 15th largest food

chain in America

Environment

Plastic bag for a nickel Recycle bins for used

batteries, packaging Stoughton store has 7,000

sq.mt. plants All IKEA related dealers have

to implement environment friendly methods

Water harvesting Natural light

Criticism

Not quality furniture Low design Assembling nightmare Danish town names

used for carpet, door mats etc.

Created non profit organization to avoid high taxes

Future

Increase the number of stores Competition from specialty retailers Find a balance between niche and

traditional furniture Low on customer service Cut down costs to lower rates further

THANK YOU