A study on Ikea's strategy

Résumé du document

The main Ikea's service is to provide all consumer design furniture at a low price. IKEA entails a qualitative change by making design and practical products at the same price than the basic one. IKEA creates something new by creating new processes through innovative design, production, distribution, and sales techniques.

The production of IKEA is innovative, for instance, through the use of wood coming from sustainable forests. IKEA works in partnership with the National Forest Office in order to support and improve rebuilding and protection of forests. The distribution process and sales techniques are also innovative. Indeed the innovation is the "cash and carry" or "self service" systems. People take products in the warehouse; assume the transportation and assemble the furniture. All these innovative processes raise the productivity of IKEA because IKEA needs less employees, less sales man, less deliveryman for the same amount of sales.

IKEA has developed some technological instruments like the IKEA® Home Planner, which enable customers to plan the organization of their rooms with Ikea's products. But technical development is not the key point of Ikea's innovation. Technologies are not their comparative advantage but this is not an important point in their activity and in the furniture's market.

As IKEA fulfils the fifth criteria of the innovation's definition, we can say that IKEA developed a service innovation.

Extraits

[...] This has been a key step in the Ikea's development. For the first time customers can see, touch and test furniture before buying. This showroom is the solution given by IKEA to make the difference with competitors. Indeed IKEA and its main competitors had reduced a lot prices thanks to economies of scales, and they fears that customers don't perceive the quality anymore. By exposing products, IKEA shows functionality and quality of product.[2] The following flowchart shows the global environment of IKEA in 1953. [...]

[...] IKEA satisfies also customer's aesthetic need because they create design furniture at low price. Customer implication Active participation of customers (high) During shopping in IKEA, customers are constantly participating. They have to stride along the several departments and to write down references of product they want on a sheet of paper. Then customers have to go in the self-service warehouse in order to take products out of shelves. Then they have to go to the checkout, to rent a van (if they have big furniture), to go back home and to assembly furniture. [...]

[...] Chapter II: Customers expectations IKEA provides to customers a feeling of membership thanks to the IKEA family card or the fitting of shop and restaurant. Everything is done in order we feel at home, we feel relax and have pleasure and desire by testing product in a real and lovely living room. Concerning resources optimization, IKEA provide economies to customers because the same products would be more expensive elsewhere. The only criticism I want to do is about time constraint. First customers are obliged to spend long time in IKEA. [...]

[...] There is no time optimization possible. IKEA shops are organized like a path and we are obliged to pass by each department. People lose completely all sense of time and can not come to IKEA to buy only few things. Customers know they need time to go their and expect at least a half day. I think this time constraint entails a lose of customers, particularly for decoration because people will prefer proximity shop. Then even if customers have taken time to go to IKEA they have to assemble furniture. [...]

[...] By what kind of innovation IKEA is concerned? See the following table Chapter VII: The analyse of the service experience 1. Rethink the elements of the service delivery system 2. Rethink the service relationship IKEA create real scene and not a sale room IKEA put furniture in situation to seduct customer and attract them to test. But maybe IKEA should a little bit more invest in contact personal because people can feel lost in the department and can need advices Knowing the consumers competency IKEA non verbal communication IKEA give important to after sales services and to know what people think and advices. [...]