Mock room setups
Artfully arranged room displays
With its carefully curated store decor, IKEA aims to inspire and empower customers to create their dream homes. By showcasing products in beautifully arranged rooms, utilizing innovative lighting systems, and offering a comfortable and enjoyable shopping environment, IKEA ensures that the in-store experience is as memorable as its iconic furniture designs.
As the world’s largest furniture brand, IKEA understands the importance of providing a seamless online experience to its customers. With over 4.3 billion visitors on its website in 2022, IKEA’s online presence is undeniable and pivotal to its success.
To ensure optimal user experience, IKEA invests in its website and mobile application, focusing on factors such as website speed, intuitive navigation, and responsive design. These aspects contribute to a user-friendly interface that enhances the overall browsing and shopping experience.
One of the key features that sets IKEA apart is its commitment to user interface and user experience (UI/UX) design. By prioritizing UI/UX, IKEA creates a visually appealing and intuitive platform that captivates customers and encourages them to explore further.
IKEA also leverages innovative technologies to engage users and enhance their shopping journey. For instance, the brand offers a 3D modeling app that enables customers to visualize how IKEA products would look in their own homes. This interactive experience not only assists customers in making informed purchasing decisions but also contributes to the brand’s positioning as a leader in user-centric design.
Furthermore, SEO optimization plays a critical role in IKEA’s digital marketing strategy. Understanding that most users do not go beyond the first page of Google search results, IKEA invests in SEO techniques to enhance visibility and organic ranking. This focus on SEO helps attract online visitors and drive conversion rates.
The success of IKEA’s website and mobile application marketing is evident in the brand’s achievements. Despite the challenging market conditions, IKEA’s conversion rate of 1.7% surpasses the industry average of 0.5%. Additionally, with 4.3 billion visitors in 2022 alone, IKEA reiterates its position as a top choice for consumers worldwide.
Statistics | Year |
---|---|
Website Visitors | 4.3 billion (2022) |
Conversion Rate | 1.7% |
IKEA understands the power of social media in reaching and engaging with their target audience. With a strong presence on platforms such as Facebook, Instagram, Twitter, and YouTube, IKEA leverages these channels to showcase their products, inspire their customers, and foster a sense of community.
Through visually appealing content, IKEA captivates their audience by providing them with design tips, showcasing customer stories, and highlighting their latest product offerings. By sharing relatable and aspirational content, IKEA has successfully created a connection with their followers, nurturing brand loyalty and advocacy.
One of the key elements of IKEA’s social media strategy is their collaboration with influencers in the home decor and lifestyle space. By partnering with these influencers, IKEA is able to tap into their reach and credibility to showcase their products in real-life settings. These influencer collaborations not only provide social proof for IKEA’s products but also generate excitement and interest among their target audience.
Furthermore, IKEA’s social media profiles serve as a gateway to direct communication with their customers. They provide links to their website, allowing users to explore and purchase products directly. This seamless integration between social media and e-commerce enhances the customer experience and drives conversions.
However, IKEA’s social media journey has not been without its challenges. In the past, they experienced a decrease in positive brand preferences among viewers due to a social media campaign that deviated from IKEA’s established brand image. The mismatch between the campaign’s execution and the brand’s personality led to confusion and discontent among their audience.
Feedback from viewers on YouTube highlighted the disconnect between the campaign and IKEA’s target audience, potentially impacting brand perception and social media engagement metrics. Learning from this experience, IKEA recognizes the importance of articulating their brand essence through future social media campaigns and aligning their storytelling approach with the key features of their furniture series.
Efforts to refine their social media strategy also extend to IKEA’s website. Addressing the issue of slow speed, there are recommendations to improve mobile speed by 7.62 seconds and enhance desktop website speed by 2 seconds. By optimizing the website’s performance, IKEA aims to reduce bounce rates and provide a seamless browsing experience for their customers.
Overall, IKEA’s social media marketing plays a crucial role in generating brand awareness, fostering a sense of community, and driving customer engagement. Through their strategic use of platforms like Facebook, Instagram, Twitter, and YouTube, IKEA continues to inspire and connect with their target audience, solidifying their position as a leader in the home decor industry.
Content marketing is a crucial component of IKEA’s overall marketing strategy. By creating engaging content through various mediums such as commercials, print ads, social media, and their website, IKEA effectively communicates its brand message and connects with its target audience.
One of the key elements of IKEA’s content marketing is storytelling. They craft narratives that resonate with consumers by presenting relatable scenarios and everyday life situations. Through these stories, IKEA showcases how its products can solve common challenges and enhance the home environment. By focusing on real-life experiences, IKEA creates a connection with their audience and positions their products as solutions to their everyday needs.
A great example of IKEA’s successful content marketing is their sponsored miniseries “Easy to Assemble” in 2008. This miniseries generated millions of views and created significant buzz on social media, effectively capturing the attention of their target audience. This success demonstrated the power of storytelling in engaging consumers and building brand awareness.
In 2011, IKEA launched the “Share Space” campaign, which encouraged customers to share their own home designs and ideas, fostering a sense of community and further strengthening the brand’s connection with its customers through user-generated content. This campaign generated thousands of submissions, showcasing how IKEA’s customers play an active role in shaping the brand’s identity.
In recent years, IKEA has also embraced influencer marketing, collaborating with influencers on social media to create authentic content featuring their products. This approach allows them to reach new audiences and leverage the influencers’ credibility to promote their brand. It’s part of their strategy to stay relevant and engage with younger consumers, especially millennials and Gen Z.
To incorporate technology and enhance customer experiences, IKEA launched an app in 2020 that utilizes Augmented Reality (AR) to help customers visualize furniture in their homes. This innovative approach demonstrates IKEA’s commitment to incorporating emerging technologies into their content marketing strategy.
Overall, IKEA’s content marketing efforts revolve around engaging their audience through compelling stories, relatable scenarios, and innovative approaches like AR technology. By creating valuable and inspiring content, IKEA builds brand loyalty and positions itself as a trusted and aspirational brand in the home furnishings industry.
Initiative | Year | Key Result |
---|---|---|
Easy to Assemble miniseries | 2008 | Millions of views, significant buzz on social media |
Share Space campaign | 2011 | Thousands of user-generated content submissions, fostering a sense of community |
Influencer collaborations | 2015-present | Authentic content featuring IKEA products, reaching new demographics |
AR app for furniture visualization | 2020 | Enhanced customer experiences through technology |
Through these successful content marketing initiatives, IKEA demonstrates the power of storytelling, user-generated content, influencer collaborations, and technology integration in engaging their audience and driving brand awareness.
IKEA, with over 50 years of experience in international business expansion, has successfully established its presence in 52 countries worldwide. The company’s global expansion strategy combines standardization and localization to adapt to diverse markets and gain a competitive advantage.
One of the key factors contributing to IKEA’s global success is its ability to create franchise agreements that ensure consistency among its global stores while promoting a modern and managerial culture. This approach allows for efficient operations and a seamless customer experience across different markets.
To cater to local preferences and demands, IKEA strategically develops new supply chains in each market it enters. This enables the company to offer products that resonate with the local customers while maintaining its commitment to affordability and quality. For example, in markets like India, IKEA offers locally sourced mattresses and sofas made from local materials.
IKEA’s localization strategy goes beyond product adaptation. In its expansion into India, the company conducted thousands of home surveys to understand local preferences and cultural practices. This valuable market research informed product modifications, pricing strategies, and even the menu of IKEA’s stores in India.
However, localization also comes with challenges. IKEA has had to navigate different cultural and regulatory environments, such as in Russia where foreign ownership of land regulations require the company to lease, rather than own, its stores.
To address concerns about labor practices, IKEA has strengthened its supply chain management and responsible sourcing practices. The company invests in ensuring fair labor conditions and has taken measures to address past criticisms, such as accusations of forced labor in East Germany.
As IKEA expands into new markets, it invests in local marketing campaigns, forms partnerships with local influencers, and engages with local communities to build brand trust. This approach fosters a sense of familiarity and authenticity, enhancing customer loyalty and brand recognition.
In conclusion, IKEA’s global expansion and localization strategy have been instrumental in its success. By balancing standardization and localization, IKEA adapts to local markets while maintaining its competitive advantage. Through franchise agreements, strategic supply chains, and market research-driven adaptations, IKEA offers quality products at affordable prices worldwide.
The success of IKEA can be attributed to its innovative marketing strategy, which has allowed the company to dominate the furniture industry and grow from a small business in Sweden to a global empire. By offering affordable and functional furniture with clean lines and functionality, IKEA aims to make well-designed furniture accessible to everyone, catering to a wide range of consumers.
Through its strategic initiatives, including store decor, website optimization, social media marketing, and content creation, IKEA has effectively engaged its target audience and built a recognizable brand identity. Sustainability is a key focus for the company, resonating with environmentally-conscious consumers and aligning with the growing demand for eco-friendly practices.
Moreover, IKEA’s approach of allowing customers to assemble their own furniture not only differentiates the brand but also reduces costs. The company invests heavily in market research and customer insights to align its products with customer preferences, ensuring that its offerings are relevant and desirable.
In conclusion, IKEA’s marketing case study showcases the power of strategic initiatives, company culture, and leadership transition. By continuously innovating its marketing strategies, maintaining consistency in messaging and visual identity, and embracing sustainability, IKEA has successfully positioned itself as a market leader in the home furnishings industry, both globally and in new markets such as South Korea and India.
Who is ikea’s target audience, what marketing channels does ikea utilize, what is ikea’s marketing strategy, how does ikea create an inspiring in-store experience, how does ikea optimize its website and mobile application, what is ikea’s social media marketing strategy, how does ikea utilize content marketing, how has ikea expanded globally while maintaining localization, what are the key takeaways from ikea’s marketing strategy, related posts:.
Nina Sheridan is a seasoned author at Latterly.org, a blog renowned for its insightful exploration of the increasingly interconnected worlds of business, technology, and lifestyle. With a keen eye for the dynamic interplay between these sectors, Nina brings a wealth of knowledge and experience to her writing. Her expertise lies in dissecting complex topics and presenting them in an accessible, engaging manner that resonates with a diverse audience.
Zomato marketing strategy 2024: a case study.
A Q&A with Barbara Martin Coppola, IKEA Retail’s chief digital officer.
How does going digital change a legacy retail brand? According to Barbara Martin Coppola, CDO at IKEA Retail, it’s a challenge of remaining fundamentally the same company while doing almost everything differently. In this Q&A, Martin Coppola talks about how working in tech for 20 years prepared her for this challenge, why giving customers control over their data is good business, and how to stay focused on the core mission when you’re changing everything else.
What does it mean for one of the world’s most recognizable retail brands to go digital? For almost 80 years, IKEA has been in the very analogue business of selling its distinct brand of home goods to people. Three years ago, IKEA Retail (Ingka Group) hired Barbara Martin Coppola — a veteran of Google, Samsung, and Texas Instruments — to guide the company through a digital transformation and help it enter the next era of its history. HBR spoke with Martin Coppola about the particular challenge of transformation at a legacy company, how to sustain your culture when you’re changing almost everything, and how her 20 years in the tech industry prepared her for this task.
We want to be a force for good for people, society and the planet. For us, it’s about balancing economic growth and positive social impact with environmental protection and regeneration.
Through our business we have a unique opportunity to be a good example for positive change. This requires us to look critically at all aspects of our business, but also to engage in the wider debate and enable all stakeholders across the IKEA value chain and beyond to take action and contribute.
The purpose of the IKEA Sustainability Strategy, launched in 2018 is to inspire, activate and lead us in our planning, decision-making and goal setting so that we together can achieve the big positive changes we want to see for the IKEA business, and in the world.
The strategy identifies three major sustainability challenges that are highly relevant for the IKEA business: climate change and nature loss, unsustainable consumption, and rising inequality. These challenges help us define the sustainability issues where we have the most impact: Healthy & sustainable living; Climate, nature & circularity and Fair & equal. The sustainability ambitions and commitments for each of these focus areas are set for FY 2030 in line with the UN Sustainable Development Goals.
The strategy (previously called People & Planet Positive) is reviewed annually to align with the latest science and legal requirements. Our latest update in 2024 reflects the next step on the IKEA climate journey going from “Climate Positive” to Net Zero and Beyond, with strengthen climate goals and an increased focus on the nature agenda. We are committed to reduce the absolute greenhouse gas emissions from the IKEA value chain by at least 50% by FY 2030 (compared to FY 2016 baseline) and reach net-zero emissions by FY 2050 without relying on carbon offsets. IKEA is committed to the Paris Agreement and to contribute to limiting the global temperature rise to 1.5°C.
Table of contents, in the beginning....
Just about 80 years after it was founded, IKEA has become one of the world’s top furniture companies. Today, it’s known as a place where shopping is truly an experience, not just a chore. Between the popular food courts and handsomely designed showrooms, IKEA is simply a fun place to spend an afternoon — and be productive at the same time.
Of course, the company wouldn’t still be in business if it wasn’t able to provide great products as well. Throughout the years, IKEA has carved out a name for itself as a company that provides unique and high-quality furniture at a great price — some assembly required. As a result, it’s particularly popular among young and thrifty shoppers.
Here’s what the company’s numbers look like at a glance:
In this strategy study, we’re going to explain how IKEA became not only one of the world’s leading retail furniture brands, but a global cultural icon. From rural Sweden to the global marketplace, this is the story of IKEA’s rise.
The vast majority of people alive today have never lived in a world without IKEA. In fact, many of us have fond childhood memories of walking through one of its stores with our parents and enjoying some tasty Swedish meatballs before heading home.
But IKEA didn’t appear spontaneously. It was brought into existence thanks to the hard labor and ingenuity of one man: Ingvar Kamprad. To understand IKEA’s success, we need to understand the man behind it.
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Ingvar Kamprad was born in 1926 in Angunarryd, a small town in the Småland province of southern Sweden. Heir to a poor family of farmers, Ingvar was surrounded by financial insecurity and quickly learned the value of money and hard work.
From an early age, Kamprad exhibited an entrepreneurial spirit. By the time he turned six, he had already started his first business selling matches, buying them on the cheap in Stockholm and selling them at a profit in his hometown. Two years later, he moved into the vehicle business, selling bicycles to his neighbors. As he grew older, his enterprises moved into various different products, ranging from Christmas tree decorations to fish to seeds and beyond.
When Kamprad turned 17, his father made good on a promise to provide him with money if he succeeded in his schoolwork. He used that money to found what we now know as IKEA.
Kamprad founded IKEA while sitting at his uncle Ernst’s kitchen table in 1943, deriving the name from his own (Ingvar Kamprad), his family farm’s (Elmtaryd), and his hometown’s (Angunarryd).
At the start, IKEA was not a furniture business. Instead, Kamprad sold small household goods, such as pens and wallets, which customers ordered through a mail-in catalog and would receive via milk truck delivery. This catalog was an essential feature of Kamprad’s business, as his rural location made it difficult to conduct business any other way.
It wouldn’t be until 1948, five years later, that Kamprad would get into the furniture business and begin shaping IKEA into what we know it as today.
Although many people imagine that businesses always start out with their unique selling propositions fully formed, this could not be further from the truth. IKEA is a perfect example of a company that grew into its own, finding its way not through some clear vision at the outset but through many small “aha” moments that shaped it into its current form. In fact, many of the features that we recognize IKEA by today came completely in response to difficulties — they were creative solutions to the problems Kamprad faced.
Right out of the gates, IKEA made a name for itself as a retailer with extremely low prices. In 1951, it launched its first catalog, which offered low-cost, chic, and stylish furniture with the convenience of mail-order shopping.
As appealing as budget-friendly options may be, they also raised concerns: customers simply couldn’t believe that quality furniture could be had at such a bargain. As a result, they began to worry about IKEA’s quality.
To solve this, Kamprad came up with a solution: set up a showroom. Now, customers could come into his store, look at the furniture themselves, and walk away with it. Problem solved.
But this wasn’t the end of IKEA’s pricing struggles. Although the consumers had been pacified, the producers were still unhappy — but for an entirely different reason. In 1955, the producers that IKEA used started boycotting the business, claiming the prices were too low. Instead of viewing this as an insurmountable problem, Kamprad took it as an opportunity to bring manufacturing in-house.
The last major innovation came as a bit of a happy accident one year later in 1956. One day, as Kamprad watched an employee load up a customer’s table into their car, he noticed something interesting: the employee had removed the table’s legs to help it fit.
Then it hit him: if Kamprad sold his furniture disassembled, he could fit more of it into a single truckload, thus saving money on shipping costs. Instead of trying to fit fully-assembled tables together, leaving tons of empty space in the truck, he could pack everything flat.
This “aha” moment gave IKEA what is perhaps its most recognizable feature — it became a retailer of furniture that required assembly at home, thus making it cheaper, easier to carry out of the store, more efficient for delivery, and rather fun to set up. Although flatpack furniture already existed, it wasn’t yet popular in Sweden. This observation showed Kamprad an untapped market opportunity.
By the time IKEA had pivoted to flat-packing, it had achieved several milestones: it now manufactured all its own products, it ran its own showrooms, and it provided high-quality, low-cost products that appealed to young people. At this point, IKEA had stepped into its modern skin.
IKEA didn’t emerge from Kamprad’s kitchen as a fully-formed entity. Quite the opposite: the first thirteen years of operations were an experimental period during which Kamprad sought out solutions to the problems that confronted him.
IKEA’s development wasn’t visionary but reactionary. Although Kamprad always envisioned IKEA as a company that sold high-quality, low-priced products with mass appeal, it was the sum of Kamprad’s clever solutions over time, such as shipping disassembled furniture to save on packing space, that shaped IKEA into what it is today.
All great businesses are essentially solutions to difficult problems. When faced with a seemingly intractable issue, business leaders should view it as an opportunity for growth, not as a disruption to their normal operations. For all you know, that nagging problem could be what turns you into the world’s next IKEA.
From the beginning, international expansion has been a cornerstone of IKEA’s growth strategy. And if you think about it for a minute, it makes a lot of sense: Sweden is a small country with a population of only 10 million. That imposes a pretty low ceiling as far as business growth is concerned.
Ingvar Kamprad knew that if he wanted to grow his company, he would need to go beyond Sweden’s borders. But unlike many other brands (Walmart and Home Depot, to name a few), he actually succeeded in his internationalization project. In 2018, IKEA had company-owned stores in 24 countries and franchises in many more. Currently, there are over 50 IKEA locations around the world, and the company is continuing to expand.
Let’s take a look at what made IKEA’s globalization so successful.
At the start, IKEA threaded lightly. Although international expansion was clearly a goal from the start, as indicated by Kamprad’s maxim “it is our duty to expand,” IKEA didn’t come out with guns blazing. Its first expansion efforts were within markets it already fully understood: its neighboring Scandinavian countries.
The first international IKEA branches were in Norway (1963) and Denmark (1969). Just going by the dates alone, it’s clear that this was by no means a rapid expansion. Kamprad took things slow, making sure to firmly establish his business in the local market.
By 1973, Kamprad was positioned well: he had opened up stores in all three Scandinavian countries, and he had captured 15% of the Swedish market share. He was ready for his next step.
In 1973, Kamprad decided to take IKEA beyond the borders of snowy Scandinavia and into the broader international market.
At the time, the German-speaking countries had the largest furniture markets. And beyond that, they were fragmented: 67% of furniture companies had fewer than three employees and were in expensive locations, meaning that there was a gap in the market for non-boutique, affordable furniture. Kamprad believed that “if it works in Switzerland, it’ll work anywhere,” and chose the quiet country as his next stop on the continent.
Kamprad selected a small suburb outside of Zurich, called Spreitenbach, as his entry point. This small area accounted for 20% of the consumer purchasing power, so was a logical choice. To promote the new store, he circulated 500,000 catalogs filled with off-beat advertising. Within a year, he had 650,000 visitors. The store was a smashing success.
A year later, Kamprad opened a store in Munich, West Germany, that attracted 37,000 visitors in just the first three days. Over the next five years, IKEA conquered a 50% share in the German cash-and-carry market. To this day, IKEAs biggest market is Germany, where it has 53 stores.
Although there was opposition from more traditional furniture retailers (and even some court-mandated penalties), by this point it was becoming clear to everyone in the industry that IKEA had something special. The model was here to stay, and competitors needed to start taking notes.
From 1973 onwards, IKEA began to expand at a much more rapid pace. But it hit a snag: in 1974, IKEA entered the Japanese market. Although it stayed around for 12 years before closing down, the entry was ultimately a failure.
What went wrong? At the time, IKEA thought it could export its current business model wholesale without making any changes to fit the culture it was expanding into. Japan had a very service-oriented culture, and the people didn’t take well to the do-it-yourself attitude that IKEA was offering. But IKEA was also not a fit with the Japanese market on a much more literal level: its products simply weren’t compatible with the size of the average Japanese home.
Luckily, IKEA was able to learn from its mistakes. After its Japanese fiasco, the company began tailoring its expansions to the market much more thoroughly. In its 1985 US expansion, for example, it ensured that its products matched up with the sizes that Americans would expect. In its recent 2018 entry into the Indian market, it made sure to set up customer service booths, where employees can help customers build their products — an important feature given that India, like Japan, does not have a strong DIY culture.
In an almost literary redemption story, IKEA re-entered the Japanese market in 2006. Its newer stores implemented features that meshed better with Japanese culture, such as assembly assistance, delivery, and of course: products that were hand-selected to fit Japanese homes.
By all measures, IKEA’s return to Japan was a success (as of 2020, there were nine stores across the country) and gives clear proof that not only has the company learned from its mistakes, but it has developed a truly mature expansion strategy.
Some of IKEA’s initial expansion efforts failed because the company was a bit stubborn — Kamprad believed that what worked in Europe should translate directly into every market.
This was a huge mistake. Within twelve years, IKEA’s first expansion into a non-European market had failed. But this failure wasn’t without its lessons.
Japan taught Kamprad that his products needed to fit the customer, not the other way around. While he didn’t upend IKEA entirely to fit into new markets, he did make small but necessary changes that would help the stores integrate better into different cultures.
On a conceptual level, business leaders should realize that every mistake is a learning opportunity. Although Japan started out as a failure, without this mistake under Kamprad’s belt, he likely wouldn’t have been able to catch his missteps, and he may never have learned how to successfully expand into foreign markets.
On a more concrete level, the key takeaway here is that the same market entry strategy won’t work across the board.
There are a lot of reasons why IKEA was able to make the global impact that it has — a talented founder at the helm, a successful market entry strategy, and an ingenious business model are just a few.
But there’s something else that has helped IKEA climb the ranks and become one of Sweden’s largest cultural and business exports: differentiation. IKEA’s differentiation strategy can be divided into three prongs:
The sum of these three parts is a company that offers a unique and appealing product at a low cost and with a unique shopping and assembly experience. Let’s take a look at how IKEA was able to build a name for itself and stand out from the crowd.
Today, Swedish design has become synonymous with sleek, minimalist, and aesthetically appealing furniture and interiors. Of course, IKEA didn’t invent the style itself — its pioneers were the likes of Bruno Mathsson and Astrid Sampe. But even though Ingvar Kamprad wasn’t the mastermind behind Swedish design, it’s undeniable that his company helped bring the style to a worldwide audience.
However, like most parts of IKEA’s development, its design language didn’t come out of the womb fully formed. In the early days, IKEA’s furniture offerings were fairly conventional — a far cry from the eccentric shapes and unusual colors it would later employ. At that time, IKEA differentiated itself primarily from a cost leadership and convenience standpoint.
That said, even in 1954, the beginnings of IKEA’s signature designs were taking form. That year, the Lovet table, one of IKEA’s most well-known designs, was introduced. The wood table was crafted to look like a leaf, giving it an eye-catching and aesthetically pleasing appeal. It also happened to be the first of IKEA’s flatpack offerings.
By the 1970s, IKEA had truly entered its own, offering furniture that looked unlike almost anything on the market — at least at the same price point. Many of the pieces released during that time are still popular today, such as the classic Poäng chair.
But looking at the design of the furniture itself doesn’t tell the whole story. IKEA built up a brand aesthetic that exudes Swedishness in everything from the names to its logo, which uses the Swedish flag’s colors.
Take IKEA’s product names as an example. Although the company learned that it needs to alter its catalog a bit for every new market it enters, one thing stays the same in every country: the names. Outside of Scandinavia, practically no one can pronounce them, but that’s part of their appeal — strange and alien-looking names like Poäng, Ektorp, and Famnig are intriguing and stand out from competitor offerings.
There’s a good reason for those exotic names. Apparently, Kamprad struggled with dyslexia and decided to name the furniture after Swedish towns and villages, humans, and other applicable Swedish names.
Ektorp sofa is named after a village just outside Stockholm
IKEA’s shift to Swedish branding evolved as it expanded into foreign markets. This makes sense — the exotic appeal of the Swedish language doesn’t have the same effect in Sweden. This development can be seen especially clearly in its logo design.
Originally, the IKEA logo was quite bland. In 1951, it was nothing but a reddish stamp with the name “ikea” stamped in the middle:
In 1967, IKEA’s logo almost entered its final form: a circumscribed name in capital letters with a rectangle surrounding it.
Finally, in 1983, as IKEA was making significant advantages in its globalization effort and close to opening its first US store, it hit on the right design: the familiar gold and yellow logo.
If you’ve ever seen a Swedish flag, it’s clear where the logo takes its inspiration from. With this move, IKEA made it clear that it was a Swedish company, and that foreign flair helped differentiate it.
But there were still a few final touches that needed to be added. In 1985, when IKEA opened its first US store, it also launched the iconic Swedish meatballs, aka Kottbullär. Although the IKEA restaurant had been a feature of the store from the beginning (Kamprad firmly believed that “it’s tough to do business with hungry stomachs”), it was at this point that the menu took an even more decidedly Swedish turn.
Swedish food became so important to IKEA’s brand image that nowadays, the last thing you see as you exit the store are bottles of lingonberry jam and Kottbullär available for purchase.
From the very start, IKEA was envisioned as a brand that would provide budget-friendly products to the masses. Although those products changed over time from small household goods to furniture, the mission statement stayed the same.
In the end, IKEA succeeded in its mission. Today, IKEA is the go-to brand for young people in need of cheap furniture for their first houses and apartments — and frugal people of all ages aren’t shy to walk through IKEA’s doors either.
So, how exactly was IKEA able to keep its costs so low? For the most part, it comes down to IKEA’s reliance on self-assembled and flat-packed products. In the early days, IKEA sold fully-assembled furniture. It wasn’t until 1954 that Kamprad got the idea to pivot to flat-packed goods.
This change provided several advantages. Obviously, it made shipping and transportation costs lower — with flat-packed goods, more products can be loaded up into a single delivery truck. Along the same lines, it also saved money on the manufacturing end because IKEA could essentially “outsource” the assembly work to its customers.
But there was another advantage that came from this move: modularity. By requiring customers to assemble their products, IKEA can manufacture modular pieces that fit several different furniture items. This means that production lines can be streamlined and made more efficient.
Similarly, by removing the assembly from the picture, IKEA also needs to hire fewer service employees, which saves on employee compensation costs. Although IKEA has begun adding more service centers in markets that don’t have a mature DIY culture, these costs are minimal compared to the expense of fully-fledged service initiatives.
This unique business model has a surprising and somewhat paradoxical side effect, commonly referred to as the “IKEA Effect,” which allows IKEA to make its products appear more valuable than they are.
The principle behind the IKEA Effect is simple: people value things that they build themselves more than things that are built for them. There is a certain satisfaction that comes from spending an hour building your own sofa that simply can’t be had if you buy one pre-assembled. Doing the work yourself gives you a better appreciation of the value, and since people tend to think quite highly of their own craftsmanship, they will tend to view the furniture as well-made.
This helps IKEA with a cost leadership sleight of hand: by asking customers to assemble their own furniture, they can keep their own costs low, while simultaneously making their customers view their products as higher-quality and more valuable.
While many low-price retailers attempt to keep production costs low by pitting suppliers against each other and selecting the most competitive price offerings, IKEA takes the opposite approach. Instead of fostering competition among the suppliers it works with, it opts for collaboration.
IKEA keeps production costs low by signing long-term contracts with its suppliers. The result is that IKEA is able to keep its costs low consistently, instead of constantly scrambling to find the lowest cost supplier.
The strategy appears to work. IKEA has more than 1,800 suppliers in 50 countries , and it consistently has more than 95% of its inventory in stock.
Additionally, IKEA does its best to source its wood close to its suppliers in order to keep transportation costs down. For example, in 2018, IKEA bought 25,000 acres of timberland in the US to provide raw materials to its suppliers. This also helps with the company’s sustainability initiatives.
Although IKEA originally started as a primarily mail-order retailer, the showroom experience has become an integral part of the company’s branding and operations. It’s a devilishly clever strategy because, like the IKEA effect, it keeps business-side costs low while simultaneously providing a high-quality shopping experience to customers.
If you’ve ever been to an IKEA, you’ll recognize one thing immediately: these stores are big. They are essentially repackaged warehouses. Within the store, customers are presented with realistic representations of how each furniture item might be used in a contemporary living situation. The displays are not sterile lineups — they feel alive, livable, and customers can easily see the functionality of each item.
To make the shopping experience even more pleasant, IKEA provides play areas for children and eating areas for hungry shoppers. The end result is a store that feels homey and comfortable despite the industrial scale.
Although this may all seem entirely in service of the customer, it also confers several cost-saving benefits to IKEA.
For one, IKEA specifically places its stores in more domestic areas, where real estate prices are lower and the stores can be more expensive. This saves the company from having to spend top dollar for competitive retail space in a large city.
Secondly, by making stores so large, they can effectively function as both a warehouse and a showroom. As a result, IKEA can combine warehouse and showroom expenses into one, keeping total costs low. Of course, the fact that IKEA products are flat-packed also means that more products can be stored per warehouse, further reducing storage expenses.
Thirdly, the huge amount of space allows IKEA to present many different design possibilities to customers without the need for large numbers of staff to constantly rearrange furniture for shoppers.
Overall, the end result is that the unique IKEA showrooms provide customers with an enjoyable shopping experience, all while allowing the company to save on real estate, warehousing, and staffing expenses.
When we think of something valuable, we tend to think of something expensive: gold watches, luxury cars, rare jewelry. But not all value can be measured in dollar bills: to a parent, their child’s drawing could be more valuable than the Mona Lisa.
IKEA was able to leverage this phenomenon by offering what is essentially “low-cost value” — the type of value that money can’t buy. Thanks to the IKEA effect, customers often find IKEA products to be more valuable to them than other, higher-priced products. Add on a unique experience, filled with memories of eating Swedish meatballs with your family, and you have a value that money can’t touch.
After all, it’s a part of their vision “To create a better everyday life for the many people.”
Business leaders should follow in IKEA’s footsteps and look for new ways to increase their products’ or services’ worth without raising costs. Sometimes, small changes can lead to big results.
From its humble beginnings in small-town Sweden to its current seat as a major player in the global retail market, IKEA has been nothing short of a Cinderella story. But no business can rest on its laurels — the market is constantly changing, and a single bad move could throw away 80 years of success in a flash.
That said, the future does look bright for IKEA — even during the pandemic, the company was able to generate almost the same amount of revenue as the previous year ( €39.6 billion in FY2020 and €41.3 billion in FY2019). But a few figures don’t tell the full story. To get a better view, let’s dive into a SWOT analysis.
If there is one thing that IKEA does well, it’s understanding its market and leveraging that understanding to better position itself. From the start, IKEA has had the goal of becoming a company that sold low-priced products that would appeal to mass-market consumers. Today, IKEA has become practically the world leader in budget furniture — it is the first place that the average Joe will go when searching for new furnishings. It is particularly popular amongst young people furnishing their first apartments and houses.
Throughout its development, IKEA had ample opportunity to stray from this initial vision, but it never has. As a result, it’s carved out an important part of the market that it can expect to hold onto for years to come.
IKEA doesn’t merely understand what its target market is, it’s able to corner that market. Through the various cost leadership strategies we discussed in Chapter #3, IKEA is able to consistently price its products cheaper than its competitors. In turn, this has made IKEA the go-to brand for budget-friendly furniture.
Although IKEA surely isn’t top-of-the-line, its products retain a respectable level of quality despite being priced so low. This is largely thanks to IKEA’s strong relationships with its suppliers and the culture of collaboration it fosters with them.
Any quality deficits that IKEA products may have been made up for by the IKEA Effect, which causes self-assembled products to take on a higher apparent value in the eyes of the builder.
From the unique furniture designs to the use of Swedish names to the beloved in-store restaurants and beyond, IKEA has crafted a brand experience that is unlike any other. In fact, what IKEA has created is so special that in some countries, it’s known as a fun place to go and get a bite to eat than as a place to buy furniture. When you’re able to turn a boring old furniture store into a cool place to hang out with your friends, you know you’ve done something right.
Across the world, people instantly recognize the IKEA name and its bold yellow-and-blue logo. Without a doubt, IKEA is a household name, and that level of recognition is rare. To put things into more quantifiable terms, in 2020, the IKEA brand was worth almost $18 billion . This level of brand recognition means that IKEA is ingrained in the global culture as the first stop for affordable furniture.
Unlike many companies vying for cost leadership, IKEA refuses to force its suppliers to compete with each other. Instead, it opts for a more collaborative approach, which leads to strong relationships and consistently low pricing in the long term. Additionally, having control of some of the raw material supply chain helps keep IKEA in a strong position.
Lower quality than competitors .
IKEA’s products could accurately be described as “good but not great.” Although the company makes products that are at an acceptable and functional standard, they can’t compete with high-end furniture manufacturers and dealers.
However, this weakness is mitigated by the fact that IKEA isn’t trying to compete with luxury furniture providers. Instead, they have focused on cornering the budget market.
Although IKEA has developed strong relationships with its suppliers, the fact that more than 50% of its products are manufactured by third-parties leaves IKEA in a position of serious reliance on other companies. Its long-term and collaborative arrangements help reduce this risk, but it is still a less favorable position to be in than producing everything in house.
Since 2011, five children have been killed by an IKEA product, the Malm dresser, toppling over onto them. The company has agreed to pay settlements of around $50 million to several families of the victims.
Unsurprisingly, this has led to a public relations nightmare, which could seriously damage IKEA’s reputation. The company has also received bad press for treating its workers poorly .
IKEA is a company that focuses on providing its customer base with cheap, unassembled furniture. While this works well to corner its core market, it does leave other potential markets, like budget pre-assembled furniture, almost completely untapped.
By leasing its own forest land, IKEA is able to further ensconce itself in its supply chain, which leads to more control, lower prices, and better sustainability initiatives. However, managing and operating timberland is a costly and time-consuming effort, which could ultimately leave IKEA scattered and less focused on its core purpose.
Gain a greater hold over the developing market.
Currently, IKEA is overwhelmingly focused on the developed world. In fact, 90% of its sales are from OECD countries , and 70% are in Europe alone. This leaves large swaths of the developing world practically untouched and represents a sizeable growth opportunity.
IKEA is cognizant of this and has made moves into the Indian and Chinese markets. If the company continues to direct energy and resources in this direction, it could see a strong ROI.
Historically, IKEA’s strategy has focused on the in-store experience, which has been a key component of its success. However, as e-commerce becomes a greater part of everyday life, IKEA will need to find a way to effectively digitize and create a similarly enticing brand experience in the digital world.
IKEA has begun making changes to better position itself in the developing e-commerce landscape. For example, many of its stores now double as fulfillment centers, and the company has made many behind-the-scenes changes to ensure online orders are fulfilled faster.
Particleboard is a material that is made by gluing together wood particles. Essentially, particleboard is made from wood, but it is not wood.
Surprisingly, a single log of wood yields more particleboard than wood, and it’s also lighter. Combined, this means that particleboard makes more efficient use of raw materials and transportation, given that its lower weight allows more particleboard items to be shipped per load. Overall, particleboard is 20% cheaper than wood.
Currently, IKEA produces 45% of its products with particleboard and 55% with wood. If it raised the percentage of particleboard products, it could save significantly.
Earlier, we mentioned that IKEA has been at the butt of several lawsuits relating to the death of children that its products purportedly caused. Although the settlement amounts are drops in a bucket for a company of IKEA’s size, they do represent a threat if they increase in number or if the bad PR severely damages the company’s reputation.
Analysts have been predicting a recession in the American and European markets for years now. Unfortunately, this is also where the bulk of IKEA’s sales and customers come from. Although IKEA is diversifying into other markets, a severe recession in its core markets could theoretically represent an existential threat to the company.
IKEA has made it clear that it places an emphasis on sustainability and market expansion. However, in some developing nations, local laws are antithetical to the standards IKEA holds for itself. This leaves the company in a dilemma: it must either adapt to the lower sustainability standards of these countries or delay its market expansion. Slowing down on either one of these could threaten IKEA’s current branding and positioning.
It should come as no surprise that two areas that are growing rapidly, the developing world and e-commerce, represent some of the biggest growth opportunities for IKEA. Indeed, despite IKEA’s position as a global leader in the furniture space, failure to invest in these areas could spell trouble for the brand.
As we stand face to face with an unprecedented climate crisis, businesses are seeking new avenues for sustainable growth. IKEA has fully embraced this new business paradigm and is making great strides in its effort to reduce its carbon footprint and become an all-around eco-friendly company.
However, IKEA thinks that being sustainable means more than caring for the environment. It’s for this reason that it refers to its sustainability strategy as “People and Planet Positive.” In this strategy, IKEA notes three broad areas that it wants to improve on:
Let’s take a look at some of the changes IKEA is implementing to meet this goal.
The first prong of IKEA’s sustainability plan is quite simple: to inspire others to live more happy and fulfilling lives. Overall, this is the vaguest part of its plan, and IKEA itself doesn’t seem to be entirely clear about what its own goals are. For example, IKEA states that “We will, together with others, define what sustainable consumption means for IKEA.”
On a more concrete note, IKEA has been a leader in removing toxic materials from its supply chain. It has been ahead of the curve, removing problematic substances from its products even before they were officially banned.
IKEA is hoping to go one step beyond becoming a carbon-negative business and actually become a climate-positive business — that means that it’s attempting to not only stop hurting the environment but to benefit it as well.
To this end, IKEA has made a shift towards more sustainable sources of its raw materials. For example, all its cotton, fish, and seafood currently come from sustainable sources. The company is also trying to source 100% of its wood from sustainable sources. Additionally, it will also promote the reuse of its products to extend their lifetime.
By 2030, IKEA aims to be a completely circular business.
IKEA has received bad press over the years for the way that it treats its workers. Although it is vague about how it hopes to improve, IKEA notes several areas that it is attempting to make changes to. Some of these include gender equality, children’s rights, diversity encouragement, and providing stable and secure employment.
IKEA, like all businesses, is up against an unprecedented climate crisis. Beyond that, there are serious social issues that IKEA can sometimes indirectly contribute to. As the world changes, it’s important to remember to change with it — don’t stubbornly take new paradigms as a chance to prove your original view was correct but as an opportunity to find new solutions that ultimately make the world a better place.
From the start, IKEA has placed a significant focus on showrooms and the in-person experience — in some places, IKEA has become more known for its food than its furniture. But as more and more people move away from brick-and-mortar stores in favor of the e-commerce giants like Amazon, IKEA is put in a tough position.
Its solution? Find ways to move into the modern age without sacrificing the original IKEA vision. Here are a few ways that the company is doing that.
Earlier, we discussed how IKEA is able to maintain cost leadership thanks to its dual-purpose showroom warehouses. Now, these facilities are taking on a third purpose as a fulfillment center.
Although IKEA has had some degree of e-commerce for quite some time now, the increased popularity of e-commerce along with COVID, which forced IKEA to temporarily close 75% of its stores, has made the company fast track its online experience. These new moonlighting fulfillment centers have played a crucial role in handling the onslaught of online orders.
IKEA has been making an effort to not only improve its e-commerce presence but to better integrate technology into the shopping experience as a whole. One of the latest additions is “Shop & Go,” a feature in the IKEA mobile app. This lets you scan and pay for items while you shop so that you don’t have to wait in line for checkout.
Like all modern companies, IKEA’s digital strategy will rely in part on customer data. However, after gaining the market’s trust over approximately 80 years, it doesn’t want to throw that away. For this reason, it introduced the “Customer Data Promise,” which says that people need to come first in all data analytics and data-driven processes.
Although IKEA hasn’t gone too far down the rabbit hole, the company has started implementing XR to help customers visualize objects in their own homes.
Placing furniture in your home with the help of XR!
IKEA is a company steeped in tradition — 80 years worth. Perhaps more importantly, during that time, the business has focused almost exclusively on brick-and-mortar selling. Unfortunately, relying entirely on the old way of doing things simply isn’t tenable in this market. Business leaders need to learn to pivot as new technology emerges and integrate it into their strategy.
Whether it’s employees or customers, all companies are run by and revolve around people. Finding the right people, however, is what makes or breaks a company.
Between hiring strong candidates and reaching its target buyer persona, IKEA has succeeded in getting its products in front of the right people.
Part of IKEA’s success lies in its ability to understand its target market. By getting fully acquainted with its ideal buyer persona, it can make better strategic decisions on all levels.
So, who is IKEA’s core target market? Well, there are a few.
To start, IKEA tries to corner young urbanites between the ages of 25 and 35, primarily those that have graduated high school, and are either single and living with a significant other or are married.
There’s a good reason for this too: nearly 60% of American city dwellers plan to move in the next year. And that means they’ll likely need to buy furniture.
Additionally, IKEA tends to target renters, not homeowners, as this demographic is more likely trying their best to budget and save up for their future goals, like buying a house, getting married, etc.
Beyond that, IKEA also tries to get the attention of married couples with children, which is evidenced by the fact that they include playpens for children in the stores. Plus, situating the stores outside cities can make them more appealing to suburbanites.
Worldwide, IKEA has over 220,000 employees . To get to that level, IKEA has developed a unique hiring process.
Primarily, IKEA seeks to hire people who are interested in home furnishings, are friendly, and care about providing good customer experiences. It hires primarily during the months between April and August and provides relocation assistance for successful applicants.
Most of its candidates come from online sources, such as Indeed. However, IKEA has also branched out and partnered with some social media sites and universities to find new candidates. Plus, it has a strong internal referral program.
In interviews, IKEA hopes to find candidates with some connection to the store, such as having visited one of their outlets or their website.
IKEA has a strong internship program in logistics, marketing, communications, and interior design. Interns are not only paid but receive college credit as well.
However, unlike many employers, IKEA doesn’t require that employees hold a formal degree except for specialist positions. That said, experience is still largely required — IKEA does expect some of its employees, such as interior design managers, to be well-versed in home design and retail trends. For other positions, just an interest is enough.
Wise people have said that you’re only as good as the people you surround yourself with. IKEA has taken that to heart.
For any business to succeed, it’s important to have a robust hiring process that attracts the right candidates and places them in suitable positions. On the consumer side, businesses need to be clear on what type of customers they hope to attract so that they can target their marketing efforts towards them.
Over the past 80 years, IKEA has grown from a small mail-order catalog in rural Sweden into one of the world’s largest furniture retailers. In the process, it has become nothing short of a global staple and a cultural icon.
Year | 2020 | 2015 |
Availability | 59 countries | 51 countries |
Revenue | 39,6 billion USD | 32,7 billion USD |
Number of employees | 220,000 | 155,000 |
Strategy must be built on market insights.
While Kamprad did have a strong vision of where the company is heading, his strategic steps were based on market evaluation and identified market needs.
He built the product strategy around the wishes and behaviors of IKEA customers. For example, disassembled furniture was created from observing customers how they struggled with getting furniture into their cars.
Unique, home-like layout, delicious meatballs, and play area are only the start of the IKEA experience.
Customers continue to value IKEA products due to building them at home, associating higher value to them. With this approach, IKEA continues its cost-leadership strategy while ensuring loyalty and high quality of its products.
IKEA’s been around for more than 80 years. Sticking to the traditional business model would only take them so far and it’s safe to say that they’d definitely not emerge as market leaders without any innovation and adaptation.
With their vision in mind, they’ve managed to transform from brick and mortar stores to e-commerce and pick-up points. To support the transformation, they leaned into the latest technology and managed to strategically expand into the digital world.
With great power comes great responsibility… And big brands like IKEA understand the environmental and societal power they have. They have already banned toxic materials from their production, they are striving to become a climate-positive business and to positively impact the whole value chain.
In the end, it seems that IKEA’s success largely comes from its ability to balance maintaining its core vision with changing to adjust to new market landscapes. At the start, Kamprad envisioned a store that sold products at budget prices for the masses to enjoy. Now, Kamprad has achieved that, but it took several changes along the way, such as pivoting from small goods to furniture, from fully-assembled furniture to flat-pack furniture, and more recently, from brick-and-mortar to e-commerce.
Following in IKEA’s footsteps, business leaders should fully understand the need to keep your vision intact while still staying flexible enough that you can adjust your strategy to the changing waters of the market.
International Journal of Retail & Distribution Management
ISSN : 0959-0552
Article publication date: 15 March 2022
Issue publication date: 19 December 2022
The paper aims to clarify how an incumbent retail organisation explores digitalisation for its existing business.
The paper draws from an in-depth case study of home-furnishing retail giant, IKEA conducted with semi-structured interviews, participant observations and document analyses.
In the exploration phase of digitalisation, three major activities – interpreting, interrelating and integrating – illuminate how the exploration process can be organised in practice.
Although digitalisation ranks amongst the most significant ongoing transformations in retail businesses, research on how incumbent retail organisations have engaged in exploring digitalisation in practice has remained scarce. The paper contributes insights into digitalisation processes in retail businesses that may also apply to other trends affecting the retail industry.
Hagberg, J. and Jonsson, A. (2022), "Exploring digitalisation at IKEA", International Journal of Retail & Distribution Management , Vol. 50 No. 13, pp. 59-76. https://doi.org/10.1108/IJRDM-12-2020-0510
Emerald Publishing Limited
Copyright © 2022, Johan Hagberg and Anna Jonsson
Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
Digitalisation , defined as the “integration of digital technologies into everyday life by the digitization of everything that can be digitized” ( Hagberg et al. , 2016 , p. 696), ranks amongst the most significant ongoing transformations in business, one that has introduced new ways of doing business whilst challenging established ones ( Leeflang et al. , 2014 ). As such, digitalisation has been characterised as a disruptive change that tests industries, their accepted logics and even individual businesses (e.g. Verhoef et al. , 2015 ; Hänninen et al. , 2018 ).
In literature addressing retail, digitalisation has received increased attention from both consumers' and retailers' perspectives ( Frasquet et al. , 2021 ), including in terms of omni-channel strategies ( Verhoef et al. , 2015 ), business models ( Jocevski et al. , 2019 ), multi-sided platforms ( Hänninen et al. , 2019 ) and the reconfiguration of retail stores ( Hagberg et al. , 2017 ). Most recently, according to Hänninen et al. (2021) , such research has integrated far more discussion and theorising about digitalisation across the value chain. However, the organisational processes that catalyse the incorporation of digital technologies in retail businesses – in March's (1991) and Winter and Szulanski's (2001) terms, the exploration phase – have received less attention. Therefore, this paper focusses on that very phase – the early stage of digitalisation – to contribute insights into digitalisation in retail ( Hänninen et al. , 2021 ) whilst answering the call for research on “how firms adapt their business models in response to external threats and opportunities” ( Saebi et al. , 2017 , p. 567).
The paper aims to clarify how an incumbent retail organisation explores digitalisation for its existing business, even as potential disruptions, their meanings and their consequences remain uncertain. To that purpose, the paper builds upon an in-depth case study on IKEA, an established firm in today's dynamic retail sector, an environment in which digitalisation especially urges business actors to rethink their ways of doing business and attracting customers ( Hänninen et al. , 2018 ; Blom, 2019 ; Jocevski et al. , 2019 ). It draws upon first-hand experiences with, and insights into, how IKEA has explored digitalisation, even when the concept was relatively elusive and how it would affect IKEA's business. In describing IKEA's exploration phase and what digitalisation has meant for its business, the paper delineates three major activities of that exploratory process: (1) interpreting what digitalisation means, (2) interrelating digitalisation and the existing business and (3) integrating new ideas and solutions in light of digitalisation.
In what follows, we review literature on digitalisation in retail and research focussing on that process's exploration phase and development in businesses. Next, we describe the methodological considerations made for our case study on IKEA. After that, we present our findings in terms of three major activities that guide the exploration phase. We conclude the paper by discussing our findings in relation to the literature and addressing our research's limitations.
Having significantly impacted retail in recent years, digitalisation has become an important topic in research on the industry ( Hänninen et al. , 2021 ), especially regarding specific applications of digital technology – for example, the use of smartphones in physical retail settings ( Fuentes et al. , 2017 ; Grewal et al. , 2018 ), augmented reality ( Scholz and Duffy, 2018 ; Caboni and Hagberg, 2019 ) and digital signage ( Dennis et al. , 2012 ; Jäger and Weber, 2020 ). Studies on specific technologies have been accompanied by broader frameworks for integrating various digital technologies into retail, not only by turns based upon their usage and retailers' objectives ( Wolpert and Roth, 2020 ), their social presence and consumers' convenience ( Grewal et al. , 2020 ) and their use in relation to shopping behaviour at various stages of the customer's journey ( Rosengren et al. , 2018 ; Blom, 2019 ; Roggeveen and Sethuraman, 2020 ), but also by general frameworks of what digitalisation implies for retail business overall ( Hagberg et al. , 2016 ). In such studies, digitalisation in retail has received sustained attention regarding several aspects of consumer behaviour ( Hure et al. , 2017 ; Pantano and Gandini, 2018 ), the retailer–consumer interface ( Hagberg et al. , 2016 ; Roggeveen and Sethuraman, 2020 ) and retailers' ways of doing business ( Verhoef et al. , 2015 ; Hänninen et al. , 2018 ). The processes in which incumbent retailers develop their businesses in light of digitalisation, however, have received far less attention.
Because digitalisation, understood as the integration of digital technologies, is arguably not a binary shift from one stage to another but an ongoing process without a clear beginning or end ( Hagberg et al. , 2016 ), its exploration in retail warrants a more processual perspective, particularly regarding its influence on how retail organisations alter their businesses (cf. Langley, 1999 ). Along with frameworks addressing how retail businesses can integrate digitalisation in various ways, the actual processes that may result in digital integration need to be explored and modelled. That need directs our attention to the exploratory processes through which retail businesses may approach digitalisation and, more specifically, to how digitalisation consequently influences established business models. Especially for the latter reason, we gave priority to incumbent retailers, whose business models and established ways of conducting business often confront such considerations.
Despite extensive research on what constitutes a business model, understandings differ about how to define, explore and leverage one. In fact, Teece (2018 , p. 41) has estimated that there are probably as many definitions of business model as there are models themselves. According to Ritter and Lettl (2018) , a business model, simply put, is a company's “way of doing business”. In this paper, considering how business models have been discussed in retail settings ( Sorescu et al. , 2011 , p. 4), we broadly understand a company's business model as representing “the firm's distinctive logic for value creation and appropriation”.
Although various external events may necessitate changes to ways of developing and operating businesses, digitalisation itself is not an event but an emergent, comprehensive and uncertain phenomenon. Indeed, digitalisation can span several external and internal aspects of businesses, as well as pose myriad implications for individual business models. To date, though scholars interested in digitalisation have examined different approaches to innovating business models, from making gradual, evolutionary adjustments to radically altering them ( Berends et al. , 2016 ; Inigo et al. , 2017 ; Snihur and Wiklund, 2019 ), how the exploration phase of digitalisation is understood and organised merits further investigation.
Following March's (1991 , p. 71) definition, exploration refers to searching for, innovating and experimenting with something novel. The concept as used by March (1991) is often considered in relation to exploitation, which refers to refinement, efficiency and implementation of “old” routines or certainties in an organisation. As noted by He and Wong (2004 , p. 481), researchers in strategic management, organisation theory and managerial economics have applied the two concepts in order to understand how innovations occur and how an organisation learn and develop dynamic capabilities to meet change. Previous studies either focus on the trade-off between exploration and exploitation or the balancing act between the two as discussed within literature focussing on ambidexterity and means for developing dynamic capabilities (e.g. Benner and Tushman, 2003 ; He and Wong, 2004 ; Vahlne and Jonsson, 2017 ). The two concepts have also been applied in processual research describing the evolution and development of an organisation. Winter and Szulanski (2001) use the two concepts when outlining their theory of replication as strategy and suggest a two-phase model where the organisation first enters the exploration phase “in which the business model is created or refined” (p. 731) and then move on to the exploitation phase. The argument that exploration and exploitation can be understood in terms of different phases of a process has been adopted also by researchers focussing on, for instance, retailers' internationalisation process ( Jonsson and Foss, 2011 ), the transition into retail omni-channel strategies ( Picot-Coupey et al. , 2016 ) and reverse knowledge flows within franchise organisations ( Friesl and Larty, 2018 ). Still, how the exploration phase is organised and how it can be understood remains to be further investigated. To the best of our knowledge, there is a dearth of research focussing specifically on the exploration phase and how it develops in practice. Whilst existing studies do explore the exploration phase, it is also discussed in relation to the exploitation phase with focus on the outcomes rather than the processual aspects of the phase as such. For this paper, we zoom in on and examine the exploration phase and how it can be understood in the context of retail digitalisation. In particular, when emergent trends such as digitalisation, a change process, challenge established business models, more comprehensively re-engaging the exploration phase can become essential.
Investigating a complex phenomenon such as digitalisation, and given our aim, calls for a qualitative in-depth case study ( Eisenhardt, 1989 ). According to Dyer and Wilkins (1991 , pp. 615–617), case studies aim to “provide a rich description of the social scene”, “describe the context in which events occur” and thus offer opportunities for other researchers to see “phenomena in their own experience and research”. In that sense, rich, explorative case studies provide avenues for future research or, as more broadly conceived by Doz (2011 , p. 588), “offer the opportunity to help move the field forward and assist in providing its own theoretical grounding”.
Our in-depth case study focussed on IKEA, a global home-furnishing retail company, and its work with developing an understanding of digitalisation. IKEA is a particularly interesting case that has attracted practitioners seeking a benchmark in a hitherto successful business model (e.g. Jonsson and Elg, 2006 ; Edvardsson and Enquist, 2011 ; Burt et al. , 2016 ). IKEA has frequently been used as an empirical example in the business models literature (e.g. Hedman and Kalling, 2003 ; Sorescu et al. , 2011 ) and subject to in-depth case studies of the development of specific aspects related to the IKEA business model over time (see e.g. Salzer, 1994 ; Jonsson, 2007 ; Tarnovskaya et al. , 2008 ; Edvardsson and Enquist, 2011 ; Hellström and Nilsson, 2011 ; Burt et al. , 2016 , 2021 ). In addition, there are several studies of various aspects related to digitalisation, including store format development ( Hultman et al. , 2017 ) and comparison of IKEA's digital catalogue and website ( Garnier and Poncin, 2019 ). IKEA has also served as an in-depth case for studies of exploration in relation to exploitation and replication ( Jonsson and Foss, 2011 ; Vahlne and Jonsson, 2017 ). The present study adds to this literature through an in-depth case study of IKEA's digitalisation process in an early explorative phase.
In the ten months from September 2014 to June 2015, we observed IKEA's work on exploring digitalisation and the trend's potential impacts on various parts of the organisation's business model and participated in a project undertaken in support of such exploration. In that form of action research ( Patton, 1980 ), engaging in IKEA's internal exploratory work as researchers allowed us to understand digitalisation's implications by discussing them with representatives at IKEA, which, at the time, considered knowledge of those implications to be important because they, along with digitalisation itself, remained unknown. Using such methods enabled us to contrast findings from interviews with findings from observations and synthesise the results in light of theory ( Ghauri and Grönhaug, 2002 ). In particular, our case study revolved around two ongoing projects and the processes of working within them: IKEA's “E-Commerce Programme”, later named the “Multichannel Transformation Programme”, and a project designed as a pre-study addressing the future role of IKEA's physical stores and the challenges and opportunities that they face amid digitalisation.
We collected data with three overlapping methods: in-depth semi-structured interviews, participant observations and document analyses (for an overview, see Table 1 ). As for the first, we conducted 21 interviews with senior executives with different functions in different departments at IKEA as detailed in Table 1 . Using purposeful sampling, we interviewed IKEA managers and employees working with and/or preparing for the organisation's digitalisation about their experiences with and thoughts on the concept of digitalisation and its implications. The interviews combined retrospective questions about IKEA's business model with questions about current situations experienced by the interviewees and prospective enquiries about IKEA's future in relation to digitalisation. All interviews began with open-ended questions about digitalisation in general and digitalisation at IKEA in particular. As the interviews progressed, questions became more structured and delved into the future role of IKEA stores, the specific challenges that IKEA faces, whether they will affect the IKEA concept and if so, then how. All interviews were recorded and transcribed verbatim and translated into English in those cases the interviews were made in Swedish.
Meanwhile, participant observations involved three meetings – before, during and after data collection, respectively – with the project manager of the pre-study to discuss the overall project. Those meetings lasted 11 h and 36 min in all. We also engaged in both in-store observations and meetings, lasting 10 h in total, whilst visiting an IKEA store in the Altona borough of Hamburg, Germany that operates as a test store for new concepts (e.g. urban proximity, technical solutions and delivery solutions). The local managers who accompanied us during our in-store observations also met with us twice: once with five other store managers and once with five employees from different departments. We conducted both meetings as group interviews guided by the same questionnaire used in the individual interviews. During all observations, we took field notes for data about the employees' perspectives and what digitalisation meant in practice. That information was valuable when conducting interviews with IKEA managers responsible for strategic decision-making and for translating digitalisation into IKEA's business model. Last, we also collected documents and visual communication, both public and internal, for analysis. The internal documents contained information about the pre-study, the “E-Commerce Programme”, the “Multichannel Transformation Programme” and the movie “ Shop with Laura ” (see Table 1 ) and public documents included information about the IKEA history, vision and business idea statements. Documents were collected on the basis of their mentioning during the interviews or participant observation sessions. These constituted sources of detailed information preserved from the time in which they were written and less dependent on the informants' memories. Throughout data collection, we facilitated informants' validation of the data on several occasions (cf. Silverman, 2006 ), which afforded us the opportunity to discuss our observations and findings with the participants. Apart from our participant observations, we also hosted two internal workshops with the project manager of the pre-study to discuss our findings.
To analyse the data, we used systematic combining ( Dubois and Gadde, 2002 ) – i.e. alternated focus between our empirical material and theory – whilst developing our case study and the emerging framework. For integrity's sake, we triangulated the three major sources of data – participant observations, interviews and document analysis ( Silverman, 2006 ) – during all four steps of data analysis. First, we coded the transcripts with reference to keywords and phrases related to digitalisation and its consequences for the retail industry in general and IKEA in particular. In that step, we adopted an emic perspective that prioritised the perceptions and understandings of the informants ( McCracken, 1988 ). Second, following Langley's (1999) suggestion, we took a narrative approach to comprehending the process-related data, namely by drafting a general description of the process with illustrative quotations from material collected in the field ( Berends et al. , 2016 ). Third, whilst working abductively between the empirical material and our emerging analytical framework, we used theoretical coding ( Charmaz, 2014 ) to sort, integrate and organise the material to represent a three-phase process. In so doing, we gradually shifted to an etic perspective – i.e. from the informants' perspective to our own perspectives as observers of the empirical material. Fourth and finally, we reorganised the material and wrote a case narrative structured according to the three abovementioned activities as presented next.
In the past 70 years, IKEA has grown from a small, family owned company in Sweden into the world's largest retailer of home furnishings. Arguably, IKEA's rapid international expansion resulted from the three-phase development of a formula that has been replicated in all markets where IKEA has entered an expanded, where the first phase commenced by exploring IKEA's business idea and opening test stores in markets outside Sweden ( Jonsson and Foss, 2011 ).
IKEA's business idea builds upon two concepts – the idea concept and the concept in practice – that together define what, in theoretical terms, could be understood as IKEA's business model. Whereas the idea concept refers to IKEA's vision “to create a better everyday life for the many people”, its philosophy of co-creation (i.e. “We do our part, and you do yours”) and the central role of IKEA stores, the concept in practice refers to IKEA's practices of examining specific sets of variables whilst adjusting to local markets ( Jonsson and Foss, 2011 , p. 1,090). The two concepts are mutually dependent; if the concept in practice does not change, then the practices of the idea concept will eventually become irrelevant and not reach “the many people”.
In 2014, drawing from insights during its internationalisation, IKEA realised that digitalisation could be both a challenge and an opportunity amid its recently declining expansion. For decades, IKEA had experienced outstanding success in replicating its business model: an average yearly increase in sales of approximately 8–10%, the constant meeting of new sales targets and a steady rate of expansion, with 12–14 store openings per year. In 2013, however, IKEA's steady growth declined in some markets, as the rapid worldwide growth of e-commerce in retailing continued to challenge physical stores and change the competition. In response, the company decided to decelerate its international expansion in favour of exploring what digitalisation could mean for their established business model. At IKEA, it was, therefore, considered increasingly important to return to a state of exploration in which key variables describing the idea concept and the established concept in practice would be re-evaluated. Moreover, as increasingly more young employees at IKEA sought new, 21st-century ways of reaching “the many people” – i.e. current and potential customers – both IKEA's employees and customers began looking for digital solutions and new ways of working.
In the following sections, we recount how IKEA engaged in exploring digitalisation in the IKEA way and how it (re)imagined reaching “the many people” in the shifting retail landscape. The story begins when the intersection of digitalisation and IKEA's business model was becoming increasingly apparent but not yet regarded as a phenomenon that would require radical changes, and it ends six months later, when the exploration phase resulted in an understanding and approach that we term the re(in)innovation of IKEA's business idea. In particular, we discuss how IKEA interpreted, interrelated and integrated digitalisation with its established ways of doing business. Although we have structured our discussion in three subsections, each addressing one of those three activities, the activities should not be considered as occurring along a linear path but instead as three aspects of the exploration phase.
For an overview of the activities and related steps, please see Table 2 .
In 2014, aware that IKEA retailers in the USA were witnessing a cannibalising effect on their physical stores because of e-commerce, IKEA took its first steps towards exploring digitalisation. IKEA realised that its E-Commerce Programme launched only a year prior, could not simply be rolled out as initially planned but needed to be informed by a discussion about what e-commerce and digitalisation would mean for sales in IKEA's physical stores. Although digitalisation was becoming a widely discussed concept in retail at the time, it had remained undefined, and it was unclear how, or even whether, it was distinct from e-commerce. Recognising that possibility, IKEA's global expansion manager initiated several internal projects to explore what digitalisation meant and how it might relate to IKEA's business idea.
E-commerce is how we do business electronically, so it's about selling: selling online. But digitalisation is much bigger than that […] It's about the whole company, because it involves, for example, online learning. I think that e-commerce is not just about selling; it's about fulfilment, the buying process. (Development Manager, E-Commerce Programme)
Digitalisation is broader than e-commerce. It's also more about how we approach customers: how we communicate and how we ensure that all of our customers have the same knowledge, whether they're buying things in the store or online. Digitalisation is something that happens in the store. It's how we provide all of the information to our customers: where the products come from, what they do and how you can use them. (Supply Manager, IKEA Supply AG, Logistics)
As that quotation suggests, despite references to what digitalisation might mean and what it truly is, its signification remained vague. Even so, it appears that digitalisation might have generally been understood as offering digital information to customers. Making sense of digitalisation thus involved distinguishing digitalisation from e-commerce to not only explain how the concepts differed but also make digitalisation manageable for and relevant to customers.
So, all of a sudden, the amount of information that we have about people and how they live, move, interact etc. is phenomenal. And it's in combination. It's not urbanisation only; it's urbanisation plus digitalisation that gives us the opportunities. It's an example of how combined trends can become very powerful. (Digital Business Manager, Inter IKEA Systems B.V.)
It is exponential because every new invention in the digital space is built on previous ones. So, it's a combined effect that creates exponential speed. So, ignoring it, as Kodak or Nokia did, will be very dangerous. On the contrary, it can be very powerful, like for Apple, Google, Facebook, etc.
For me, digitalisation is a moving target. Its content is changing all of the time. To some extent, we use a lot of digital technology already—it's just that it’s outdated, right—so we're changing how we digitalise instead of digitalising something that is not digital. (Global Retail Logistics Manager, Retail Logistics IKEA of Sweden)
Gradually, it became clear that digitalisation not only needed to be understood in the sense of selling goods online but would have broader implications for the company. As a case in point, when observing customers who had already developed new shopping behaviours – using mobile phones to search for products from both outside and inside stores, for example – IKEA realised that new mobile solutions had to be integrated with traditional retail logic. As a result, IKEA unveiled the “Future Role of the IKEA Store in a Multichannel Environment” project to emphasise the need to understand and combine related trends. The project was initiated to jumpstart a shift towards what IKEA called a “seamless customer journey”. Consisting of five sub-projects, the project prompted the redefinition of the E-Commerce Programme and later evolved into the Multichannel Transformation Programme.
Digitalisation means nothing, I would say. Because what we want is to secure a solution for when you, the customer, move between the store and the web. It might be a digital solution, but it can also be a physical solution, or something else. The only thing that's important is to solve some sort of need and to learn more about those needs. (Group Retail Manager, Global Retail Services IKEA Group)
The expansion manager also emphasised that instead of simply focussing on defining digitalisation, routines and skills need to be developed for facilitating “disruptive developments” and finding new solutions and ways of testing new ideas. Understanding how various activities were organised and integrated was also considered to be pivotal. The idea addressed in many interviews – namely, that digitalisation both enables and requires the integration of knowledge – was explained as enhancing the focus on customers and their experiences. That perspective marked a shift into the phase in which IKEA began actively exploring what digitalisation meant to its ways of doing business by revisiting the idea concept and the concept in practice.
Altogether, the first activity of the exploration phase, interpreting, refers to ways of understanding and making sense of digitalisation and the changes that it was considered to imply. The process can be described as encompassing three steps: differentiating (i.e. distinguishing and delimiting digitalisation from other concepts), combining (i.e. making connections between digitalisation and other trends and concepts) and concretising (i.e. defining digitalisation and making it actionable). Building upon lessons from that work, IKEA transitioned into the second activity of exploration where it began relating digitalisation more explicitly to IKEA way of doing business.
Whilst interpreting digitalisation, informants increasingly reflected on what it would mean for IKEA's established business ideas. After all, the replication formula was being challenged by not only digitalisation but also urbanisation. Mounting criticism about globalisation and calls for de-growth were also seen as challenging the existing understanding of doing business – i.e. by selling furniture “to the many people” – and concerns for sustainability were identified as needing to be incorporated into understandings of digitalisation.
To ensure that all IKEA employees shared the same interpretation of digitalisation and how it relates to IKEA's established business model, it was considered to be necessary to visualise the future. To convince internal sceptics, it was considered to be especially important to also visualise how digitalisation could generate opportunities for sales and attract a broader customer base and thereby more fully reach “the many people”. It additionally required ideas about urbanisation, sustainability and ways of offering not only furniture but also services, both in terms of continuity and making it easier to shop. Some proposals even conceived collaborating with second-hand retailers or establishing an organisation that would create opportunities to sell recycled and/or used furniture.
We wanted to have a completely different kind of interaction with our customers: a completely different type of conversation, a completely different type of engagement. So, I made a video that I think is very entertaining. […] She [Laura, the protagonist] wants to decorate her children's room, and the videos show her journey until she's satisfied. (Web and Digital Manager, Web and Digital Retail Services)
To develop a “seamless” experience for customers, it was considered to be crucial to introduce multiple perspectives, which seemed to require visualising the journey of customers in order to ensure focus on their experiences. To that end, it was expressed that all perspectives in IKEA's value chain had to be considered, and a consensus was emerging that different perspectives needed to be integrated in order to realise digitalisation. It was also clear that integrating knowledge from various functions in order to avoid a silo mentality would require more effort.
Our model has been built on direct deliveries to our stores, where you [the customer] do your part, we do our part, and then we save money. We need to think about a completely different kind of integration in how we develop and how we lead the overall development. To make that happen, we're now investing billions in new infrastructure—large investments in IT—but that's not what will take us into the future . (Group Retail Manager, Global Retail Services IKEA Group)
It was necessary to look inwards and to involve different views and perspectives, both across different parts of the company and from the outside. The same informant underscored the importance of accessing different perspectives to also “integrate the outside perspective into our structure, so that we do not get too isolated and, in that way, also cultivate our own skills”. The involvement of different functions and external partners prompted discussions about what digitalisation meant in relation to the established retail logic of “You do your part, we do our part (and together we save money)”. As it became clear that digitalisation would inevitably affect IKEA's business model, the question of how that process would unfold increasingly became the topic of discussion.
In sum, the second activity of the exploration phase, interrelating, refers to assessing digitalisation in relation to established ways of doing business in three steps: visualising (i.e. what the future might look like), mapping (i.e. what functions, areas and parts of the business model will be involved) and evaluating (i.e. how digitalisation will affect the business model and current ways of doing business). Based upon insights from that work, IKEA advanced to putting lessons learnt into practice and began the third activity: integrating new knowledge with existing knowledge.
From the internal projects related to efforts of interpreting digitalisation and interrelating it to other trends, IKEA's managers concluded that its established business model needed an update and that the antidote, digitalisation, also offered an opportunity to fully realise the business idea of offering products and services to “the many people”. To that end, testing new ideas, learning from them and making any necessary adjustments were considered to be important tasks. Thus, to be able to integrate digitalisation with the business model, it was necessary to experiment with numerous ideas and solutions as was done at numerous IKEA locations. For example, at IKEA in Altona, new ideas and concepts were tested to see whether they could satisfy a more digital, urban segment of customers. The Altona store was not only constructed differently from the standard global store format, in terms of size and layout, but also to accommodate for trends in urbanisation. It had also been adapted to test new concepts in practice, including new logistics and distribution solutions, and the normal pathway through the IKEA store had been partly removed to attract customers passing by outside. In the United Kingdom, by comparison, as a result of exploring digitalisation and testing new digital solutions, IKEA had launched its first app.
Experiences from testing new ideas and solutions were transferred back to the IKEA Group and Inter IKEA Systems. Thus, an important step was reviewing and learning from those experiences followed by transferring them internally within the organisation. In relation to the Altona store, both IKEA's management team in Germany and the IKEA Group's management team followed the experiences closely. Beyond that, many employees from IKEA worldwide visited the UK and/or Altona stores simply out of curiosity.
That's the essence of IKEA. If you remove everything, then the core is what's left, and that's IKEA… [We] need to develop our concept, take it further and say, “This is how I see IKEA today”. We have to be on track and dare to test and create other formats… So, IKEA has to change; otherwise, it's the beginning of the end. (Group Retail Manager, Global Retail Services IKEA Group)
The concept manager also reflected on how those changes would affect the idea concept and the concept in practice, as well as the latter should not come at the former's expense: “I mean the concept, if we go back to it, and the vision… part of the recipe for success has been just doing things together, engaging people” (IKEA Concept Manager, Inter IKEA Systems B.V.). Thus, integrating digitalisation into IKEA's business also implied reconnecting with IKEA's roots and reflecting on the idea concept as “the core of the core”. After all, although IKEA was changing at the time and continues to change, it remains the same IKEA. In that sense, revising the business model appeared to be quite natural, for though it had always changed in one sense, in another sense it had also always remained intact. The conclusion was that to be able to sustain the idea concept, “the core of the core”, the concept in practice needed to change, which would imply searching for new formats and new solutions to further leverage IKEA's business. IKEA's managers realised that although the basic needs were the same, people had changed and were continuing to change, and the experiences of customers demanded far more focus. For those reasons, a new position, global customer experience manager, was created. The shift implied a return to the core of IKEA's concept and vision – “to provide products and services that are both cost-efficient and innovative” – and that digitalisation had forced IKEA to rethink its processes of achieving those ends. As another informant argued, the entire process of re-evaluating the way of doing business – i.e. the IKEA way – had alerted managers and employees not only to IKEA's strong vision and business model, but also its need to seize the opportunity to fully realise that vision and reach “the many people” both online and offline.
All of the work to prepare IKEA for the digital shift had prompted a return to the company's roots and the questioning of proven solutions, which is indeed one of IKEA's ten values, perhaps best be described as shifting from interpreting digitalisation and interrelating with IKEA's business model into integrating and turning it into practice. That integrative phase also precipitated how IKEA re(in)novated its business model. IKEA's approach of digitalisation could thus be understood as returning to the company's original idea; the understanding of the idea concept will never change, but the concept in practice has to be rethought and new ideas and practices tested and evaluated in order to continue to reach “the many people”. To that end, practising and testing new solutions were crucial strategies for IKEA, not to mention integral to the IKEA concept and its organisational culture.
In all, the third activity of the exploration phase, integrating, refers to the actual digitalisation of the business idea by steps of practising (i.e. developing and trying different solutions to test and learn from them), reviewing (i.e. sharing knowledge within the organisation to learn from practice) and revising (i.e. connecting and evaluating changes to the established business model in order to provide continuity).
This paper has sought to illuminate how an incumbent retail organisation approached digitalisation for its existing business at an early, exploratory phase when possible disruptions, their meanings and their consequences remained uncertain. To that aim, we have provided an account based upon our in-depth case study of IKEA and how the company explored digitalisation at an early stage. We have delineated the exploration phase as consisting of three chief activities – interpreting, interrelating and integrating – each of which we have detailed by identifying certain steps therein. Together, and with reference to IKEA's case, those aspects allow an understanding of the exploration phase.
Compared with previous studies on exploration and exploitation (e.g. March 1991 ; Winter and Szulanski, 2001 ) and specifically in the context of retailing ( Jonsson and Foss, 2011 ; Picot-Coupey et al. , 2016 ; Friesl and Larty, 2018 ), our paper contributes with insights on how the exploration phase is understood and organised in practice. The study further contributes to previous literature of IKEA's business model ( Hedman and Kalling, 2003 ; Sorescu et al. , 2011 ) and specific aspects of the IKEA business model (see e.g. Edvardsson and Enquist, 2011 ; Burt et al. , 2016 , 2021 ) by outlining the exploration phase in further detail. Although the activities of the exploration phase – interpreting, interrelating and integrating – stem from a specific case, we believe, following the potential of qualitative in-depth case studies ( Dyer and Wilkins, 1991 ; Doz, 2011 ), that they may provide value for analysing what digitalisation or any other current or future trend means to retail businesses apart from IKEA.
Because our study was performed at a relatively early phase of adapting the business model at IKEA, some of the outcomes of that process were beyond our study's time frame. However, conducting the study during the process afforded the advantage of revealing ambiguities, scepticism and reservations amongst employees and managers, all of which are important for understanding how retail businesses can be transformed in practice due to digitalisation. In hindsight, some of those uncertainties may be expected to fade or fall into oblivion once changes appear as a continuation of their antecedents and become institutionalised in the ordinary course of business, whether such a development occurs and, if so, then how it remains to be investigated. In any case, a key contribution of our study is the understanding of how an organisation such as IKEA, a global retail giant, organises its efforts to explore digitalisation in relation to its existing business. Still, as this study was conducted in a relatively early phase of the digital transformation, we believe that the findings may differ from later implementations when digitalisation has increasingly become a norm rather than an exception and retailers having increased abilities to learn from their and other's previous experiences. An important opportunity for further research would be to study more recent cases of exploration phases in relation to digitalisation as well as comparing incumbents and entrants as well as larger and smaller organisations.
Using a case study to develop an understanding of digitalisation in retail has advantages and disadvantages. On the one hand, it affords a more profound understanding of how retail businesses are transformed due to digitalisation in practice, as well as detailed insights into the practical work within the company (cf. Saebi et al. , 2017 ). On the other, however, it can be difficult to apply the results of case studies in forming a basis for scientific generalisation ( Yin, 2003 ). Although an analysis based upon a particular case can indeed provide an understanding of the practical process, that process is liable to differ between companies and between industries. In IKEA's case, as an organisation that many companies use as a benchmark due to its long-term success, no precedent construct existed for understanding how digitalisation in retail would look – for example, by relying on normative models – but instead surfaced as an emerging process. A better understanding of how a specific retailer has approached digitalisation complements current understandings of retail's digitalisation in general ( Hagberg et al. , 2016 ; Hänninen et al. , 2021 ). By extension, we believe that the suggested conceptual framework for understanding and organising the exploration phase could be a useful tool for retail managers to explore not only digitalisation, but also any other transformation and the consequences for their businesses.
Types of data sources
Type | Purpose | Description |
---|---|---|
Interviews | To get the emic perspective, the participants' individual narratives about the exploration process of digitalisation, combining questions asked to all participants, adjusted to their specific role and follow-up questions | 21 semi-structured interviews with senior executives with different functions and departments within IKEA, recorded and transcribed |
Observations | To get an overall understanding of the exploration process and what participants were involved what the participants. In addition, to mutually design the study, validate preliminary findings and to be able to gain a more detailed understanding of the IKEA Store | Participant observations and field observations of IKEA stores observations together with IKEA staff in Altona, Hamburg, Germany taking notes and photos within the store, in total 10 h |
Documents | To retrieve information about the purpose of the different programmes, initiated following the exploration process and how digitalisation was communicated both internally within IKEA and externally to customers | Both written document and visual communication of three different types ” |
Exploring digitalization in relation to an established business model
Activities | Definition/meaning | Steps | Description | Case example |
---|---|---|---|---|
Interpreting | Ways of understanding and making sense of digitalization and the changes it was considered to imply | Differentiating | Distinguishing and delimiting digitalization from other concepts | Distinguishing, clarifying and separating digitalization from e-commerce, emphasizing similarities and differences |
Combining | Making connections between digitalization and other trends and concepts | Relating digitalization to other trends and developments such as urbanization and technological development | ||
Concretising | Making digitalization less abstract, e.g. by concretizing, defining and making actionable | Making digitalization manageable by relating it to present and ongoing specific activities within and outside the company | ||
Interrelating | Assessing digitalization in relation to the existing business model | Visualising | Creating illustrations of what the future might look like through a concrete situation which everyone could easily relate to | Introducing a future oriented vision of what digitalization could look like from the point of view of the customer (journey) |
Mapping | Different views and perspectives both across different parts of the company as well as from the outside | Inviting and involving senior executives and various functions, and discussing issues related to roles and responsibilities | ||
Evaluating | Assessing the impact of digitalization on the existing ways of doing business by focusing on what it would mean in terms of transformation in particular | Bringing in different perspectives – both internal and external – when assessing the implications of digitalization for the ways of doing business | ||
Integrating | Digitalization of the business model in practice (e.g. minor modifications, renovating, innovating, shifting into a completely new business model) | Practicing | Developing and trying different solutions to be able to test and to learn from them | Taking the visual vision to practice, in order to try out new concepts in practice |
Reviewing | Sharing of knowledge between different parts of the organization, to learn from practice | Learning from the experiences, and transferring these internally within the organization | ||
Revising | Connecting and evaluating the changes back to the established business model in order to provide continuity | Re(in)novation. Bringing lessons learnt back to the project group and interrelating it to the company origin and “essence” |
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The authors contributed equally to this work. The paper is part of a research project with financial support from The Swedish Retail and Wholesale Development Council. The authors would like to thank Niklas Egels-Zandén for comments on an earlier draft of this paper, and also colleagues Catrin Lammgård and Malin Sundström who were also part of the research project. In addition, the authors would like to thank the people at IKEA who have contributed with their time and reflections, and in particular, the authors would like to appreciate Martin Hansson and Carole Bates for showing interest in this research and for inviting the authors to participate in the internal work of trying to interpret what retail digitalization means to IKEA.
About the authors.
Johan Hagberg is professor of business administration specialising in marketing at the School of Business, Economics and Law, University of Gothenburg. His research revolves around the digitalization of retailing, consumption and markets.
Anna Jonsson is associate professor at Lund University, School of Economics and Management. Her research interests include learning and knowledge sharing in organizations and society. She has conducted research about various industries and organizations, including the retail industry.
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Ikea target audience, ikea marketing channels, ikea marketing strategy, ikea marketing strategy 2024: a case study.
Founded in 1943, Ikea operates 422 stores in 50+ markets. The favored furniture brand has an impressively wide customer base, with nearly 70% of its stores in Europe. Ikea added 19 stores last year, including its first in India. The Ikea marketing strategy includes some of the most iconic logos, campaigns and companies in recent history.
Ikea serves the unique functional needs of each target audience, with special attention to 16-34-year-old adults. It has solutions for:
Thus, it uses the following types of product positioning :
Ikea utilizes the power of the following marketing channels:
The Ikea marketing strategy contributes majorly to its success because it's original, imaginative, and distinctive while maintaining a transparent value proposition.
From the Swedish national colors on its buildings to rich meatballs in its store cafeterias, Ikea's marketing strategy reflects its cultural heritage proudly. It infuses all elements of their identity with a sense of self-assuredness that maintains their identity in the market of stiff competition.
Understanding that a simple tiered strategy won't encourage repeat business, Ikea extends customization, flexibility, and mix-and-match furniture modules. It effectively combines the elements of affordability and sustainability in its marketing strategy to ensure success.
While the furniture options don't pledge a lifelong guarantee, the products are built to last. Even its reusable shopping bags reflect its commitment to sustainability.
IKEA-sponsored comedic series Easy to Assemble. Its innovative content marketing was way different from a furniture product demo. Incorporating sponsored digital marketing campaigns and social media influencers have boosted the Ikea marketing strategy.
Ikea’s Easy to Assemble Series
Ikea brilliantly displays products employing the best lighting systems to generate more sales. It strategically arranges best-matched items in mock rooms to encourage impulse purchases and inspire decor. The company also extends excellent customer service to provide a memorable experience and incite customers to come back for more.
Ikea’s Store Decor for Inspiration
Ikea ensures an optimal mobile website's speed, button displays and gesture controls on its website and mobile app to retain and attract individuals to the site. It carefully invests in its UI/UX , enquiry-based chatbot, and regular updates on new offers, discounts, and promotions.
One of the most successful marketing moves includes downloading its 3D modeling app to envision a dream home. It's one of its most successful marketing moves that allows IKEA to upsell its low-demand items by creating a desire in its customers to revamp the room.
Ikea’s Website With Engaging Content
Ikea's marketing strategy aims at enhancing the site's visibility for relevant searches to attract the attention of new and existing customers. It includes the right product-specific keywords and Google advertisements to further augment its organic ranking .
Ikea Ranking for Bookcases on Google’s First Page
Ikea's handles are very active on digital marketing platforms like Facebook, Instagram , Twitter, and Youtube . Their digital presence is impressive, with more than 30 Million likes on Facebook, 1 Million followers on Instagram, 5.3k followers on Twitter, and 41.2k subscribers on YouTube.
Ikea’s Instagram Profile
Its Instagram bio links to its website. The website also has links to its various social media posts. Its 'view shop' and 'call' options for product catalog and direct assistance, respectively, are a testament to a well-crafted Ikea marketing strategy.
Ikea’s Youtube Advertisements
IKEA also conducts free online workshops that lure lots of enthusiastic customers, resulting in gaining leads.
Ikea’s Online Workshop Ad
Ikea relies on its content marketing strategy to create a distinguished presence amongst furniture brands. Its commercials, print ads, social media, and website stands out with attention-grabbing content. It combines innovation and humor to present the brand's core values and inspire people.
Ikea’s Captivating Commercial
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Introduction
IKEA is a renowned Sweden-based multinational retail company that focuses on do-it-yourself furniture, home accessories and electronic appliances. This essay will discuss how IKEA’s business model has evolved over time and how it has performed. The essay will then discuss IKEA’s main competitors and business environment using the PEST framework, before ending with a list of recommendations for IKEA to maintain its success in the US while expanding globally.
Section 1: Evaluation and evolution of IKEA’s business model concept
Initially, IKEA focused on lowest-price DIY furniture at sufficient quality, which allowed consumers access to affordable furniture which they could assemble on their own . However, the company was criticised for its poor product durability and poor design aesthetic. Since then, IKEA has invested heavily in product design and manufacturing, and now delivers affordable furniture at reasonable quality and design. The core aspects of IKEA’s business model are thus its affordable DIY products, simple Swedish design, and reasonable quality. In recent years, IKEA also offered excellent service and innovation through its products, which drove it to grow rapidly in the international furniture market. (Edvardsson and Enquist, 2011)
The company has changed the way consumers shop for furniture by turning a time-consuming, expensive and formal process into one that was more affordable, simple and fun. (Moon, 2004) IKEA did so through the use of affordably priced products, stylish catalogues, large and playful consumer showcase stores, and sleek Scandinavian design. (Khamis, 2016) This approach allowed beautiful design to be accessible to the mass consumer market. The advantages of such an approach were affordability, aesthetics and efficient setup and storage, while the disadvantages were a lack of durability and the time spent on constructing and assembling the IKEA furniture.
Section 2: PEST Analysis and Key Environmental Factors
Next, this essay will analyse IKEA’s business environment in order to better inform IKEA’s new strategies for dealing with competition and expansion. The following PEST analysis will be used to analyse the environmental factors impacting IKEA. Primarily, IKEA’s operations in different countries has presented specific political, economic and social sensitivities that affect IKEA’s supply chain, product branding and naming, and marketing, while new technologies represent both significant opportunities and threats for IKEA.
Foremost, in terms of political factors, IKEA has been affected by politics in terms of supply chain stability, regulation, political crises and product naming. IKEA’s operations remain reliant on political stability to ensure that the global supply chain remains reliable. IKEA also remains subject to regulation over safety and reliability of furniture, which may vary across different political jurisdictions. Political events such as Brexit have also caused IKEA to experience an increase in manufacturing and export prices due to the fracturing of the EU common market. Finally, IKEA has had to more carefully consider the naming of its products which have specific cultural or political connotations across different countries. For example, its Lufsig product was construed to have a name similar to a vulgarity in Hong Kong, and was used for a political protest against the Hong Kong government. (Ngai et al, 2017) This caused IKEA to launch initiatives to defuse the political tensions that arose as a result.
Next, in terms of economic factors, IKEA is set to benefit from the growing middle class in emerging markets such as East Asia, and may wish to diversify its operations away from the West given the sluggish recovery post -2008 in the US and EU. The globalization of the supply chain has also allowed IKEA to enjoy better production costs, as it has outsourced manufacturing to keep costs low.
In terms of social factors, IKEA’s operation in diverse multinational markets have led it to weigh tradeoffs in its marketing approach, when catering to countries with distinct social norms. For example, conservativism in Russia and Saudi Arabia led IKEA to remove same-sex couples and women respectively in their catalogues for those countries, but resulted in a backlash from their Western consumer market whose customers were more liberal in political beliefs. (Molin et al, 2012) IKEA has also had to deal with social backlash from the use of East German political prisoners to manufacture their products in 1980s. (Briskin, 2016) However, on the bright side, growing global interest in Scandinavian design and sustainability within the larger society has allowed IKEA to tap on these trends to drive growth.
Finally, in the area of technological factors, new technologies such as augmented reality, virtual reality and artificial intelligence present opportunities for IKEA to deliver more customised and experiential consumer experiences. Furthermore, IKEA is able to conduct on-site, on-demand manufacturing through advances in scalable 3D printing. However, IKEA has to be mindful of rising competition from white label manufacturers and copycats enabled through the technology of e-commerce.
Section 3: Evaluation of IKEA’s competition
IKEA’s key competitors are Walmart, Amazon and Ashley Furniture Industries. By revenue, IKEA’s 2018 revenue was USD $44.6 billion, which puts it behind diversified retail conglomerates such as Walmart (USD $500.3 billion) and Amazon (USD $207 billion), but ahead of pure-play furniture companies such as Ashley Furniture Industries (USD $4.7 billion). (Buehlmann and Schuler, 2009) These companies were selected because they represent a broad spectrum of furniture and home appliance providers. While IKEA is a pure-play furniture company like Ashley Furniture Industries, Walmart and Amazon may be seen more as aggregators of third-party furniture brands, with Walmart being more dominant in physical retail and Amazon being more dominant in online retail.
Their advantages and disadvantages in satisfying the value propositions of their customers will be evaluated according to the dimensions of affordability, product quality, branding, supply chain management, digital marketing and e-commerce. Foremost, for IKEA, the company delivers on strong branding and affordable furniture at reasonable quality, but needs to expand more actively in digital marketing and e-commerce sales, as well as the management of its supply chain, which is necessary to keep costs and prices low. Secondly, for Walmart, the company excels in affordable furniture and low costs due to its supply chain excellence, but needs to improve on its branding, digital marketing and e-commerce sales. Thirdly, for Amazon, the company is strong in its supply chain and e-commerce sales, but as it is an aggregator of several third-party furniture suppliers, it is weak in product quality, branding and digital marketing, and needs to improve those aspects. Finally, for Ashley Furniture Industries, the company is strong in branding and quality, but needs to improve its affordability, digital marketing and e-commerce.
Section 4: International expansion strategies to maintain customer value, satisfaction and loyalty.
As IKEA looks to maintain markets in the US while expanding to emerging markets in Asia and India, they should focus on branding, innovation, after-purchase services, premiumisation and localisation of marketing in order to maintain customer value, satisfaction and loyalty.
Foremost, IKEA should focus on branding by continuing to promote uniqueness of Scandinavian design rather than diversifying its product ranges, because diversification would result in brand dilution and a weakening of IKEA’s distinctive global brand. (Moon, 2004)
Secondly, IKEA should continue to innovate in order to maintain aesthetic appeal and functional quality. (Moon, 2004) IKEA’s chief weakness in its products has been their slightly inferior design and quality, which are typically not very durable when compared to those of their competitors. IKEA should therefore invest more actively in research and design to create products that are more durable and beautiful.
Thirdly, IKEA should Include better after-purchase services such as assembly and warranty guarantees. This may include having home assembly services at an affordable price point.
Fourthly, in line with the demand from the growing middle class in emerging markets, IKEA should launch a premium range of products that is more durable and luxurious, to cater to the upper-class tastes of the new middle class. (Moon, 2004)
Finally, IKEA should localise marketing to local cultural contexts and sensitivities as they expand. This may be done through the use of new technologies such as augmented reality and AI to provide better online customer experiences that are experiential and customised. Also, as shown by a 2007 study by Capdevielle et al, IKEA Sweden experienced success in catering its product catalogues to fit the tastes of the Chinese and French markets. (Capdevielle et al, 2007) Hence, while IKEA should not diversify its products, IKEA should adapt and localise its marketing to local contexts.
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Capdevielle, L., Li, M., & Nogal, P. (2007). A creation of competitive advantage by using differentiation of company´ s strategy actions: The case study of IKEA Sweden with experiences on Chinese and French markets.
Edvardsson, B., & Enquist, B. (2011). The service excellence and innovation model: lessons from IKEA and other service frontiers. Total Quality Management & Business Excellence , 22 (5), 535-551.
Khamis, S. (2016). Brand IKEA in a Global Cultural Economy: A Case Study. Consumer Culture: Selected Essays .
Molin, A. N. N. A. (2012). Ikea regrets cutting women from Saudi ad. Wall Street Journal .
Moon, Y. (2004). IKEA invades America . Harvard Business School.
Ngai, S. B. C., & Falkheimer, J. (2017). How IKEA turned a crisis into an opportunity. Public Relations Review , 43 (1), 246-248.
Wei, L. Q., & Zou, X. (2007). IKEA in China: facing dilemmas in an emerging economy. Asian Case Research Journal , 11 (01), 1-21.
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Learning outcomes Students should be able to use the case study in debate apply theories relating to the subjects specified. Case overview/synopsis The case is based on a fictitious South African company going through emergency response conditions analogous with what many businesses are encountering during the COVID crisis. The protagonist is struggling with structural challenges imposed on the business by unpredictable and uncontrollable external pressures and needs to make transformative decisions which might impact the culture, organisational design and digitisation of the business. Complexity academic level Post-graduate general management. Supplementary materials Teaching Notes are available for educators only. Subject code CSS: 7 Management Science.
Learning outcomes The learning outcomes are as follows: students will identify the reasons for a firm to internationalize and its specific internationalization entry mode; students will distinguish how to follow the client and how physic distance strategies work; students will analyze a host country’s external environment using the PESTEL framework, and they will analyze the international strategies followed by a multinational enterprise using the integration-responsiveness framework as well. Case overview/synopsis The authors explore the case of DICOMA Corporation, a Costa Rican multinational enterprise with presence in five countries. Adrian Sanchez, who is Dicoma’s president, needs to craft an international strategy to increase the international sales in the foreign markets where the firm operates. The company may follow two paths. On the one hand, Dicoma can adopt the strategy of following its major clients to expand overseas, which will lead to the opening of operations in more countries, but making the foreign sales highly dependent on these types of partnerships. This has been so far the path pursued by Dicoma in its international expansion. On the other hand, Dicoma can opt to focus on increasing commitments in the existing international markets where it already has operations by capturing new clients in those locations but scarifying the potential business opportunities to enter into other countries in partnership with its major clients. Complexity academic level Post-graduate early stage business students enrolled in programs such as Master of Business Administration, Master of Management, Master of International Business, executive education programs, among others. Supplementary materials Teaching notes are available upon request for educators only. These teaching notes should be shared solely with the instructor and students should not have access to. Please contact your library to gain login or email [email protected] to request teaching notes. Subject code CSS 5: International Business.
Subject area Reverse positioning, market segmentation, customer-centric organization. Study level/applicability Postgraduate program; Master in strategic marketing and Master in business administration. Case overview Declining radio listenership is triggered by lack of attention of the radio managers to the desires of radio listeners. Delta FM radio, as part of Masima Media Group, is a radio that realized the need for revitalization. They changed their target audience and positioning to regain its former glory. Delta FM radio get back to the core benefit with the tagline: “100% Great Songs”. Shifting from highlighting the emotional benefits to functional benefits and to cut a variety of benefits is called “reverse positioning”. Expected learning outcomes The objective of this case study is to give deeper comprehension a new concept called reverse positioning or reverse branding. It is an example of the dynamic of hyper competition in media market in practice, in the emerging market such as Indonesia. It provides clear picture of the difference between listener oriented vs advertiser oriented company and the impact of the imbalance portion between them. Supplementary materials Teaching notes are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes.
Learning outcomes It intends to help the learners assess the scenarios of volatility in the Indian capital market which was caused by unpredictable market forces. It also helps in understanding how analysts struggle to predict the direction of the market and what options strategies can be recommended to be deployed by the investors to maximize returns in such compelling scenarios. Case overview/synopsis This case study presents snapshots of high volatilities caused by the market and economic forces in the Indian capital market. It depicts how analysts struggled to predict the direction of the market; and how high volatility can put them in trouble. It also exemplifies as to how by selecting the apt strategies, investors maximize their immediate returns in a volatile period and can produce large returns in a short time. Complexity academic level The best time to discuss the case is during the completion of options strategies in the course of Derivatives or Portfolio/Investment Management. Supplementary materials Teaching Notes are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes. Subject code CSS 1: Accounting and Finance.
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IKEA business strategy is built upon the IKEA concept. The IKEA Concept starts with the idea of providing a range of home furnishing products that are affordable to the many people, not just the few. It is achieved by combining function, quality, design and value – always with sustainability in mind. The IKEA Concept exists in every part of the company, from design, sourcing, packing and distributing through to business model. [1]
The following points constitute integral elements of IKEA business strategy.
1. Offering the lowest prices . Cost effectiveness is one of the solid bases of IKEA competitive advantage. The global furniture retailer is able to offer low prices thanks to a combination of economies of scale and technological integration into various business processes.
2. Increasing variety of products . Great range of products also belongs to the list of IKEA competitive advantages. There are 12000 products across in IKEA portfolio and the company renews its product range launching approximately 2000 new products every year. [2] The company is also increasing its presence in food and catering industries.
3. International market expansion strategy . The home improvement and furnishing chain has traditionally engaged in new market development in an aggressive manner. IKEA has11 franchisees operating in more than 500 locations in 63 countries. [3] Furthermore, The Swedish furniture chain has long-term plans to establish its firm presence in many developing countries.
4. Benefiting from strategic alliances . The global furniture retailer benefits from strategic alliances to a maximum extent. The formation of strategic alliances is placed at the core of IKEA business strategy. The list of the most successful collaborations include partnership with Apple to explore the possibilities of Augmented Reality as a tool for home-furnishing, partnership with LEGO for new product development and partnership with Adidas in knowledge sharing about customer behaviour. Experience and competency in the formation of strategic alliances can be specified as one of the most important IKEA competitive advantages.
Currently, IKEA is in the middle of transformation of its business model that made it successful in the global scale. Specifically, for many decades IKEA business strategy was largely based on having giant out-of-town warehouses, where shoppers pick their own furniture and then build it at home. But now it is looking increasingly at city-centre stores, online shopping, home delivery and assembly, and more radical ideas such as leasing furniture and selling on websites such as Alibaba. [4]
IKEA Group Report contains the above analysis of IKEA business strategy. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on IKEA . Moreover, the report contains analyses of IKEA leadership, organizational structure and organizational culture. The report also comprises discussions of IKEA marketing strategy, ecosystem and addresses issues of corporate social responsibility.
[1] The IKEA Concept (2019) IKEA, Available at: http://www.ikea.com/ms/en_US/this-is-ikea/the-ikea-concept/
[2] Sustainability Report FY 2021,IKEA
[3] Inter IKEA Holding B.V. Annual report FY21
[4] Milne, R. (2019) “Inter Ikea’s Torbjorn Loof: making the vision clear” Financial Times, Available at: https://www.ft.com/content/6b250c0a-2486-11e9-b329-c7e6ceb5ffdf
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Zaoui & co. (a): consigliere for high stakes m&a transactions.
Ikea’s global product strategy, ikea’s response to the problems faced in some countries, ikea’s success and appraisals at the beginning of every year.
The IKEAs future strategy is primarily to empower workers in spirit and remuneration. They have to increase the workforce in their company by a great percentage to ensure customers’ satisfaction all throughout their national and multinational companies worldwide. This includes treating each client and workers alike and as equal partners. One of the ways includes reducing hierarchy in the organization so that service delivery is fast, easy, and friendly.
It also plans to open 20 to 25 stores a year until the end of the decade, rising to 500 in 2020 from 338 today.
In order to develop this culture, IKEA has always focussed on the spirit of openness and freedom for every worker in the company. They are quick to admit when they are wrong, and work towards strategies that will enable them resolve any issue arising in their company. IKEA also recruits through values and not credentials, and organize capacity enhancement workshops for their employees. This is in order to maintain the spirit and culture at all levels of employment, through sharing values, strengths, weaknesses and opportunities in their global markets.
One of the IKEAs global strategies is to impose similar store design and product offering all over the world where they have opened stores. This includes price reduction, gives ways whenever a customer purchases a product, and also having the same corporate identity. Another global product strategy has been understanding the culture of each country and making products to suit that culture. Their products are always tailored on customer values and spirit, and this enables them to meet each needs through understanding their customers.
Most of the problems IKEA has been facing are in the management area. Some of the problems have not being able to customize a product to fit the cultural needs of certain countries. For example, they would produce a kitchen too small not to fit a Thanksgiving turkey, or a glass too small for wine as put by Richard Milne. However, IKEA responded swiftly by first apologizing to the communities and then went ahead to change the products so that they can suit local tastes.
If IKEA is to be successful, then the head of marketing has to make sure it appraises its customers and staff at the beginning of each year. This will include analyzing customers’ needs and making sure they meet those needs in the planning of each year. The marketing department should make sure that the culture of togetherness is upheld all the time. They should continue doing capacity enhancement for their staff each year to realize their weaknesses and strengths and improve on it in the New Year. This will ensure the maintenance of core values, mission and vision for the company each year as they begin.
IvyPanda. (2020, August 18). IKEA's Corporate Culture and Global Strategies. https://ivypanda.com/essays/ikeas-corporate-culture-and-global-strategies/
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IvyPanda . 2020. "IKEA's Corporate Culture and Global Strategies." August 18, 2020. https://ivypanda.com/essays/ikeas-corporate-culture-and-global-strategies/.
1. IvyPanda . "IKEA's Corporate Culture and Global Strategies." August 18, 2020. https://ivypanda.com/essays/ikeas-corporate-culture-and-global-strategies/.
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IvyPanda . "IKEA's Corporate Culture and Global Strategies." August 18, 2020. https://ivypanda.com/essays/ikeas-corporate-culture-and-global-strategies/.
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Are you looking for an IKEA case study according to Michael Porter’s Five Forces?
Porter’s IKEA case study shows one company’s success in fitting together business activities, business strategy, and operations. His analysis shows how the activities connect to create a uniquely competitive business.
Good strategies depend on the connection among many things. Fit means the value or cost of one activity is affected by the way other activities are performed – in other words, “synergy.” If the activities fit together, they each meaningfully contribute to the company’s increased value or lower cost, and they work strongly together. The IKEA case analysis below is one example of fit between different activities.
This is a clear departure from the (mistaken) idea of the one core competence. If strategy truly is based on one core competence, then it becomes relatively easy to replicate. More often, industries compete fiercely to control the one key “resource” – distribution channels, product portfolios – thus driving up cost. In reality, strong strategies are built on many unique activities that fit together to deliver the unique value proposition . Later, you’ll see how fit works well in the IKEA case study, despite certain trade-offs.
Fit arises in 3 ways . Keep this in mind when you read the IKEA case analysis:
Fit discourages rivals in a few ways:
Let’s examine a masterpiece of strategy in IKEA using the IKEA case study analysis. Their mission is to deliver stylish furniture at low prices. Their activities show clear trade-offs and strong fit:
Many of these activities fit together and reinforce each other to provide low-priced furniture. The furniture’s self-assembled design reduces manufacturing costs, storage costs, shipping costs from manufacturer, and shipping costs to customers. In turn, IKEA’s locations make the furniture’s self-assembled design even more effective.
Note how each activity is distinctly a trade-off : you either have furniture disassembled or not. You either have salespeople on the showroom floor or not. This is one of the aspects covered in the IKEA case study analysis.
Many traditional furniture retailers practice the inverse of IKEA’s value chain. If they tried to adopt one of IKEA’s activities, they’d find it less compatible with their own value chain, and so they’d gain very little of IKEA’s competitive advantage.
Note too that, in making these tradeoffs, IKEA is deliberately alienating customer groups – those who want furniture ordered seamlessly to their homes, who want nice salespeople to guide them through options, who want unique and fancifully designed furniture. The IKEA case study analysis shows how trade-offs can sometimes have big strategic payoffs.
To visualize the strength of fit between activities, place the activities on a map.
Here’s an example for IKEA:
A densely interconnected activity map is a good sign. A sparsely connected map shows weak strategy.
The activity map isn’t useful just for description of your current strategy. It can also be used for ideation for new strategies:
Porter’s IKEA case study is an example of a competitive business in a particular area of an industry. Porter’s IKEA case study shows business activities and strategy intersecting successfully.
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The global concern for e-waste necessitates comprehensive research, especially in educational institutions. This paper examines the case study of Ho Chi Minh City University of Technology (HCMUT), examining the generation, flow, and potential environmental impact of e-waste from 2024 to 2034. The research incorporates life cycle inventory (LCI) and material flow analysis (MFA) to estimate the volume and composition of obsolete electronic and electrical equipment (EEE). The study reveals a substantial increase in discarded devices at HCMUT, aligning with campus expansions. E-waste is estimated to generated 1.5 times from 16,792 kg in 2024 to 25,230 kg in 2034, emphasizing the urgency for effective waste management. MFA models delineate the flow of e-waste materials, emphasizing the need for targeted recycling measures. The examination of specific EEE types (projectors, computers, air conditioners, and lamps) reveals varying recyclability proportions, necessitating tailored management strategies. The absence of a specific e-waste management law in Vietnam, coupled with manual and unsafe processing practices, contributes to environmental and health hazards. The paper emphasizes the imperative for sustainable practices in higher education institutions (HEIs) and presents HCMUT's case as pivotal. The university's commitment to sustainable development is highlighted, underscoring the importance of integrating e-waste management into broader environmental strategies. As HEIs globally struggle with e-waste challenges, the study proposes a framework for effective management, incorporating LCI and MFA for informed decision-making. The results provide valuable insights for developing practical and sustainable e-waste management measures, guiding HEIs toward minimizing environmental impact while fostering a culture of responsible e-waste practices.
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We acknowledge Ho Chi Minh City University of Technology (HCMUT), VNU-HCM for this study.
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Faculty of Environment and Natural Resources, Ho Chi Minh City University of Technology (HCMUT), 268 Ly Thuong Kiet St., District 10, Ho Chi Minh City, Vietnam
T. Q. Thao, T. H. Hanh & N. N. Huy
Vietnam National University Ho Chi Minh City, Linh Trung Ward, Thu Duc District, Ho Chi Minh City, Vietnam
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TQT conceived, designed, and supervised the study and prepared the first draft manuscript. THH collected and processed data. NNH prepared and revised the whole manuscript. All authors read and approved the final manuscript.
Correspondence to N. N. Huy .
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Thao, T.Q., Hanh, T.H. & Huy, N.N. Sustainable e-waste management in higher education institutions: case study of Ho Chi Minh City University of Technology. Int. J. Environ. Sci. Technol. (2024). https://doi.org/10.1007/s13762-024-06012-w
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The Value of Localization for Businesses. IKEA's localization strategy serves as a valuable case study for businesses seeking to expand internationally. By striking an effective balance between standardization and adaptation, companies can enhance their brand relevance, increase customer satisfaction, and gain a competitive edge in global ...
They studied how IKEA made big changes for the future and wrote a business case about it. They explain how the company reworked its franchise agreements to ensure consistency among its global stores.
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IKEA is the world-leading design-sell and ready-to-assemble furniture, applicants. and accessories retailer, it was established in Sweden in 1948 and grown since then. to have 433 stores, 211,000 ...
Nevertheless, IKEA is an example of a highly profitable global company. This paper will cover the benefits of globalization that IKEA experienced, the importance of cross-cultural understanding, and the limits of the global market. Get a custom case study on IKEA Globalization Strategy Benefits and Limits Case Study. 186 writers online.
IKEA Global Marketing Strategy 2024: A Case Study. By Nina Sheridan. Since its founding as a mail-order business in the late 1940s in Sweden, IKEA has grown to become a global retail giant with 422 stores in over 50 markets. However, the company faced challenges in 2017 with the passing of its founder and the rise of online shopping.
Three years ago, IKEA Retail (Ingka Group) hired Barbara Martin Coppola — a veteran of Google, Samsung, and Texas Instruments — to guide the company through a digital transformation and help ...
The purpose of the IKEA Sustainability Strategy, launched in 2018 is to inspire, activate and lead us in our planning, decision-making and goal setting so that we together can achieve the big positive changes we want to see for the IKEA business, and in the world. The strategy identifies three major sustainability challenges that are highly ...
Without a doubt, IKEA is a household name, and that level of recognition is rare. To put things into more quantifiable terms, in 2020, the IKEA brand was worth almost $18 billion. This level of brand recognition means that IKEA is ingrained in the global culture as the first stop for affordable furniture.
Case overview/synopsis. The case study enables discussion about the global strategy of a well-established multi-national company, IKEA in an emerging market. IKEA is a well-established and well-known brand in the international market in furniture retailing. It has decided to make a debut in India in 2017 with its first store in Hyderabad.
Our in-depth case study focussed on IKEA, a global home-furnishing retail company, and its work with developing an understanding of digitalisation. IKEA is a particularly interesting case that has attracted practitioners seeking a benchmark in a hitherto successful business model (e.g. Jonsson and Elg, 2006 ; Edvardsson and Enquist, 2011 ; Burt ...
Abstract and Figures. IKEA is the world-leading design-sell and ready-to-assemble furniture, applicants and accessories retailer, it was established in Sweden in 1948 and grown since then to have ...
Ikea Marketing Strategy 2024: A Case Study. Founded in 1943, Ikea operates 422 stores in 50+ markets. The favored furniture brand has an impressively wide customer base, with nearly 70% of its stores in Europe. Ikea added 19 stores last year, including its first in India. The Ikea marketing strategy includes some of the most iconic logos ...
Capdevielle, L., Li, M., & Nogal, P. (2007). A creation of competitive advantage by using differentiation of company´ s strategy actions: The case study of IKEA Sweden with experiences on Chinese and French markets. Edvardsson, B., & Enquist, B. (2011). The service excellence and innovation model: lessons from IKEA and other service frontiers.
Highlights. Explores the global sourcing process from an interaction perspective through a case study of IKEA. Global sourcing process is influenced by interactions amongst supply network actors. Global sourcing strategy of one actor may influence the sourcing strategies of other actors. Global sourcing decisions need to be understood and coordinated across global supply networks.
Case overview/synopsis The case study enables discussion about the global strategy of a well-established multi-national company, IKEA in an emerging market. IKEA is a well-established and well-known brand in the international market in furniture retailing. It has decided to make a debut in India in 2017 with its first store in Hyderabad.
The formation of strategic alliances is placed at the core of IKEA business strategy. The list of the most successful collaborations include partnership with Apple to explore the possibilities of Augmented Reality as a tool for home-furnishing, partnership with LEGO for new product development and partnership with Adidas in knowledge sharing ...
Describes the innovative strategic and organizational changes Kamprad made to achieve success. In particular, focuses on his unique vision and values and the way they have become institutionalized as IKEA's binding corporate culture. The trigger issue revolves around whether this vital "corporate glue" can survive massive expansion into the ...
IKEA's global product strategy. One of the IKEAs global strategies is to impose similar store design and product offering all over the world where they have opened stores. This includes price reduction, gives ways whenever a customer purchases a product, and also having the same corporate identity. Another global product strategy has been ...
Let's examine a masterpiece of strategy in IKEA using the IKEA case study analysis. Their mission is to deliver stylish furniture at low prices. Their activities show clear trade-offs and strong fit: Furniture is disassembled and requires self-assembly, reducing assembly cost and allowing storage in compact boxes.
The global concern for e-waste necessitates comprehensive research, especially in educational institutions. This paper examines the case study of Ho Chi Minh City University of Technology (HCMUT), examining the generation, flow, and potential environmental impact of e-waste from 2024 to 2034. The research incorporates life cycle inventory (LCI) and material flow analysis (MFA) to estimate the ...