case study ikea

• SUGGESTED TOPICS
• The Magazine
• Newsletters
• Managing Yourself
• Managing Teams
• Work-life Balance
• The Big Idea
• Data & Visuals
• Reading Lists
• Case Selections
• HBR Learning
• Topic Feeds
• Account Settings
• Email Preferences

Inside IKEA’s Digital Transformation

• Thomas Stackpole

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.

• Thomas Stackpole is a senior editor at Harvard Business Review.

Partner Center

Table of Contents

Ikea target audience, ikea marketing channels, ikea marketing strategy, ikea marketing strategy 2024: a case study.

Become a Certified Marketing Expert in 8 Months

Ikea serves the unique functional needs of each target audience, with special attention to 16-34-year-old adults. It has solutions for:

• Single people not living at home
• Newly married couples
• Families with the youngest child under six
• Older married couples with dependent children
• No children families
• Labor force
• Professionals 

Thus, it uses the following types of product positioning :

• Mono-segment positioning. It appeals to the needs and wants of a single customer segment that is cost-conscious and prefers value for money.
• Adaptive positioning. It believes in periodically repositioning products and services to adapt to changes in customer preferences. Its Swedish furniture chain considers the dynamic nature of customer preferences. For instance, its latest products reflect increasing minimalism on the global scale. 

Ikea utilizes the power of the following marketing channels: 

• Mobile Application
• WebEngage: Email, SMS, and Whatsapp Marketing
• Social Media
• Telecalling
• Commercials

The Ikea marketing strategy contributes majorly to its success because it's original, imaginative, and distinctive while maintaining a transparent value proposition.

A Creative, Consistent Brand Theme

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. 

Emphasizing Affordability and Sustainability 

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.

Sponsorship and Influencers 

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

Exceptional In-store Experience

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

Learn About the Purdue Digital Marketing Bootcamp

Website and Mobile Application Marketing

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 SEO (Search Engine Optimization)

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 SMM (Social Media Marketing)

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

Content Marketing

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 

Ikea Marketing Strategy bears testimony to a well-thought and structured marketing venture. Sign-up for our Digital Marketing Specialist and learn more about marketing case studies published by Harvard Business. You will be taught by experts from facebook and Purdue University. Sign-up for the course TODAY!

Our Digital Marketing Courses Duration And Fees

Digital Marketing Courses typically range from a few weeks to several months, with fees varying based on program and institution.

Recommended Reads

Digital Marketing Career Guide: A Playbook to Becoming a Digital Marketing Specialist

A Case Study on Netflix Marketing Strategy

12 Powerful Instagram Marketing Strategies To Follow in 2021

Introductory Digital Marketing Guide

A Case Study on Apple Marketing Strategy

What is Digital Marketing and How Does It Work?

Get Affiliated Certifications with Live Class programs

Imt ghaziabad digital marketing program.

• Digital Marketing certificate from IMT Ghaziabad
• IMT Ghaziabad Associate Alumni status
• PMP, PMI, PMBOK, CAPM, PgMP, PfMP, ACP, PBA, RMP, SP, and OPM3 are registered marks of the Project Management Institute, Inc.

Shortform Books

The World's Best Book Summaries

IKEA Case Study: IKEA’s Genius Business Strategy

This article is an excerpt from the Shortform summary of "Understanding Michael Porter" by Joan Magretta. Shortform has the world's best summaries of books you should be reading.

Like this article? Sign up for a free trial here .

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.

IKEA’s Fit Between Activities

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:

• Example: many of Southwest’s activities are directionally pointed toward lowering cost and increasing convenience.
• When activities are inconsistent, they cancel each other out.
• Netflix’s large catalogue gives more chances to collect data points to make better recommendations.
• IKEA’s room displays substitute for sales associates, thus lowering cost.
• Dell will preload software onto PCs, substituting for the customer’s IT department.

Fit discourages rivals in a few ways:

• With a large range of activities, it becomes unclear which of the company’s activities are most valuable to replicate.
• As a simplistic example, say there are 5 activities that give a company a competitive advantage. If the chance of replicating one activity is 90%, then the chance of replicating all of them is 0.9^5, or 62%.
• An activity that fits one value chain can punish a different value chain, if it lacks synergies with the other activities or contradicts them.
• Activities with fit make it easier to see where the weak link in the chain is (think about this in the IKEA case analysis later).

The IKEA Case Study

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:

• Assembling furniture yourself also seems to increase your enjoyment of it, maybe because of endowment effect. 
• Compact boxes reduce freight shipping costs from the manufacturer.
• This means time from buying to having furniture in your house is much faster than shipped furniture.
• IKEA stores are huge warehouses in large suburban locations with highway access. With large parking lots and loading zones, they allow customers to self-service and deliver their own furniture.
• IKEA showrooms have minimal staff, with the entire inventory laid out for buyers to peruse.
• IKEA cafeterias are self-service and customers are encouraged to bus their own trays.
• IKEA designs its own products, allowing trade-offs in styling and cost.
• Furniture has few customization options, allowing production in bulk and bargaining at scale.
• A narrower catalogue also allows IKEA to keep its warehouses fully stocked, instead of requiring shipping.

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.

Activity System Map

To visualize the strength of fit between activities, place the activities on a map.

• Start by placing the key components of the value proposition.
• Make a list of the activities most responsible for competitive advantage
• Add each activity to the map. Draw lines wherever there is fit: when the activity contributes to value proposition, or when two activities affect each other

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:

• Can you improve fit between activities? 
• Can you find ways for an activity to substitute for another?
• Can you find new activities or enhancements to what you already do?
• Are there new products or features you can offer because of your activity map, that rivals will find difficult to emulate?

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.

———End of Preview———

Like what you just read read the rest of the world's best summary of joan magretta's "understanding michael porter" at shortform ..

Here's what you'll find in our full Understanding Michael Porter summary :

• How Porter's famous Five Forces help you analyze every industry
• How IKEA, Southwest Airlines, and Zara have ironclad, defensible strategies
• Why the best companies reject opportunities to focus on what they know
• ← 5 Simple Steps: How to Do an Industry Analysis
• Likeability Lies: You’re Being Fooled by Charm and Charisma →

Carrie Cabral

Carrie has been reading and writing for as long as she can remember, and has always been open to reading anything put in front of her. She wrote her first short story at the age of six, about a lost dog who meets animal friends on his journey home. Surprisingly, it was never picked up by any major publishers, but did spark her passion for books. Carrie worked in book publishing for several years before getting an MFA in Creative Writing. She especially loves literary fiction, historical fiction, and social, cultural, and historical nonfiction that gets into the weeds of daily life.

You May Also Like

3 Customer Experience Strategies That Hit the Spot

Writing a Call to Action Email: Be Direct

Why Lithium Is So Crucial (and How the US Is Falling Behind)

PUA Gurus: 7 Top Pickup Artists From The Game

A Guide to Finding Your Target Audience in Marketing

It Starts with Why: Key Takeaways from Simon Sinek

Leave a reply cancel reply.

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

Brought to you by:

What IKEA Do We Want?

By: Juan Alcacer, Cynthia A. Montgomery, Emilie Billaud, Vincent Dessain

In 2018, Swedish furniture maker IKEA was undergoing a significant transformation. Challenged by the rise of online shopping and changing consumer behavior, and mourning the death of its founder, the…

• Length: 34 page(s)
• Publication Date: Jun 16, 2020
• Discipline: Strategy
• Product #: 720429-PDF-ENG

What's included:

• Educator Copy

$4.95 per student

degree granting course

$8.95 per student

non-degree granting course

Get access to this material, plus much more with a free Educator Account:

• Access to world-famous HBS cases
• Up to 60% off materials for your students
• Resources for teaching online
• Tips and reviews from other Educators

Already registered? Sign in

• Student Registration
• Non-Academic Registration
• Included Materials

In 2018, Swedish furniture maker IKEA was undergoing a significant transformation. Challenged by the rise of online shopping and changing consumer behavior, and mourning the death of its founder, the Company's top executives knew they had to step out of their comfort zones and embrace new strategic initiatives to stay relevant. But which initiatives, executed where, when and how, would enable IKEA to achieve its goals in a way that was profitable while creating an IKEA they would want to pass on to the next generation of co-workers and customers?

Learning Objectives

Strategy Identification and Evaluation: Learn to identify the key elements of a firm's strategy, and why it is effective or ineffective. Students are asked to identify IKEA's historic strategy, its key supporting elements, and what made it successful for so long. Added-Value: Learn to de-compose a firm's added-value. Did IKEA increase customers' willingness to pay, reduce the total cost of supply, or both? How did it do it? Environment and Competitive Analysis: Understand the key factors in the external landscape that impact a firm's success and the ways those factors can change over time. What is notable about the macro environment, the furniture industry, and consumer behavior and preferences at the time IKEA's initial strategy was developed? Globally, what has changed? What are the implications for IKEA? Change at an Iconic Firm: Iconic firms are set apart by their distinctiveness. Often, their strategies are developed over years and reflected in a host of unique, interconnected elements, a system of advantage. This case gives students an opportunity to consider when, as a leader, you might want to change a strategy, or key elements of a strategy; the possible risks and benefits of doing so; and how one might want to proceed.

Jun 16, 2020

Discipline:

Geographies:

China, India, Netherlands, Sweden, United States

Industries:

Retail and consumer goods

Harvard Business School

720429-PDF-ENG

We use cookies to understand how you use our site and to improve your experience, including personalizing content. Learn More . By continuing to use our site, you accept our use of cookies and revised Privacy Policy .

IKEA U.S. takes equity, diversity and inclusion to the next level

Furniture retailer builds ambitious new strategies into its business plan.

5-MINUTE READ

Call for change

A responsibility to build a better society.

For many years, the world’s largest furniture retailer, IKEA, has prioritized efforts to promote equity, diversity and inclusion (ED&I). For example, the company has partnered with social entrepreneurs, creating thousands of jobs for under-represented groups around the world, including a project with Syrian refugees to develop textile products for sale in IKEA stores. Additionally, through employee development and human resources programs across the globe, IKEA has successfully increased the percentage of women in leadership positions,  reaching 50% in 2020 .

Even with its existing achievements in ED&I, IKEA wanted to do more.

IKEA U.S. asked Accenture to help assess its current state of ED&I, define an ED&I vision, and develop a comprehensive plan to accelerate gains in this area. The aim was to implement an effective approach that the company could replicate in other countries. IKEA U.S. was particularly interested in setting and pursuing race and ethnicity goals as well as increasing the diversity of its leadership.

With increasing inequality due to climate change and other global challenges, we recognized that we have a responsibility to help build a society that provides equal opportunities for all.

STEPHANI “STEVIE” LEWIS / Chief Diversity Officer, IKEA U.S.

When tech meets human ingenuity

Improving maturity in ed&i.

We used our maturity model to characterize the current state of ED&I at IKEA U.S. This model measures the extent to which ED&I is embedded in a company in specific areas and identifies opportunities for improvement.

The team inputted the results of several activities into the model:

• Interviews with IKEA U.S. departments:  For instance, interviews with communications staff focused on understanding how ED&I values are embedded into the communication strategy.
• A survey of executives at IKEA U.S.  gathering insights into the current state of ED&I and their aspirations for the company.
• Focus groups with IKEA U.S. co-workers  to explore their experiences working at IKEA and gather their perspectives on the company’s ED&I maturity.

Using the model’s results and additional research on ED&I at eight other retailers, Accenture compared the ED&I maturity of IKEA U.S. with that group. We also compared human resources data for IKEA U.S. employees with U.S. Census data in various geographic areas, revealing the diversity gap between IKEA and local Census populations.

A valuable difference

A roadmap for greater equality.

We presented the results from our maturity assessment in a facilitated workshop with the IKEA U.S. ED&I staff and leadership team. The participants translated the results into a vision to guide action and several ED&I strategies, such as increasing underrepresented groups at all levels of the organization. They also developed 30 recommendations to be integrated into the 2023 business plan for IKEA U.S., such as determining ED&I performance indicators.

Since Accenture completed the project, the ED&I team has asked leaders at each U.S. store to implement ED&I initiatives that support the new vision and strategies while serving specific store needs. These include an Equity Council, an accountability group led by CEO Javier Quiñones, and a pilot program to support diverse talent with leadership training and mentorship. IKEA U.S. has also built a dashboard that tracks ED&I indicators at stores, allowing for progress reports to be shared with executives.

“We now have the data and the tools to take ED&I to the next level,” said Lewis.

Exploring digitalisation at IKEA

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.

Design/methodology/approach

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.

Originality/value

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.

• Digitalisation
• Exploration

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

1. Introduction

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.

2. Literature review: exploring digitalisation in retail

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.

3. Methodology

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.

4. Exploring digitalising: the IKEA way

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 .

4.1 Interpreting digitalisation

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.

4.2 Interrelating digitalisation with established business ideas

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.

4.3 Integrating digitalisation into a business model

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).

5. Conclusion

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

Exploring digitalization in relation to an established business model

Benner , M.J. and Tushman , M.L. ( 2003 ), “ Exploitation, exploration, and process management: the productivity dilemma revisited ”, Academy of Management Review , Vol. 2 , pp. 238 - 256 .

Berends , H. , Smits , A. , Reymen , I. and Podoynitsyna , K. ( 2016 ), “ Learning while (re) configuring: business model innovation processes in established firms ”, Strategic Organization , Vol. 14 No. 3 , pp. 181 - 219 .

Blom , A. ( 2019 ), “ One size fits all?: Understanding shopper responses towards integration activities in omnichannel retailing ”, Dissertation , Stockholm School of Economics , Stockholm .

Burt , S. , Johansson , U. and Dawson , J. ( 2016 ), “ International retailing as embedded business models ”, Journal of Economic Geography , Vol. 16 No. 3 , pp. 715 - 747 .

Burt , S. , Dawson , J. , Johansson , U. and Hultman , J. ( 2021 ), “ The changing marketing orientation within the business model of an international retailer – IKEA in China over 10 years ”, The International Review of Retail, Distribution and Consumer Research , Vol. 31 No. 2 , pp. 229 - 255 .

Caboni , F. and Hagberg , J. ( 2019 ), “ Augmented reality in retailing: a review of features, applications and value ”, International Journal of Retail and Distribution Management , Vol. 47 No. 11 , pp. 1125 - 1140 .

Charmaz , K. ( 2014 ), Constructing Grounded Theory , Sage Publications , Thousand Oaks, CA .

Dennis , C. , Michon , R. , Brakus , J.J. , Newman , A. and Alamanos , E. ( 2012 ), “ New insights into the impact of digital signage as a retail atmospheric tool ”, Journal of Consumer Behavior , Vol. 11 , pp. 454 - 466 .

Doz , Y. ( 2011 ), “ Qualitative research for international business ”, Journal of International Business Studies , Vol. 42 No. 5 , pp. 582 - 590 .

Dubois , A. and Gadde , L.-E. ( 2002 ), “ Systematic combining: an abductive approach to case research ”, Journal of Business Research , Vol. 55 No. 7 , pp. 553 - 560 .

Dyer , J.W.G. and Wilkins , A.L. ( 1991 ), “ Better stories, not better constructs, to generate better theory: a rejoinder to eisenhardt ”, Academy of Management Review , Vol. 16 No. 3 , pp. 613 - 619 .

Edvardsson , B. and Enquist , B. ( 2011 ), “ The service excellence and innovation model: lessons from IKEA and other service frontiers ”, Total Quality Management and Business Excellence , Vol. 22 No. 5 , pp. 535 - 551 .

Eisenhardt , K.M. ( 1989 ), “ Building theory from case study research ”, Academy of Management Review , Vol. 14 No. 4 , pp. 532 - 550 .

Frasquet , M. , Brusset , X. , Kotzab , H. and Teller , C. ( 2021 ), “ Guest editorial ”, International Journal of Retail and Distribution Management , Vol. 49 No. 7 , pp. 813 - 816 .

Friesl , M. and Larty , J. ( 2018 ), “ The exploration phase of replication strategies: the role of autonomous action for reverse knowledge flows ”, British Journal of Management , Vol. 29 No. 3 , pp. 411 - 427 .

Fuentes , C. , Bäckström , K. and Svingstedt , A. ( 2017 ), “ Smartphones and the reconfiguration of retailscapes: stores, shopping, and digitalization ”, Journal of Retailing and Consumer Services , Vol. 39 , pp. 270 - 278 .

Garnier , M. and Poncin , I. ( 2019 ), “ Do enriched digital catalogues offer compelling experiences, beyond websites? A comparative analysis through the IKEA case ”, Journal of Retailing and Consumer Services , Vol. 47 , pp. 361 - 369 .

Ghauri , P. and Grönhaug , K. ( 2002 ), Research Methods in Business Studies: A Practical Guide , Financial Times Prentice Hall , Harlow .

Grewal , D. , Ahlbom , C.P. , Beitelspacher , L. , Noble , S.M. and Nordfält , J. ( 2018 ), “ In-store mobile phone use and customer shopping behavior: evidence from the field ”, Journal of Marketing , Vol. 82 No. 4 , pp. 102 - 106 .

Grewal , D. , Noble , S.M. , Roggeveen , A.L. and Nordfalt , J. ( 2020 ), “ The future of in-store technology ”, Journal of the Academy of Marketing Science , Vol. 48 , pp. 96 - 113 .

Hagberg , J. , Sundstrom , M. and Egels-Zandén , N. ( 2016 ), “ The digitalization of retailing: an exploratory framework ”, International Journal of Retail Distribution Management , Vol. 44 No. 7 , pp. 694 - 712 .

Hagberg , J. , Jonsson , A. and Egels-Zandén , N. ( 2017 ), “ Retail digitalization: implications for physical stores ”, Journal of Retailing and Consumer Services , Vol. 39 , pp. 264 - 269 .

Hänninen , M. , Smedlund , A. and Mitronen , L. ( 2018 ), “ Digitalization in retailing: multi-sided platforms as drivers of industry transformation ”, Baltic Journal of Management , Vol. 13 No. 2 , pp. 152 - 168 .

Hänninen , M. , Mitronen , L. and Kwan , S.K. ( 2019 ), “ Multi-sided marketplaces and the transformation of retail: a service systems perspective ”, Journal of Retailing and Consumer Services , Vol. 49 , pp. 380 - 388 .

Hänninen , M. , Kwan , S.K. and Mitronen , L. ( 2021 ), “ From the store to omnichannel retail: looking back over three decades of research ”, The International Review of Retail, Distribution and Consumer Research , Vol. 31 No. 1 , pp. 1 - 35 .

He , Z.-L. and Wong , P.-K. ( 2004 ), “ Exploration vs. exploitation: an empirical test of the ambidexterity hypothesis ”, Organization Science , Vol. 15 No. 4 , pp. 481 - 494 .

Hedman , J. and Kalling , T. ( 2003 ), “ The business model concept: theoretical underpinnings and empirical illustrations ”, European Journal of Information Systems , Vol. 12 No. 1 , pp. 49 - 59 .

Hellström , D. and Nilsson , F. ( 2011 ), “ Logistics-driven packaging innovation: a case study at IKEA ”, International Journal of Retail and Distribution Management , Vol. 39 No. 9 , pp. 638 - 657 .

Hultman , J. , Johansson , U. , Wispeler , A. and Wolf , L. ( 2017 ), “ Exploring store format development and its influence on store image and store clientele – the case of IKEA's development of an inner-city store format ”, The International Review of Retail, Distribution and Consumer Research , Vol. 27 No. 3 , pp. 227 - 240 .

Huré , E. , Picot-Coupey , K. and Ackermann , C.L. ( 2017 ), “ Understanding omni-channel shopping value: a mixed-method study ”, Journal of Retailing and Consumer Services , Vol. 39 , pp. 314 - 330 .

IKEA ( 2015 ), “ Future IKEA store pre-study directive ”, Internal document .

Inigo , E.A. , Albareda , L. and Ritala , P. ( 2017 ), “ Business model innovation for sustainability: exploring evolutionary and radical approaches through dynamic capabilities ”, Industry and Innovation , Vol. 24 No. 5 , pp. 515 - 542 .

Inter IKEA Systems ( 2019 ), available at: http://franchisor.ikea.com/index.html ( accessed 09 July 2019 ).

Jäger , A.K. and Weber , A. ( 2020 ), “ Increasing sustainable consumption: message framing and in-store technology ”, International Journal of Retail and Distribution Management , Vol. 48 No. 8 , pp. 803 - 824 .

Jocevski , M. , Arvidsson , N. , Miragliotta , G. , Ghezzi , A. and Mangiaracina , R. ( 2019 ), “ Transitions towards omni-channel retailing strategies: a business model perspective ”, International Journal of Retail and Distribution Management , Vol. 47 No. 2 , pp. 79 - 93 .

Jonsson , A. ( 2007 ), Knowledge Sharing Across Borders - A Study in the IKEA World , Lund Business Press , Lund , Vol. 97 .

Jonsson , A. and Elg , U. ( 2006 ), “ Knowledge and knowledge sharing in retail internationalization: IKEA's entry into Russia ”, International Review of Retail, Distribution and Consumer Research , Vol. 16 No. 2 , pp. 239 - 256 .

Jonsson , A. and Foss , N.J. ( 2011 ), “ International expansion through flexible replication: learning from the internationalization experience of IKEA ”, Journal of International Business Studies , Vol. 42 , pp. 1079 - 1102 .

Langley , A. ( 1999 ), “ Strategies for theorizing from process data ”, Academy of Management Review , Vol. 24 No. 4 , pp. 691 - 710 .

Leeflang , P.S.H. , Verhoef , P.C. , Dahlström , P. and Freundt , T. ( 2014 ), “ Challenges and solutions for marketing in a digital era ”, European Management Journal , Vol. 32 , pp. 1 - 12 .

March , J.G. ( 1991 ), “ Exploration and exploitation in organizational learning ”, Organization Science , Vol. 2 No. 1 , pp. 71 - 87 .

McCracken , G. ( 1988 ), The Long Interview , Sage , Newbury Park, CA .

Pantano , E. and Gandini , A. ( 2018 ), “ Shopping as a ‘networked experience’: an emerging framework in the retail industry ”, International Journal of Retail and Distribution Management , Vol. 46 No. 7 , pp. 690 - 704 .

Patton , M.Q. ( 1980 ), Qualitative Evaluation Methods , Sage , Beverly Hills, California .

Picot-Coupey , C. , Huré , E. and Piveteau , L. ( 2016 ), “ Channel design to enrich customers' shopping experiences: synchronizing clicks with bricks in an omni-channel perspective - the direct optic case ”, International Journal of Retail and Distribution Management , Vol. 44 No. 3 , pp. 336 - 368 .

Ritter , M. and Lettl , C. ( 2018 ), “ The wider implications of business-model research ”, Long Range Planning , Vol. 51 No. 1 , pp. 1 - 8 .

Roggeveen , A.L. and Sethuraman , R. ( 2020 ), “ Customer-interfacing retail technologies in 2020 & beyond: an integrative framework and research directions ”, Journal of Retailing , Vol. 96 No. 3 , pp. 299 - 309 .

Rosengren , S. , Lange , F. , Hernant , M. and Blom , A. ( 2018 ), “ Catering to the digital consumer: from Multichannel to omnichannel retailing ”, in Andersson , P. , Movin , S. , Mähring , M. , Teigland , R. and Wennberg , K. (Eds), Managing Digital Transformation , SSE Institute for Research , Stockholm , pp. 97 - 113 .

Saebi , T. , Lien , L. and Foss , N.J. ( 2017 ), “ What drives business model adaptation? The impact of opportunities, threats and strategic orientation ”, Long Range Planning , Vol. 50 , pp. 567 - 581 .

Salzer , M. ( 1994 ), Identity across Border: A Study in the ‘IKEAworld’, Linköping Studies in Management and Economics 27 , Linköping University , Linköping .

Scholz , J. and Duffy , K. ( 2018 ), “ We ARe at home: how augmented reality reshapes mobile marketing and consumer-brand relationships ”, Journal of Retailing and Consumer Services , Vol. 44 , pp. 11 - 23 .

Silverman , D. ( 2006 ), Interpreting Qualitative Data , Sage , London .

Snihur , Y. and Wiklund , J. ( 2019 ), “ Searching for innovation: product, process, and business model innovations and search behavior in established firms ”, Long Range Planning , Vol. 52 No. 3 , pp. 305 - 325 .

Sorescu , A. , Frambach , R.T. , Singh , J. , Rangaswamy , A. and Bridges , C. ( 2011 ), “ Innovations in retail business models ”, Journal of Retailing , Vol. 87 , Supplement , pp. S3 - S16 .

Tarnovskaya , V. , Elg , U. and Burt , S. ( 2008 ), “ The role of corporate branding in a market driving strategy ”, International Journal of Retail & Distribution Management , Vol. 36 No. 11 , pp. 941 - 965 .

Teece , D.J. ( 2018 ), “ Business models and dynamic capabilities ”, Long Range Planning , Vol. 51 , pp. 40 - 49 .

Vahlne , J.-E. and Jonsson , A. ( 2017 ), “ Ambidexterity as a dynamic capability in the globalization of the multinational business enterprise (MBE): case studies of AB Volvo and IKEA ”, International Business Review , Vol. 26 No. 1 , pp. 57 - 70 .

Verhoef , P.C. , Kannan , P.K. and Inman , J.J. ( 2015 ), “ From multi-channel retailing to omni-channel retailing: introduction to the special issue on multi-channel retailing ”, Journal of Retailing , Vol. 91 No. 2 , pp. 174 - 181 .

Winter , S.G. and Szulanski , G. ( 2001 ), “ Replication as strategy ”, Organization Science , Vol. 12 No. 6 , pp. 730 - 743 .

Wolpert , S. and Roth , A. ( 2020 ), “ Development of a classification framework for technology based retail services: a retailers' perspective ”, International Review of Retail, Distribution and Consumer Research , Vol. 30 No. 5 , pp. 498 - 538 .

Yin , R.K. ( 2003 ), Case Study Research: Design and Methods , 3 ed. , Sage Publications , Thousand Oaks .

Acknowledgements

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.

Corresponding author

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.

Related articles

We’re listening — tell us what you think, something didn’t work….

Report bugs here

All feedback is valuable

Please share your general feedback

Join us on our journey

Platform update page.

Visit emeraldpublishing.com/platformupdate to discover the latest news and updates

Questions & More Information

Answers to the most commonly asked questions here

Select Clients

Defining and executing the vision for the next-generation customer experience

What we did

• Vision for transformation
• First e-commerce app
• Global site redesign
• Redefined in-store digital
• Built a design system

Growth in e-commerce in 3 years

Increase in online sales in 2020

Star rating, up from 2.5

IKEA’s footprint is vast—over two billion people shop a range of 12,000 products in 500+ sales locations in 59 countries and online. But as digital becomes increasingly important—especially in the age of Covid—the retail behemoth needed to modernize and transform their business.

As their digital agency of record, Work & Co defined the vision of a future where technology holistically enhances the customer experience at every interaction. Of course, we didn’t stop there. We also helped bring it to life.

Our first challenge—creating IKEA’s first e-commerce-enabled mobile app—took just 6 months from concept to MVP. From there, we took on the entire multi-channel ecosystem of digital touchpoints, including the website, internal tools, and the stores.

The new experience led to greater efficiency, richer engagements, and incremental revenue.

Recognition & Awards

“It is a completely new experience. The app is combined with the store." Read more

"A bona-fide, full-featured shopping app." Read more

"The approach is sound and offers much to learn from." Read more

Shortlist, Design Week Awards, Best App Design. Read more

Winner, 6X Lovie Awards. Read more

Winner, 3X Platinum Awards. Read more

Finalist, FastCo Innovation by Design Awards, Data Design. Read more

4 Big Takeaways

Defining a vision for product and partnership.

Overhauling web & mobile commerce

A unifying design system

Redefining in-store touch points, bringing ikea into the “now”.

Already a worldwide leader in brick-and-mortar retail, IKEA’s leadership partnered with Work & Co to accelerate their digital transformation. Our team’s first task was to develop a cohesive and tech-savvy vision and strategy around which the global organization could align. We began a months-long process of research and brainstorming and problem solving.

From idea to execution

Once we’d identified effective solutions to the challenges, we drafted a new vision for the customer journey intricately detailed in animations and prototypes, which helped ensure all parties were aligned on the plan: aspirational and sophisticated, but also attainable. Together with IKEA, we established a strategy to work as partners with internal teams, sharing design and development labor, openly exchanging ideas and feedback, and even providing guidance on IKEA’s hiring strategies.

Overhauling web & mobile commerce

Personalized inspiration.

To bring IKEA’s famed catalog to life for the digitally native, the app leads with inspiration. Customers browse the app the same way they would IKEA’s showroom—imagining how products complement their home or aesthetic—but with technology enhancing the journey.

A new AI-powered API suggests images based on a customer’s interests and evolving taste. Our cross-platform CMS allows editors to create content once, then deploy them across both the app and IKEA.com. And to bring over 760 collections to life, our team of writers built new engaging copy that scales no matter the country.

Category-specific experiences

From mattresses to lightbulbs to kitchens and beyond, the variety of products IKEA offers are presented and sold in a myriad of ways. The flexible digital designs enable a shopping experience optimized by category and use. Inspiration galleries, planners, guides, and other content can easily be added to help shoppers find their perfect option, plus accessories and add-ons to complete the look. With around 250,000 SKUs per market, this aspect of our work was essential.

Ethical data usage

Industry-leading contextual digital tools raise the bar on data transparency and give customers control over how data is collected, stored, and used. Customers can choose if and how the company uses information—such as their IKEA browsing history, previous purchases, and product preferences—to inform product recommendations in its app, and eventually on its website. To aid explanation of these abstract concepts to users, we explored evolving the iconic IKEA assembly character as an approachable guide.

Consistency at scale

To address the challenge of keeping consistent design across all of the different touchpoints, we worked with IKEA to build a new design system. Skapa is a single source of truth for global button styles, iconography, interaction patterns, and motion libraries brought to life in one React Storybook component library. Components are strategically added and removed over time, meaning the design system is treated as a product that will never stop evolving, while simultaneously keeping the brand universally aligned.

Branding and tone of voice

From a custom icon set to branded price presentation and rigorous color guidelines, each component infuses the IKEA branding into our digital platforms. To complete our design system, we also established a new, digital-first tone of voice with dynamic writing guidelines. Now, writers, designers, motion designers, and developers have everything they need to produce new work across the digital ecosystem.

Integrated accessibility

By including best practices for accessibility into design components, we ensure our digital products are natively inclusive. Solutions are defined once, and repeated throughout development.

Global adoption

A design system is only successful if it’s used globally by an organization. That’s why we helped IKEA establish strategies for training tailored to user types and knowledge levels, advocating for adoption, maintenance and upkeep of components and documentation, and hiring a team dedicated to its management. These critical pieces helped to ensure long term success.

New ways to shop

Part of IKEA’s transformation includes the introduction of new store formats—spaces dedicated to browsing, planning, and ordering—in addition to the traditional locations. The new ecosystem Work & Co delivered integrates digital and physical across all stores in new ways, enhancing the experience for both shoppers and co-workers. New digital tools and features provide more relevant product browsing and interactions, personalized recommendations and shopping lists, and seamless checkout processes—all tailored to the shoppers’ preferences and needs.

Digital touchpoints are integrated to bridge the omni-channel experience. In-store features give users the ability to scan products, explore options and accessories, then skip the checkout line while in the physical store, reducing customer stress and simplifying the path to purchase.

We helped create Upptäcka, a replacement for the aging digital in-store installations. These new kiosks integrate with each other and the overall IKEA digital ecosystem, reducing one-off solutions. Upptäcka adapts to each store and location, making it the most contextually relevant digital touchpoint at IKEA.

Employee tools

Fixa is a task management app designed to digitize time-consuming paper-based processes, making co-workers more efficient and effective, freeing up time to focus on customers. Co-workers have called it “the best product IKEA has ever given them.”

Partner with us

Work & Co, part of Accenture Song, is trusted by the world’s leading companies to drive growth and bring innovative solutions to market. Together we can build and scale your core digital products.

Please enter your name

Please enter your company

Please enter your title/role

Please enter your email

Please enter your answer

Please enter your location

More Case Studies

Privacy policy

[email protected]

[email protected]

[email protected]

231 Front St., 5th Fl.

Brooklyn, NY 11201 

+1 855 967 5700

2709 SE Ankeny St

Portland, OR 97214

Rua Purpurina, 400, Sala 02-108

Vila Madalena, São Paulo, SP

+55 11 91067 8995

Rua Aníbal de Mendonça, 27, 5º andar

Ipanema, Rio de Janeiro, RJ

+55 21 99960 7575

39 Knez Mihailova St.

11000 Belgrade 

+381 65 205 59 15

Bernstorffsgade 21

1577 København

+45 33 33 03 10

1170 Howell Mill Road NW

Work & Co - Suite 300

Atlanta, GA 30318

1026 S. Santa Fe Ave.

Los Angeles, CA 90021

• Harvard Business School →
• Faculty & Research →
• March 2016 (Revised January 2017)
• HBS Case Collection
• Format: Print
• | Language: English
• | Pages: 16

About The Author

Eric J. Van den Steen

Related work.

• Faculty Research
• IKEA  By: Eric Van den Steen and Alon Galor

• IKEA Case: One Company’s Fight to End Child Labor
• Markkula Center for Applied Ethics
• Focus Areas
• Business Ethics
• Business Ethics Resources

IKEA Case: One Company’s Fight to End Child Labor

A business ethics case study.

In this business ethics case study, Swedish multinational company IKEA faced accusations relating to child labor abuses in the rug industry in Pakistan which posed a serious challenge for the company and its supply chain management goals.

Empty garage with a highlighted walking path in front of an IKEA.

Photo credit: mastrminda/Pixabay

Yuvraj Rao '23 , a 2022-23 Hackworth Fellow at the Markkula Center for Applied Ethics graduated with a marketing major and entrepreneurship minor from Santa Clara University.

Introduction

IKEA is a Swedish multinational company that was founded in 1943 by Ingvar Kamprad. [1] The company mainly provides simple, affordable home furniture and furnishings, and it pioneered DIY, or do it yourself, furniture. Kamprad originally sold binders, fountain pens, and cigarette lighters, but eventually expanded to furniture in 1948. According to the Journal of International Management, in 1953, Kamprad offered products that came as “a self assembled furniture” for the lowest price, which ultimately became a key part of IKEA’s value proposition going forward. In 1961, IKEA started to contact furniture factories in Poland to order chairs from a factory in Radomsko. [2] Outsourcing to Poland was mainly due to other Swedish furniture stores pressuring Swedish manufacturers to stop selling to IKEA. In the mid 1960’s, IKEA continued its supplier expansion into Norway, largely because IKEA didn’t want to “own their own line of production,” [3] and Germany due to its ideal location (downtown, suburban area) to place an IKEA store. Given IKEA’s suppliers were now not just in Sweden, it led to an increased importance on developing strong relationships with its suppliers.

In the following decades, IKEA continued its expansion and solidified its identity as a major retail outlet with parts being manufactured around the world. By the mid 90’s, IKEA was the “world’s largest specialized furniture retailer with their GDP reaching $4.5 billion in August of 1994.” [4] It also worked with 2,300 suppliers in 70 different countries, who supplied 11,200 products and had 24 “trading offices in nineteen countries that monitored production, tested product ideas, negotiated products, and checked quality.” [5] IKEA’s dependence on its suppliers ultimately led to problems in the mid 1990’s. At this time, IKEA was the largest furniture retailer in the world, and had nearly “100 stores in 17 countries.” [6] Also during this time, a Swedish documentary was released that highlighted the use of child labor in the rug industry in Pakistan, which impacted IKEA given it had production there. The rug industry in particular is extremely labor intensive and is one of the largest “export earners for India, Pakistan, Nepal and Morocco.” Here, children are forced to work long hours for very little pay (if there is any pay at all). In some cases, their wages are only enough to pay for food and lodging. In cases where children are not paid, the wages are used by the loom owner to pay the parents and agents who brought the children to the factories. Additionally, the work the children must do comes with a lot of risk. More specifically, children face risks of diminishing eyesight and damaged lungs from “the dust and fluff from the wool used in the carpets.” [7] As a result of these working conditions, many of these children are very sick when they grow up. Despite these terrible conditions, it isn’t that simple for families not to send children to work at these factories. A lot of the parents can’t afford food, water, education, or healthcare, so they are often left with no choice but to send their children to work for an additional source of income. [8]

 IKEA and Child Labor Accusations

The accusations of child labor in the rug industry in Pakistan posed a serious challenge for IKEA and its supply chain management goals. It would need to address the serious issues of alleged injustice for the sake of its reputation and brand image. Additionally, as IKEA also had suppliers in India, it would need to be in compliance with India’s “landmark legislation act against child labor, the Child Labor (Prohibition and Regulation) Act of 1986.” [9]

As a result of these accusations, IKEA ultimately ended its contracts with Pakistani rug manufacturers, but the problem of child labor in its supply chain still persisted in other countries that were supplying IKEA. Marianne Barner, the business area manager for rugs for IKEA at the time, stated that the film was a “real eye-opener…I myself had spent a couple of months in India for some supply chain training, but child labor was never mentioned.” [10] She also added that a key issue was that IKEA’s “buyers met suppliers at offices in the cities and rarely visited the actual production sites.” [11] The lack of visits to the actual production sites made it difficult for IKEA to identify the issue of child labor in these countries.

To make matters worse, in 1995, a German film “showed pictures of children working at an Indian rug supplier... ‘There was no doubt that they were rugs for IKEA,’ says business area manager for textiles at the time, Göran Ydstrand.” [12] In response to these accusations, Barner and her team went to talk to suppliers in Nepal, Bangladesh, and India. They also conducted surprise raids on rug factories and confirmed that there was child labor in these factories. The issue of child labor, along with the accusations of having formaldehyde (a harmful chemical) in IKEA’s best selling BILLY bookcases and the discovery of unsafe working conditions for adults (such as dipping hands in petrol without gloves), led to increased costs and a significantly damaged reputation for the company.

It was later discovered that the German film released in 1995 was fake, and the renowned German journalist who was responsible for this film was involved in “several fake reports about different subjects and companies.” [13] IKEA was now left with three options. First, some members of IKEA management wanted to permanently shut down production of their rugs in South Asia. Another option was to do nothing and proceed with its existing practices now that it was announced that the film was fake. The third option was that the company could attempt to tackle the issue of child labor that was clearly evident in its supply chain, regardless of whether the film was fake or not. IKEA ultimately decided to opt for the third option, and its recent discoveries would eventually help guide the policies the company implemented to address these issues, particularly child labor in India.

Steps Taken to Address Child Labor in the Supply Chain

IKEA took multiple steps to deal with its damaged reputation and issues of child labor in its supply chain. One way in which it did this was through institutional partnerships. One such partnership was with Save the Children, which began in 1994. According to Save the Children’s website, one of the main goals of their partnership is to realize children's “rights to a healthy and secure childhood, which includes a quality education. By listening to and learning from children, we develop long-term projects that empower communities to create a better everyday life for children.” [14] Furthermore, the partnership is intended to “drive sustainable business operations across the entire value chain.” [15] Together, IKEA and Save the Children are focused on addressing the main causes of child labor in India’s cotton-growing areas. [16] Save the Children also advised IKEA to bring in an independent consultant to ensure that suppliers were in compliance with their agreements, which further improved IKEA’s practices in its supply chain. IKEA also partnered with UNICEF to combat child labor in its supply chain. According to the IKEA Foundation, in 2014, IKEA provided UNICEF with six new grants totaling €24.9 million with a focus “on reaching the most marginalized and disadvantaged children living in poor communities and in strengthening UNICEF’s response in emergency and conflict situations.” Additionally, five of the six grants were given to help programs in “Afghanistan, China, India, Pakistan, and Rwanda,” with a “focus on early childhood development, child protection, education, and helping adolescents to improve their lives and strengthen their communities.” [17]

Next, IKEA and Save the Children worked together to develop IWAY, which was launched in 2000. [18] IWAY is the IKEA code of conduct for suppliers. According to the IKEA website, “IWAY is the IKEA way of responsibly sourcing products, services, materials and components. It sets clear expectations and ways of working for environmental, social and working conditions, as well as animal welfare, and is mandatory for all suppliers and service providers that work with IKEA.” [19] In addition, IWAY is meant to have an impact in the following four areas: “promoting positive impacts on the environment,” “securing decent and meaningful work for workers,” “respecting children’s rights”, and “improving the welfare of animals in the IKEA value chain.” [20] IWAY is used as a foundation to collaborate with IKEA’s suppliers and sub-contractors to ensure supply chain transparency.

As mentioned previously, one of the main goals of IKEA’s partnership with Save the Children was to address child labor in India’s cotton-growing areas. To do this, IKEA and Save the Children developed a program that would ultimately help more than 1,800 villages between 2009 and 2014. More specifically, the program moved nearly 150,000 children out of child labor and into classrooms. Also, as a result of this program, more than 10,000 migrant children “moved back into their home communities.” [21] Last but not least, the program trained almost 2,000 teachers and 1,866 Anganwadi workers (whose duties include teaching students and educating villagers on healthcare [22] ) in order to provide each village with a community leader. This was to ensure that the community had a skilled leader to assist in educating the villagers. In 2012, the IKEA Foundation and Save the Children announced that they would expand with new programs in Punjab, Haryana, and Rajasthan. This joint program illustrates IKEA’s commitment to improving communities in addition to helping children go to school.

Conclusion & Looking Ahead

IKEA has taken numerous steps to ensure that suppliers abide by the IWAY Code of Conduct. Companies around the world can learn from the policies IKEA has put in place to ensure that each company has control and complete oversight over their supply chains, which can lead to a more transparent and ethical supply chain. According to The IKEA WAY on Purchasing Products, Materials and Services, one way in which IKEA does this is by requiring all suppliers to share the content of the code to all co-workers and sub-suppliers, thus leading to more accountability among the company's suppliers. IKEA also believes in the importance of long term relationships with its suppliers. Therefore, if for some reason, a supplier is not meeting the standards set forth by the code, IKEA will continue to work with the supplier if the supplier shows a willingness to improve its practices with actionable steps to complete before a specified period of time. [23]

Additionally, during the IWAY implementation process, IKEA monitors its suppliers and service providers. To do this, IKEA has a team of auditors who conduct audits (both announced and unannounced) at supplier facilities. The auditors are also in charge of following up on action plans if suppliers are failing to meet the agreed upon standards specified by IWAY. Along with this, “IKEA…has the Compliance and Monitoring Group, an internal independent group that is responsible for independent verification of implementation and compliance activities related to IWAY and Sustainability.” [24] IKEA also has independent third party teams who conduct inspections on behalf of IKEA. [25] By conducting audits and putting together teams to ensure cooperation from suppliers throughout the supply chain, companies can be better equipped to prevent unethical practices in the production of goods and services. In Ximeng Han’s Analysis and Reflection of IKEA’s Supply Chain Management, Han highlights IWAY’s importance in maintaining links with IKEA’s suppliers. [26] Therefore, IWAY plays a crucial role in ensuring supply chain transparency and in building a more ethical and sustainable supply chain.

In addition to all of the policies IKEA has put in place to address issues in its supply chain, the company has also donated a lot of money to combat child labor in India. More specifically, according to an IKEA Foundation article written in 2013, “Since 2000, the IKEA Foundation has committed €60 million to help fight child labour in India and Pakistan, aiming to prevent children from working in the cotton, metalware and carpet industries.” [27] Furthermore, in 2009, the company announced that it would donate $48 million to UNICEF to “help poor children in India.” [28]

IKEA’s goal to completely eliminate child labor from its supply chain is an ongoing battle, and it is still committed to ensuring that this is ultimately the case. More specifically, it is extremely difficult to completely eliminate child labor from a company’s supply chain because of the various aspects involved. According to a report published in 2018 by the International Labour Organization, these aspects include a legal commitment, building and “extending” social protection systems (including helping people find jobs), “expanding access to free, quality public education,” addressing supply chain issues, and providing more protection for children in general. [29] Furthermore, Han points out the potential downsides that could arise as a result of having a global supply chain like IKEA does. Given IKEA is an international retailer, the company “has to spend a lot of time, money and manpower to enter new markets due to the different cultures, laws and competitive markets in different regions, and there is also a significant risk of zero return.” [30] Han also argues that the COVID-19 pandemic showed IKEA’s and many other companies’ inability to respond to “fluctuations in supply and demand,” primarily due to inflexible supply chains. [31] This information points out the various aspects that need to align in order to completely end the issue of child labor throughout the world, as well as the difficulties of having a global supply chain, which is why child labor is so difficult to completely eliminate.

Specific to IKEA’s actions, in 2021, IKEA announced three key focus areas for its action pledge: “Further integrating children’s rights into the existing IKEA due diligence system (by reviewing IWAY from a child rights’ perspective in order to strengthen the code),” “accelerating the work to promote decent work for young workers,” and partnering “up to increase and scale efforts.” [32] IKEA’s fight to end child labor in India highlights the importance of supply chain transparency and putting policies in place that ensures cooperation from suppliers and all parties involved. Additionally, in a Forbes article written in 2021, “According to the data from the OpenText survey…When asked whether purchasing ethically sourced and/or produced products matters, 81 percent of respondents said yes.” [33] Steve Banker, who covers logistics and supply chain management, also adds, “What is interesting is that nearly 20 percent of these survey respondents said that it has only mattered to them within the last year, which indicates that the Covid pandemic, and some of the product shortages we have faced, has made consumers re-evaluate their stance on ethical sourcing.” [34] These results confirm that customers are now considering how a product was sourced in their purchasing decisions, which makes it even more important for IKEA to be transparent about its efforts to eliminate child labor from its supply chain. Furthermore, the company’s open commitment to eliminating child labor and helping communities in India is beneficial in maintaining a positive relationship with its stakeholders.

The increase in globalization has made it even more essential for companies to monitor their supply chains and have complete oversight over business practices. IKEA is one of the companies leading the way in building a more ethical and sustainable supply chain, but more companies need to follow suit and implement policies similar to IWAY that holds all parties in the supply chain accountable for their actions. Through supply chain transparency and accountability, companies will likely be better equipped to handle issues that arise throughout their respective supply chains. Furthermore, by implementing new policies, conducting audits, and maintaining close communication with suppliers, companies can work to eliminate child labor in their supply chains and put children where they belong: in school.

Reflection Questions:

• What does this case teach you about supply chain ethics?
• What are some of the ways in which management/leaders can ensure compliance of the standards set forth by a company in terms of supplier behavior and ethical sourcing?
• Who is primarily responsible for ensuring ethical behavior throughout the supply chain? Is it the company? The suppliers? Both?
• How can companies utilize the various platforms and technologies that exist today to better understand and oversee their supply chains? 
• IKEA has taken numerous steps to address child labor in its supply chain. Do you think every business working in a context that may involve child labor has a duty to act in a similar way? Why or why not?

Works Cited 

“ About Ikea – Our Heritage .” IKEA.

“Anganwadi Workers.” Journals Of India , 16 June 2020. 

Banker, Steve. “ Do Consumers Care about Ethical Sourcing? ” Forbes , 9 Nov. 2022.

Bharadwaj , Prashant, et al. Perverse Consequences of Well-Intentioned Regulation ... - World Bank Group .

“ Child Labor in the Carpet Industry Rugmark: Carpets: Rugs: Pakistan .” Child Labor in the Carpet Industry RugMark |Carpets | Rugs | Pakistan .

“ Creating a Sustainable IKEA Value Chain with Iway. ” Sustainability Is Key in Our Supplier Code of Conduct .

“ Ending Child Labour by 2025 - International Labour Organization .” International Labour Organization .

“ Film on Child Labour Is Eye-Opener for IKEA .” IKEA Museum , 31 Mar. 2022.

Foundation , ECLT. “ Why Does Child Labour Happen? Here Are Some of the Root Causes. ” ECLT Foundation , 17 May 2023.

Han, Ximeng. “ Analysis and Reflection of IKEA’s Supply Chain Management. ” Analysis and Reflection of IKEA’s Supply Chain Management | Atlantis Press , 27 Dec. 2022.

“ Human Rights and Global Sourcing: IKEA in India. ” Journal of International Management , 13 May 2011.

“ IKEA and IKEA Foundation .” Save the Children International .

“ IKEA Foundation Contributes €24.9 Million to UNICEF to Help Advance Children’s Rights. ” IKEA Foundation , 26 May 2020.

“ IKEA Foundation Helps Fight the Roots Causes of Child Labour in Pakistan .” IKEA Foundation , 18 Feb. 2013.

“ Ikea Gives $48 Million to Fight India Child Labor .” NBC News , 23 Feb. 2009.

“ IKEA Supports 2021 as the UN International Year for the Elimination of Child Labour. ” About IKEA.

The Ikea Way on Purchasing Products , Materials and Services .

Jasińska, Joanna, et al. “ Flat-Pack Success: IKEA Turns to Poland for Its Furniture. ” – The First News .

Thomas , Susan. “ IKEA Foundation Tackles Child Labor in India’s Cotton Communities .” Boston College Center for Corporate Citizenship , 15 July 2014.

[1] “About Ikea – Our Heritage.” IKEA .

[2] Jasińska, Joanna, et al. “Flat-Pack Success: IKEA Turns to Poland for Its Furniture.” – The First News .

[3] “Human Rights and Global Sourcing: IKEA in India.” Journal of International Management , 13 May 2011.

[4] “Human Rights and Global Sourcing: IKEA in India.” Journal of International Management , 13 May 2011.

[5] “Human Rights and Global Sourcing: IKEA in India.” Journal of International Management , 13 May 2011.

[6] “Film on Child Labour Is Eye-Opener for IKEA.” IKEA Museum , 31 Mar. 2022.

[7] “Child Labor in the Carpet Industry Rugmark: Carpets: Rugs: Pakistan.” Child Labor in the Carpet Industry RugMark |Carpets | Rugs | Pakistan .

[8] Foundation , ECLT. “Why Does Child Labour Happen? Here Are Some of the Root Causes.” ECLT Foundation , 17 May 2023.

[9] Bharadwaj , Prashant, et al. Perverse Consequences of Well-Intentioned Regulation ... - World Bank Group .

[10] “Film on Child Labour Is Eye-Opener for IKEA.” IKEA Museum , 31 Mar. 2022.

[11] “Film on Child Labour Is Eye-Opener for IKEA.” IKEA Museum , 31 Mar. 2022.

[12] “Film on Child Labour Is Eye-Opener for IKEA.” IKEA Museum , 31 Mar. 2022.

[13] “Film on Child Labour Is Eye-Opener for IKEA.” IKEA Museum , 31 Mar. 2022.

[14] “IKEA and IKEA Foundation.” Save the Children International .

[15] “IKEA and IKEA Foundation.” Save the Children International .

[16] “IKEA and IKEA Foundation.” Save the Children International .

[17] “IKEA Foundation Contributes €24.9 Million to UNICEF to Help Advance Children’s Rights.” IKEA Foundation , 26 May 2020.

[18] “IKEA and IKEA Foundation.” Save the Children International .

[19] “Creating a Sustainable IKEA Value Chain with Iway.” Sustainability Is Key in Our Supplier Code of Conduct .

[20] “Creating a Sustainable IKEA Value Chain with Iway.” Sustainability Is Key in Our Supplier Code of Conduct .

[21] Thomas, Susan. “IKEA Foundation Tackles Child Labor in India’s Cotton Communities.” Boston College Center for Corporate Citizenship , 15 July 2014.

[22] “Anganwadi Workers.” Journals Of India , 16 June 2020.

[23] The Ikea Way on Purchasing Products, Materials and Services .

[24] The Ikea Way on Purchasing Products, Materials and Services .

[25] The Ikea Way on Purchasing Products, Materials and Services .

[26] Han, Ximeng. “Analysis and Reflection of IKEA’s Supply Chain Management.” Analysis and Reflection of IKEA’s Supply Chain Management | Atlantis Press , 27 Dec. 2022.

[27] “IKEA Foundation Helps Fight the Roots Causes of Child Labour in Pakistan.” IKEA Foundation , 18 Feb. 2013.

[28] “Ikea Gives $48 Million to Fight India Child Labor.” NBC News , 23 Feb. 2009.

[29] “Ending Child Labour by 2025 - International Labour Organization.” International Labour Organization .

[30] Han, Ximeng. “Analysis and Reflection of IKEA’s Supply Chain Management.” Analysis and Reflection of IKEA’s Supply Chain Management | Atlantis Press , 27 Dec. 2022.

[31] Han, Ximeng. “Analysis and Reflection of IKEA’s Supply Chain Management.” Analysis and Reflection of IKEA’s Supply Chain Management | Atlantis Press , 27 Dec. 2022.

[32] “IKEA Supports 2021 as the UN International Year for the Elimination of Child Labour.” About IKEA .

[33] Banker, Steve. “Do Consumers Care about Ethical Sourcing?” Forbes , 9 Nov. 2022.

[34] Banker, Steve. “Do Consumers Care about Ethical Sourcing?” Forbes , 9 Nov. 2022.

• Consultation
• Done For You!

IKEA Case Study| History of IKEA| IKEA Business Model

lapaasindia

August 31, 2019

Recent Blogs

Ikea Case Study- (Business Model)

2 Minute Summary

IKEA is one of the biggest furniture companies in the world founded by a carpenter named Ingvar Kamprad who was 17-year-old, in Sweden in 1943. Everybody knows that Ikea offers the products at a very lower price than any retail shop. Ikea has invested 800 crores in India, It has more than 9500 Products and has more than 350 stores in 35 countries. the new store is spread across 400,000 square feet in the southern city of Hyderabad & plans to invest 105 billion rupees in India. the company is a non-profit. IKEA employs about 135,000 people. Because of tax rules for non-profits, IKEA pays about 33 times fewer taxes than their for-profit competitors. The Ikea trademark and the concept is owned by another private company named Inter Ikea Systems. It acquired TaskRabbit on Sep 28, 2017. IKEA has many mobile apps. But the most popular app is IKEA STORE. The app is having almost 9,60,333 monthly downloads. IKEA is the lead investor in 4 companies. Full Detail in Blog.

Everybody knows that Ikea offers the products at a very lower price than any retail shop.

In this blog, we’ll talk about Ikea Case Study(Business Model) as the Swedish furniture company opened its first retail store in India.

Like Walmart acquired Flipkart and entered the Indian Market. Ikea can destroy the Whole Furniture Market in India.

Ikea has invested 800 crores in India, It has more than 9500 Products and has more than 350 stores in 35 countries.

According to CNN , the new store is spread across 400,000 square feet in the southern city of Hyderabad & plans to invest 105 billion rupees in India.

But have you ever wondered? How does Ikea work?

What is the meaning of IKEA?

How IKEA works?

How IKEA business model earns ?

You must have many questions regarding IKEA, like What is the meaning of IKEA?

What is IKEA?

How IKEA earns?

This will be the most detailed case study on IKEA.

I will be answering all of your questions.

Let’s START WITH

WHAT IS IKEA?

IKEA is one of the biggest furniture companies in the world founded by a carpenter named Ingvar Kamprad who was 17-year-old, in Sweden in 1943.

IKEA is a globally renowned furniture retailer that sells ready-to-assemble furniture, kitchenware and home accessories.

 The company started with selling pens, wallets, jewellery with the concept of meeting consumers demands at the most affordable prices.

After five years into the business, IKEA brought in the furniture. Since then furniture has been the mainstream for the business.

IKEA furniture is now a well-known multinational brand.

IKEA MEANING

You must be wondering that what is the story behind the unique name the brand has.

The name IKEA isn’t just a fun.. it stands for – Ingvar Kamprad Elmtaryd Agunnaryd.

Short-form is cooler to pronounce right? But it actually has a deeper meaning.

The first two letters of IKEA i.e. I and K are the initials of the name of the founder Ingvar Kamprad.

While ‘E’ comes from the name of the farm he grew up on – Elmtaryd.

And the last letter ‘A’ comes from the Swedish village, Agunnaryd,

where the farm was located.

HOW IKEA EARNS? – IKEA BUSINESS MODEL

They follow Price-leadership model. Low prices are the main concern stone of the IKEA vision, business idea and concept.

In the world of IKEA furnishings, the products are named after Swedish towns like Aneboda, Akurum and Anordna.

But the costumers worry less about the names and care more about how much they cost.

Ikea furniture is a beacon for bargain hunters. Its whole business model evolves around selling their product at the lowest price possible.

IKEA business model revolves around their vision which is – offering a very wide range of well-designed, functional home furnishing products at so low prices that as many people as possible will be able to afford them.

Anybody can make a high-quality product for a high price, or a poor-quality product for a low price.

IKEA follows a different approach, they have developed methods that are both cost-efficient and innovative. Before designing the product… they decide the price tag.

Their designers begin with designing of the product after keeping the price in mind. The IKEA Group has 31 distribution centres in 16 different countries, supplying goods to IKEA stores. It has about 45 trading service offices in 31 countries.

They have very close relationships with their 1,350 suppliers in 50 countries.

IKEA’S SMART SECRET

Is IKEA – a Non- profit organization. ?

You must be having a lot of questions by now, like if IKEA is a non

profit organization then –

How do they manage their running cost?

Where all the money goes away?

Where does all this money earned is utilised?

You will get all your answer right away as you continue reading.

I would say a big YES,

IKEA has a little known secret: the company is a non-profit

They grew with a vision that states ‘to create a better everyday life for as many people as possible. And on a mission to offer a wide range of home furnishing products at a price so low that as many people will be able to afford them.’

Besides the vision and mission, the main motive of showing itself a non profit organization could seem as business-driven.

IKEA employs about 135,000 people. Because of tax rules for non- profits, IKEA pays about 33 times fewer taxes than their for-profit competitors.

There is one more big hole in this whole IKEA non-profit organization.

Money is not trapped inside Ikea’s foundation.

The Ikea trademark and the concept is owned by another private a company named Inter Ikea Systems.

So, to operate Ikea stores and use the brand name, the non-profit Ikea have to make payments each year to the private company – Inter Ikea Systems.

This clearly means money is paid directly from IKEA profits to the owners of this private company to license the trademark.

The beneficiaries or we can say owners of this private company are not publicly recorded, but it’s not hard to speculate that the Kamprad family is on the receiving end of this loophole.

HISTORY – STARTING AND GROWTH OF IKEA

Let’s talk about the exciting history timeline of IKEA.

From the of how it is started to the story of how it evolved exponentially.

It all started in 1926 when founder Ingvar Kamprad is born in Småland

in southern Sweden.

The 1940s-1950s

In the year 1948 – Furniture was introduced into the IKEA range.

Local manufacturers produced the furniture for IKEA in the forests close

to Ingvar Kamprad's home.

In the year 1956 – IKEA came up with the idea of designing furniture for

flat packs. It started focusing on self-assembling furniture models.

In the year 1980s – IKEA expands dramatically into new markets such

as the USA, Italy, France and the UK.

In the year 1984,

Ikea family was introduced a new club for the customers was launched.

Today, Ikea family is in 16 countries (over 167 stores) and has about 15

million members.

FINANCIAL FACTS AND FIGURES

Categories – Consumer Electronics, Furniture, Retail, Shopping, Smart Home.

Headquarters –   European Union (EU)

Founded Date –   1943

Founders – Ingvar Kamprad

No. of Employees – 10001 +

Legal Name –  IKEA BV

Digital links

Website –  www.ikea.com/

Facebook- www.facebook.com/IKEAIndia

LinkedIn – www.linkedin.com/company/ikea-group/

Twitter – https://twitter.com/IKEAUSA

Till now IKEA has only 1 acquisition.

It acquired  TaskRabbit  on Sep 28, 2017

Mobile app and its downloads

IKEA has many mobile apps. But the most popular app is IKEA STORE.

The app is having almost 9,60,333 monthly downloads.

Website and its monthly traffic IKEA is ranked 166 among websites globally.

And having almost 146,040,680 monthly visitors.

Investments

IKEA is the lead investor in 4 companies. Those are –

XL HYBRIDS – IKEA announced its investment in this company on

October 12, 2017

MAT SMART – IKEA announced its investment in Massmart on Jan

TRAEMAND – IKEA announced its investment in Traemand on Dec

LIVSPACE – IKEA announced its investment in Livspace on Dec 19,

MANAGEMENT AND THE CORE TEAM

CEO – Jesper Brodin

CFO – Alistair Davidson

FOUNDER – Ingvar Kamprad

HEAD OF CORPORATE FINANCE & TAX – Krister Mattsson

HEAD OF DIGITAL – Christian Moehring

HEAD OF E-COMMERCE, SOUTHEAST ASIA – Koen Besteman

HEAD OF UK MARKETING PROCUREMENT – Maria Malpartida

HEAD OF INNOVATION – Jens Heitland

8 IKEA Marketing Strategy

Many people confuse marketing with promotion. People believe that marketing is something you do to sell your product. But, this is not completely true. Marketing begins even before the production stage, as designing a product based on the demand and needs of the customers is also a part of marketing. This is what IKEA Believes in. Everything in IKEA is from a customer’s point of view. Let’s dive deep into learning different strategies of IKEA.

1. Amazing Customer Experience

Have you tried shopping from IKEA? If not, then I would strongly recommend you to try IKEA next time you need a piece of furniture.SHopping at an IKEA store is a different experience than shopping from any other furniture store. Whenever adults go out shopping with their kids, both the kids and parents face issues.

IKEA has got an amazing solution for this where none of them would feel any type of burden and in fact, both of them would like to spend more time at the IKEA store. Yes, I am talking about the free childcare facility provided by the IKEA stores. You can just leave your child safely with them and enjoy hustle free shopping and the child will also spend some quality time playing and making new friends.

Another amazing thing is that instead of standing and having a long discussion about which product to buy and calculating your cost, you can have a seat ad enjoy your paneer butter masala meal while discussing the furniture.

These little things not only add a value to the customers shopping experience but also give them a reason to visit again and even suggest others to visit the store.

2. Brand Identity

In such a competitive environment, is it very important to stand out or be unique and creative to survive? You have to build your brand in such a way that customers prefer you over other companies.IKEA is very strongly working with this. Its goal is to become the leader of every home.

IKEA focuses more on the product and the customers which a lot of companies fail to do. If you create what your customers want then you can build a good brand identity. Your every action should be a signal of your brand.IKEA uses this technique in its advertising. If you have been following IKEA for a while then you will not have to think a lot you can recognise directly that this is an IKEA ad.

3. Content Marketing

With the growing digital environment, the content has become an important element of the digital industry. Content is used by most of the companies to promote their product digitally. From a picture art to a long written blog anything can be used as content in digital marketing.

One of the best strategies you can use in this digital era is to interact with your customers directly.IKEA uses all types of contents to reach out to their customers. From images, videos to textual content IKEA has it all. To reach your customers digitally, it is very important to identify your potential audience, basically defining who your customers are. Then the most important step is defining how your potential customers can find you?IS is through your social media handles or is it through your website or a combination of all these. And then you need to target them both organically and by paid promotion techniques.

4. Social Media

Social media is something which cannot be avoided. Everyone nowadays uses social media, thanks to the internet revolution and jio revolution in India. Your presence on every social media platform is must, it doesn’t matter if you are an old company or a new one. Social media allows you to be in constant touch with your customers. You can use various strategies across your social media platforms that can help you create trust and a good brand image in front of your customers and also develop new customers.

There are a few strategies which you can follow.

• If you follow a consistent posting schedule, then you can have a good content interaction as regular posts can make your customers think about you.
• You can also use promotional strategies provided by social media companies to reach a new audience and attract them by telling them about your new products and offers.
• Another important feature of social media that you can use is to understand your audience. Understanding your audience is important because they are the ultimate consumers and having clarity about the consumers makes it possible for a brand to plan its products and marketing accordingly.

5. Innovation

IKEA is very famous for new designs and products. It keeps on constantly adding a new design or a new to product to its collection. This allows customers to visit the store even if they do not want to buy anything so that they can check the latest trends and products. If you check their social media handles, you will find a lot of different types of content that displays new and innovative products. This is a very good strategy as your customers stay updated with your products. Even if they do not add the products to their cark at the moment, they still add it to their wishlist. Which indirectly gets converted into sales. Thus, innovation in products and making innovation reach your customers is very important.

6. Creative Marketing Campaigns

IKEA is very creative when it comes to marketing. Their posts are so engaging that you want to click on it and see them that what is there. The example given below demonstrates how one will swipe right to see what they have for you. Isn’t it creative? If you observe, they have made good use of the present condition in a creative way. Similarly, a humorous and creative content strategy can help you get more engagements.

7. Amazing Use of Technology

Living in the 21st century, you can make amazing use of technology to provide a great experience to your customers. Augmented reality and virtual reality are some great examples of technology can you can use especially in such industries.IKEA makes use of both these augmented realities and the virtual reality

What is Augmented Reality?

This is the most amazing use of technology that IKEA could have done. With this, you can use your mobile phone to see how a piece of particular furniture would look at your home. You can also use this to decide at which corner of the house that particular furniture would look good. This is like a trial technology where you can try the products virtually at the comfort of your home without actually buying it. It is similar to something used by Lenskart.

What is Virtual Reality?

Yet another amazing use of technology. Where most of the people are busy using virtual reality for gaming purposes, IKEA has its smart use. Through virtual reality technology, IKEA allows its customers to feel the look of the furniture. For example, say you want to buy a modular kitchen, you can try the kitchen before actually buying it in a virtual reality headset. The most amazing part is that you can try cooking and get real experience.

8. Payments Methods

Consumers have become a lot more advanced than before. Customers need comfort. Since the evolution of the digital era, there are a lot of different methods of payment. Every consumer has different payment options. It becomes important to have all the options available so that the customers get a hustle free shopping experience. As already, IKEA is a price dominant company, best price with all modes of payments is like a cherry on the cake.

Unknown Facts About IKEA

• Ikea is the third-largest wood consumer on the planet. Being the leading furniture company it should not be shocking.
• IKEA is claimed to print more copies of its annual catalogue each year than the bible.
• IKEA has very good food sales. Being known for its furniture has a very good taste when it comes to their restaurant. This can be a great contribution to their revenue as they have an approximate sale of 2 billion annually.
• As in 2014, they have 716 million visitors to their store. This is a very huge number.
•  The first IKEA restaurant was launched in 1956 to feed its customers that would feel hungry after spending the whole day shopping.

SWOT Analysis of IKEA

* Its vision – ‘to create a better everyday life for many people’

* Economies of scale

* Lowest Price

* Countless designs

* Bad press

* Low quality

* Difficulty to control standards across locations.

OPPORTUNITY

* Solutions for a sustainable life at home

* Developing social responsibility

* The recession slows down consumer spending

* More competitors entering the low price household and furnishings

IKEA is one of the biggest furniture companies in the world founded by a carpenter named Ingvar Kamprad who was 17-year-old, in Sweden in 1943.

The company started with selling pens, wallets, jewellery with the concept of meeting consumers demands at the most affordable prices.

IKEA KEY VALUES

They are very strict about their values.

They firmly believe that every individual has something valuable to

Let’s look at some of there core values –

1. Cost – Consciousness

Their first priority is to make their product affordable to as many

people as possible. They challenge themselves constantly to make

the product more affordable without compromising on quality.

2. Renew and Improve

They always challenge themselves to try something new and to find a

a better way out.

3. Caring for People and Planet

They believe in caring for people as well as for the environment.

They act as a force for a positive change.

IKEA IN INDIA

In 2006, Ikea first displayed an interest in the Indian market but back then

the Indian laws allowed only 51 per cent foreign ownership.

With the government of India relaxing the norms for foreign direct

investment (FDI) in single-brand retail, IKEA announced in October

their intention to open stores in India.

IKEA opened its first store in India on Aug 9, 2018.

It took IKEA 12 long years to enter the Indian market.

The first store in India was opened in Hyderabad.

Hyderabad, the southern Indian city gave it a roaring welcome.

So far, more than 3 million customers have visited IKEA Hyderabad

store and about 8 million have visited IKEA’s India website

In the year 2016, Ikea purchased land in Mumbai and said that it planned

to open stores in Bengaluru and Delhi too.

After Hyderabad, in 2019 IKEA has launched its first online store in

Mumbai is offering more than 7,500 products.

It will provide delivery to most of the locations in Mumbai and will have

a delivery time of four to seven days, subject to availability and distance.

In India, IKEA currently has more than 55+ suppliers.

Also, have more than 45,000 direct employees and 400,000 people in the

extended supply chain.

Now, the company plans to have more than 25 stores in India by 2025.

FAQ’s

Leave a reply cancel reply.

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

We don't do BLACK MAGIC No overnight results Guarantee

• Lapaas Learning
• Lapaas Voice
• Privacy & Policy
• Terms Condition

Copyright Lapaas © 2024. All rights reserved