IKEA was established in Sweden in 1943 as a privately owned company (IKEA 6). It is owned by Ingvar Kamprad. The company is renowned for exclusive and excellent quality furniture. It has been distributing its products through retail outlets. Currently, it is estimated that the company has 313 stores in 37 countries (IKEA 8). IKEA furniture stores are exclusive, thereby giving clients what they require. In addition, they have also given them enough time to choose what they desire.
This has always allowed clients to locate what they want and desire without any problem. In recent years, the furniture industry has embraced the concept of globalization. On the other hand, furniture is bulky compared to its general value (Rothstein 13). Although there have been constraints, IKEA has pioneered a good move towards globalization in this industry. Because furniture can be destroyed in shipping, the costs of transport in this industry are very high.
IKEA does not assemble its furniture and this has enabled it to incur less shipping costs. The furniture industry is very competitive and this is the reason why retailers should always involve customers in value chain. This is the strategy that IKEA has been using to lower costs. In this case, customers are allowed to carry furniture and assemble it on their own (IKEA 15). Customers in different countries are willing to purchase the same design and this has allowed IKEA to expand its business well.
Although IKEA has been expanding well on the global market and industry, it has also faced problems in different countries like the US and Canada. IKEA furniture has come under the glare of publicity because it has always met industry demands of good designs, innovative styles and low prices. This has helped to attract customers.
The furniture industry has been battered on most occasions but IKEA has always fared better than its competitors. This is because the company has put in place good cost cutting measures that have enhanced its profitability (Hawthorne 11). On the other hand, it has also enhanced value chain thereby giving customers real experience. There is an argument that most furniture retailers sell furniture while IKEA concentrates on selling experience. Furniture retailers in Sweden include Mio Group, K-Rauta, Duxiana, EM and Stalands Mobler.
The company has done a fair job by adapting to the local market than its competitors. This has been enhanced by efficient logistics where they go to customers with good designs (Hawthorne 17). Mio Group has been a big competitor in Sweden but IKEA has employed good business strategies to remain afloat. The company has continually found itself in price wars after it published its catalogues.
Competitors have seen this as a way of eating into their market share. They have argued that IKEA is charging low prices to discriminate them. IKEA’s product are mainly designed in Sweden but they are manufactured in other countries (IKEA 21). This has been used to reduce costs that the company might incur in the course of transporting furniture.
IKEA has always attacked its competitors with innovation and in the process managed to remain in business. On the other hand, they have also rewarded their customers with value which is good for a company to remain competitive. Low end retailers like Stalands Mobler offer low prices but their services and products have been of poor quality. In addition, IKEAs competitors have been low end retailers rather than high end retailers (Heidi 13). The company’s strength is in good and fascinated designs at affordable prices.
The company has been taking a successful global initiative thereby attracting a lot of competitors. This is because of its good and dedicated supplier network that has enabled it to offer quality furniture at low prices. The company has also benefited from economies of scale because of its big stores that have enabled it to stock furniture all over the world (Heidi 18). They have been able to match their rivals like Wal-Mart by enhancing quality.
This has enabled IKEA to undercut its furniture by almost 30%. It is also undeniable that the company has more than 2,300 suppliers in 67 countries (IKEA 32). This has enabled it to increase its global presence than its main competitors. There are certain cultural factors that have redefined the global furniture market. To navigate such, IKEA has been adopting individual marketing strategies to remain competitive.
Because the company has been taking furniture retailing globally, it has acted as an eye opener and inspired competitors to enter the market. As a matter of fact, more competitors are expected to intensify their global campaigns with an intention of strengthening their presence (Heidi 28). Global market dynamics are always changing and the company needs to be more cautious as it might end up over expanding which is not good for sustainability.
ILVA is a big competitor in the Scandinavian countries but IKEA has used branding to remain competitive. In addition, the company has mainly focused on the low end market. Low end retailers like Wal-mart offer low prices but their services and products have been of poor quality (Wainwright 12). The company has continued to employ efficient cost cutting measures that will enhance its activities and operations globally like manufacturing products in different countries.
IKEA values customers very much and that is why it has ensured that they are satisfied. Satisfied customers will always guarantee returns. The company believes in value chain and this has enabled it to maintain a personal touch with its customers (IKEA 24). This explains why most of its furniture is designed to be assembled by customers rather than being assembled in advance.
The company believes that it has been a pioneering force in consumer culture in most markets and this has given it a new lease of life in business. This has been enhanced by its democratic designs that take care of customers’ interests in abroad perspective (Wainwright 18). Most customers have chosen IKEA because of its stylish designs and high quality furniture. On the other hand, the company has also been competing with price by focusing on low end customers.
Although the market has high end customers, the company believes that low end customers will guarantee high returns. IKEA stores have good displays that enable customers to visualize products well (Wainwright 25). Furniture is arranged in detailed displays. Customers who visit the company’s stores are guaranteed space to do easy shopping. The company has different customers who visit its stores. Because of diversity in customers, the company has been producing catalogues to guide customers in shopping stores.
This has made shopping more pleasant and easy. IKEA has also launched a loyalty card for its stores. This card has allowed customers to obtain discounts on a special range of products (Wainwright 19). Customers are also allowed to shop online and this has enabled it to have a wide reach. This is necessary because of its wide global market that might not be sustainable with physical stores.
The furniture retailing industry is very complex and demanding. As a matter of fact, IKEA is one of the worlds top furniture retailers (Henley 13). The company has been sustainable because of good business strategies. On the other hand, the global furniture industry has been battered in recent years because of emerging business trends and dynamics.
Furniture retailers have been focusing on different market segments. IKEA has mostly focused on low end customers by offering low prices. As much as IKEA has been offering its products at low prices, it has not deviated from good and quality designs (Henley 21). The industry requires a lot of diversification for a company to be sustainable. This should be done with a lot of caution to avoid contradictions.
IKEA has also been involved in industry partnerships to reach out to a wide base of customers (IKEA 24). This is the essence of being in business and that is why the company has capitalized on partnerships. The industry is currently demanding a lot of respect and safety from all stakeholders. It therefore implies that companies need to enhance this for good relations.
The US market has been identified as one of the most competitive markets and companies like IKEA need to devise good market strategies for sustainability (Henley 29). On the other hand, countries have frugal cultures that need to be looked at for successful marketing approaches that will not be questioned by customers.
Hawthorne, Christopher. Disposable Architecture. USA: Metropolis, 2007. Print.
Heidi, Owens. IKEA: A Natural Step Case Study. UK: London, 1998. Print.
Henley, Jon. Do you speak IKEA? London: Guardian, 2008. Print.
IKEA. Products. 2010. Web. 06 October. 2010. http://www.ikea.com/ms/en_GB/about_ikea/our_responsibility/the_never_ending _list/products.html
Rothstein, Edward. Typography Fans Say IKEA Should Stick to Furniture. New York: The New York Times, 2009. Print.
Wainwright, Martin. Buying a house? Pick up a flatpack at IKEA. London: Guardian, 2005. Print.