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ikea retail management

Text of Ikea

  • 1. Live your life. Love your home. Presented by: Fenella Andrade Mallesh Goudar Nipun Jain Sarah Choudhary Masters in European Studies and Management (MESM) 2010-2012 Manipal Centre for European Studies Manipal University, Karnataka, India

2. IKEA History In 1943, IKEA was founded by Ingvar Kamprad Based in Sweden Worlds largest furniture retailer Worlds leading home furnishings retailer IKEA numbers 1,04,000 employees in 267stores in 45 countries 3. SWOT Analysis onIKEA Home Furnishings 4. STRENGTHSBrand Image IKEA ranked 41st among the best global brandsaround the world in 2006 with a brand value of$8,763 strong internationally known brand attracting keydemographic customer groups strong brands enhance customer loyalty and lead torepeat purchases 5. Cost Efficient Low price no compromise in qualityUnique business model own industrial group, Swedwood, which produces wood-basedfurniture and wooden components its operations cover every step of production, from forestry, sawmilling and board manufacture to furniture efficient productions which enable it to maximize productivity andminimize waste-generation own design group which can makes sure that their products matchesthe trend of the industry 6. Good relationship with suppliers Maintained long-term partnerships with its suppliers Ensures that the company has access to high-quality materials at reasonable prices Marketing expertise Market positioning statement is Your partner in better living.We do our part, you do yours. Together we save money. Market on its strengths based on offering a wide range of welldesigned, functional products at low prices Catalogue- 175 million copies sold in 55 editions and 27languages (2007) Other promotions include their seasonal sales, internet deals andtelevision advertisements 7. Flat packing that helps in managementFlat packaging, which reduces shipping costs, minimizes transport damage, increases store inventory capacity, and makes it easier for customers to take the furniture home themselves, rather than needing delivery.But the original reason for it was competitive pressure from IKEAs competitors to their suppliers, who actually boycotted IKEA, forcing IKEA to do it themselves. Easy to assemble One stop shopping Friendly atmosphere and store layout One stop shopping 8. Customer Service Restaurant in store IKEA exit bistro Swede Shop IKEA Restaurant Child Care Supervised Playroom Baby Care Room Food Warming Facilities Childrens Meals Design Advice Office Planning Kitchen Planning Home Furnishing Advice Store Atmosphere Easily Located Products Browse through showrooms and try out products Delivery Services available or take home products immediately 9. WEAKNESSIKEA has to acknowledge its weaknesses in order to improveand manage them. This can play a key role in helping it to setobjectives and develop new strategiesNot enough distribution channels. For eg: There are only three retail shops in Hong KongProblem of product recall due to faulty base. For eg: IKEA had recalled Parodi and Apelsin glass casesIKEA is a global company, so product standards are difficult to maintain.Some countries where IKEA products are made do not implement the legislation to control working conditionsSwedish designs not appealing to American customersLimited Furniture Designs - IKEA had limited furniture designs which could obviously not cater to a wide range of customer needs and preferences 10. OPPORTUNITIESIKEA are moving from International to global status through the development of Asia and Eastern European modelsTargets all levels of the market, upper, middle and lower classesSourcing from China is one opportunity. Sourcing from low cost countries like China would reduce its costs and enable IKEA to concentrate on increasing its market shareBright prospect of online sales 11. THREATSIf a company is aware of possible external threats,it can plan to counteract them. By generating newideas, IKEA can use a particular strength to defendagainst threats in the market.With economic concerns over rising living costs and depleting disposable income there is an overall threat to the performance of the business in UK and American markets specificallyThe regulatory environments across the globe vary and can affect how IKEA does business and its product costs, especially the use of natural resources 12. PORTERs 5 FORCE ANALYSISThreat of Buyers growing bargaining power There is a little power because of the existing low-price options IKEA ensure that their customers in all aspects willbe satisfied for quality service they provide Focused their marketing approach on demands andneeds of the buyer IKEA uses their corporate responsibility as a goodpublic image to their customers IKEA Family -card as a membership 13. Threat of Suppliers growing bargaining powerIKEA has its thousands of suppliers that set standards indelivering the materials Because of the low-pricing, IKEAs profit margin also affects the prices in raw materials than by prices in labour IKEA has a wide network of 1300 suppliers. They carefully select the manufacturer of its products. The company has own production factories and designers which makes it less dependent on others Bargaining power of supplier could be threat for the profit of the company 14. Threat of Substitute Products There is no specific product that can be asubstitute for the furniture but IKEA at least,have to keep up with the latest trends, toavoid becoming out of style Problems faced due to distribution channels 15. Threat of Intense Segment Rivalry The IKEAs furniture competitors offers different stylesand functionality Conrin targets a new low cost in terms of furniture line; Crate & Barrel offers a furniture in a box which is subject in higher prices Ethan Allen aimed at a more upscale market Wal-Mart is equipped in a big box furniture that is categorized under the general store must-have-items, but dont have much of a style IKEA is the most successful in delivering the completepackage for the customers that reflects on weak rivalries There will always be substitutes for furnitures but IKEAcompetes with price and there isnt competitors in sameprice range 16. Threat of New Entrants IKEA stores do not reach many small townsand this is an opportunity for the newcompetitors to move into small and midsizecities with smaller stores and less selection. Butnot easier in city because new entrants have toestablish a vast supply chain and create aunique brand name The furniture market is already highlycompetitive - the risk of new entrants is notextremely high - huge capital needed to startthe business 17. 5 c Analysis Company Collaborators Customers Competitors Climate/Context 18. COMPANY Product Line Kitchen ware Dinning Living room Bedroom Hallway Bathroom & Laundry Small storage Cooking 19. Market Image Awards won by the company Leo Burnett Hong Kong win the Grand Kam Fan for IKEA at the Hong Kong 4As Awards IKEA (Campaign of the Year) IKEA (Corporate Branding Campaign of the Year IKEA (Best Use of Online Media) IKEA Honoured With Eurobest 2010 Advertiser Of The Year Award Award by Queensland Governments Environmental Protection Agency for IKEAs Environmental initiatives (2007) IKEA was named one of the 100 Best Companies for Working Mothers in 2004 and 2005 by Working Mothers magazine ranked 96 in Fortunes 100 Best Companies to Work For in 2006 and in October 2008 IKEA Canada LP was named one of "Canadas Top 100 Employers" by Mediacorp Canada Inc 20. Culture Diversity and creativity Family like Quality Cost Conscious Openness Equality Competitiveness Eco Friendly Social Initiative(main partners to IKEA Social Initiative areUNICEF and Save the Children) 21. Goals of the Company Implementing strategies in the organization Customer transportation and carbonfootprint Working with suppliers on compliance Communicating sustainabilityaccomplishments Integrating sustainability into core business Forestation and use of wood 22. COLLABORATORS Distributors They have 28 distribution centres in 16 countries that supply to IKEA stores. They have over 300000 distributors all around the world 23. Suppliers They possess the bargaining power IKEA prefers procuring their materials from lowcost countries like China to reduce their overallcost 24. Alliances Rainforest AllianceThe IKEA Group supports the Rainforest Allianceto promote Forest Stewardship Council (FSC)forest management certification in China byeducating foresters and stakeholders on theprinciples of FSC certification. The projectprovides key experts with the training, tools andmaterials to conduct Rainforest Allianceworkshops in order to increase the level ofsustainable forestry awareness in China. 25. CUSTOMERS Market size First stores were opened in Norway and Denmark Germany - IKEAs biggest market ( 45 stores) United States (37 stores) France ( 28 stores) Presently IKEA has 316 stores in 45 countries Top 5 sales countriesGermany 19 %USA 11 %United Kingdom 11 %France 9 %Sweden 8 % 26. Benefits and Cost Gain from good quality at low cost Stylish and varied designs Friendly atmosphere One stop shopping 27. COMPETITORS Products All home solutions Kitchens, bathrooms, sofas, chairs, beds and textiles, rugs, floors, lamps, plants, and everything in between Displayed to show design possibilities with IKEA products Assembled by the customer 28. Intratype Competition Intertype Competition Crate and Barrel Home Improvement Pier 1Stores Pottery Barn Home Depot Furniture retailers Jerrysutilizing similar store Department Storeslayouts Meier & Frank M.Jacobs Macys Ashleys Home Discount RetailersFurnishings Wal-Mart Ethan Allen Fred Meyers 29. Market share Despite the challenging economic situation in the world, fiscal year 2009 was a good year for the IKEA Group. The Group opened 15 new IKEA stores and entered its 25th market, with the new IKEA store in