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Top Ten Reasons IKEA is the Consummate Retail Brand
By Lisa Hays, Fresh Perspective and Susan Spaulding, Recalibrate Strategies
Posted Septembert 18, 2014
IKEA, in my personal experience, is a brand unlike any other. I first visited IKEA in June 1990 when in Hong Kong on business. I still remember several things about that visit. Since that was more than 20 years ago, the sheer fact I can recall anything beyond an overall impression itself demonstrates how strikingly distinct and positively I viewed IKEA relative to other retailers.
During the weeks I spent in Hong Kong and other cities in Asia I had the opportunity to experience and/or observe differences in just about every element of life. I learned a great deal about how people live in vastly different cultures, and I have many fond memories. However, none are as vivid as the visit to IKEA.
That single visit to IKEA completely changed how I think about stores, shopping experiences and purchasing items for my home. I had never encountered a huge store that: 1) was so intuitive to shop, 2) presented numerous options in ways not visually or physically overwhelming and, 3) helped me begin to visualize different product and layout combinations applicable to me and my home. As I recognized that the store explicitly catered to residents and visitors to Hong Kong – most of whom lived in very different types of homes with far less space than I enjoy living in the Midwest – the fact I was so captivated by the possibilities and how they were presented still surprises me.
When creating my “Top 10” list I had to narrow my initial list considerably. And, I’m going to cheat a bit and comment on several things I believe contribute to IKEA’s uniqueness – outside of the “Top 10” list.
IKEA’s vision: “To create a better everyday life for the many people.”
In their words, they target “the many people.” For IKEA this incorporates providing products, services and experiences that meet or exceed the wants, needs and personal tastes of people across the 44 countries where they have stores. A number of critical components contribute to achieving IKEA’s vision. Examples
- Culture: It is difficult for me to imagine the extreme cultural differences in the vastly different countries and communities IKEA serves, in addition to a huge online market.
- Function: For me, “multifunction” is a primary memory I have from shopping the IKEA store in 1990. IKEA’s products often serve multiple functions and are modular enabling consumers to purchase pieces to meet their needs. And, by adding new components later, functionality possibilities increase.
- Quality and Durability: IKEA adds creates extra quality and durability parameters given their choice to primarily sell products that ship flat and require individuals – with wide-ranging skill sets – to assemble the final product. The fact they sell products for babies and children also increases the importance of quality and durability.
- Space: Most of us in the U.S. take for granted the amount of personal space we enjoy. Many people live in far more constrained spaces. IKEA creates products and furnishes entire rooms for widely varying space constraints.
- Financial: The reasons for selecting IKEA products may be for reasons I’ve noted above, or other personal reasons. However, for most IKEA customers the cost of products, in combination with the need(s) these products are expected to fulfill and the length of time a product is expected to be useful, are definite considerations.
- Environmental Expectations: Again, the U.S. falls behind a number of countries, particularly several European and Asian countries, in how individual citizens take responsibility for minimizing their own personal environmental footprint. Their purchases, including any inherent waste, are an important consideration. IKEA embraces environmental sustainability objectives daily as a business, and in product construction, packaging and shipping. Shipping product components in a flat box to be assembled by the consumer is a major waste reduction method.
My personal designation of the Top 10 Reasons IKEA is THE Consummate Retail Brand
- On their website, they provide downloadable easy-to-use (per me!) 3-D online room planners. These make it easy to take into account not only the size of a room, but also placement and size of windows and doors, along with other important measurements. And, in case you need help with assembly of a product you’ve purchased, there are both instructions and a video on their website. http://www.ikea.com/ms/en_US/service-offer/
- They offer “Durable Infant/Children’s Product Registration” for parents to register children’s product purchases. Then, in the unlikely event that the product is recalled, or new safety information becomes available, IKEA uses the product registration to contact parents. If issues arise, it is important to be ‘in-the-know’ quickly.
- Their website enables prospective customers to check stock availability online before going to the store. The ability to save a trip if a desired product is not in stock saves time, lessens frustration and removes the environmental impact of a trip to the store. (Note: This only applies if you have ONE specific product in mind…perhaps not often reality for many IKEA customers.)
- They are masters of “creating Buzz” for new store openings. Using the Merriam, KS store as an example:
- Articles in several publications built awareness and called out a number of IKEA’s differentiating features
- Prominent front – and back – cover newspaper ads with whole room visuals
And as the opening date, September 10, 2014, drew closer…
They invited IKEA enthusiasts to get in line up to 48 hours prior to the first day’s opening. Those who chose to ensure they were “one of the first” came away with sofas (first 40 people) and armchairs (the next 100). During the first two days they were open they gave away thousands of dollars’ worth of gift cards, merchandise and food. Their online presence was established in advance with the ability view their website to become a member of the “IKEA Family.” IKEA Family members receive notice of events and specials as well as “Family only” merchandise specials on an ongoing basis.
Women in leadership roles! Women make up 40% of IKEA’s top 230 leaders. Global (and U.S.) studies detail the benefits, including enhanced financial performance, for businesses with women in leadership roles.
While their full catalog is available online, in 2013 208 million catalogs were printed. The 208 million included 62 different versions for 44 countries. The complexity of the decisions and implementation challenges inherent in producing versions tailored for very disparate customer segments represents incredible dedication to, and achievement of tailored products and communications for a – clearly very engaged – global market.
- Several “pop-up” events showcased their products so consumers could see, touch and sit in IKEA products.
- Pop-up events were tied to popular metro-area events, such as:
- A “block party” with Sporting KC at Sporting Park, providing the ability to meet several Sporting KC players, practice soccer skills and relax on IKEA furniture
- IKEA Family Movie Night at the Boulevard Drive-In Theater, featuring games and snacks
- Booths with IKEA products at the Prairie Village Jazz Festival and the Westport Art Festival
They have high standards for how they treat employees. They don’t just talk about the importance of strong work/life balance, they actively support it. IKEA has been named among Fortune’s “100 Best Companies to Work For” and Working Mother magazine’s “100 Best Companies for Working Mothers.” Additionally, they are implementing an average 17% hourly minimum wage increase for U.S. store employees. The actual increase for a given employee is based upon use of a “living wage” calculator that provides guidance for what a “living wage” is by locale since the cost of living varies across the country.
They have an exemplary long-term record for substantial sustainability accomplishments as IKEA, and throughout their considerable value chain. The commitment to environmental sustainability is completely ingrained within the company, and is easily evident in how they conduct business on a day-to-day basis.
A few examples:
They have now raised the bar for the Kansas City metro area – and likely beyond – in a number of ways:
- The Merriam, KS store features both geothermal energy and solar arrays. The solar arrays will produce 1.3 million kWh (kilowatt hours) of electricity annually. To put that in perspective, IKEA’s solar array prevents 930 tons of CO2 emissions, equating to annual CO2 emissions of 196 passenger vehicles or supplying electricity to 128 homes for one year. (www.epa.gov/cleanenergy/energy-resources/calculator.html)
- The Merriam store increased U.S. solar installations to 41. Combined they produce 40 MW of energy – equivalent to annual CO2 emissions of 5,807 passenger vehicles, or electricity for 3,794 homes for a year.
- In 2013 IKEA finished conversion from wood shipping pallets to “paper” (corrugated, honeycomb or other paper pulp) pallets. That change reduced IKEA’s transportation footprint by 75,000 tons of CO2 annually.
- Over 70% of the cotton sourced in 2013 was from more sustainable sources – up from 32% in 2012. (Suppliers are all working toward the established “Better Cotton Initiative” standards.)
- Innovation – products, design, creative pairings and multifunction units, problem solving
- Corporate responsibility – employee wages, environmentally-responsible practices (stores and corporate)
- Shopping experience for varying consumer situations:
- Families – including baby care areas, shopping strollers, supervised play areas, kid-friendly foods in the multiple restaurants/food service areas – not to mention many family-friendly products and product groupings to create flexibility as kids grow and needs change. Modular is a family friend!
- Individuals – options for just about anything for the home – from a single room to a large house
- Couples – many options to create a comfortable and functional home filled with “his, hers and ours”
- Cost-conscious – products are generally available in a range of sizes, materials and price ranges
- Creative thinkers – the options for combinations are virtually endless!
- Purely function-driven – functionality is a key building block for most products
For those who are, or have been, skeptics of whether running a business day-after-day with significant sustainability achievements as a core objective can also be profitable, the short answer is YES! In 2013 IKEA’s revenues were $28.5B Euros ($36.94B USD), and their net income was $3.3B Euro ($4.28B USD), for a net profit margin of 11.6%.
If you have personal and/or professional experience with IKEA, I would very much like to hear about your experience(s) and resulting perspective.
Fresh Perspective helps business leaders make key strategic decisions. We adeptly research, analyze and synthesize results to deliver only ‘need to know’ insight to leaders so they make the right decision the first time. Lisa Hays, founder and CEO, gained considerable experience from widely varied roles in large corporations. She combines her 30+ years’ experience, expertise and objective viewpoint to directly help business leaders.
Lisa Hays, Fresh Perspective, Inc.
Recalibrate Strategies help companies grow their business. We apply proven marketing systems to recalibrate their business and their brands by collaboratively creating a success blueprint. We facilitate a process that harnesses insights, generates new ideas and provides a strategic roadmap. Our founder and lead consultant has 30+ years of experience as a CEO, entrepreneur and marketing expert with exceptional leadership and facilitation skills.
Susan Spaulding, Recalibrate Strategies
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