Ikea Case Analysis

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IKEA is a privately held, international home products retailer that sells flat pack furniture, accessories, and bathroom and kitchen items in their retail stores around the world. The company, which pioneered flat pack design furniture at affordable prices, is now the world's largest furniture retailer. IKEA was founded in 1943 by 17‐year‐old Ingvar Kamprad in Sweden and it is owned by the Kamprad family. The company that was originated in Smaland, Sweden, distributes its products through its retail outlets. As of June 2013, the chain has 342 stores in 41 countries, most of them in Europe, North America, Asia and Australia ("Store openings- ikea," 2013). Its continual success in the furniture retailing industry can be attributed to its unique Scandinavian designs, its focus on cost efficiency, and product strategy. The Scandinavian heritage is showcased beautifully through IKEA’s simple yet unique designs. In the early years, IKEA’s designs were functional at best, ugly at worst (Moon, 2004). Now, due to a deliberate focus on adapting a more design aesthetic (Moon, 2004), consumers began appreciating IKEA’s furniture for the appeal instead of its functionality. Another important factor is IKEA’s cost efficiency plan. In 1956, IKEA began testing flat packaging for tables and legs (Moon, 2004). This obvious idea created more storage space, more items able to be shipped, reduced labor costs, and less reported damages (Moon, 2004). Ultimately, this meant for the consumers a lower priced product with easy transportation (Moon, 2004). Additionally, with the “Low price with meaning slogan”, consumers were only affirmed in that they were going to receive trendy furniture at the best possible cost. A product-strategy council, consisting of senior managers, established priorities for IKEA’s product lineup (Moon, 2004). Once product priorities became established, a product

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