Ikea Invades America Essay

1427 WordsDec 17, 20136 Pages
IKEA invades America – Case Report IKEA, Swedish furniture retailer, was founded in 1943 by 17-year-old Ingvar Kamprad with money he got from his father for being successful in studies. The business expanded quickly and by 1950s IKEA had already published their famous furniture catalogue and less than 10 years later it had opened its own showroom and has also started designing its own furniture. Early on, IKEA discovered that products could be packed flat and assembled by customers to reduce costs and therefore be priced lower than those of competitors. However, in 2002, IKEA held only 12 out of its worldwide 154 stores in the United States and set its goal to expand this number to 50 stores by 2013. All over the world, their slogan was “Low price with meaning”, believing in offering tasteful, cleverly designed products at affordable prices. Nonetheless, when trying to invade America, IKEA had to compete with already pre-set context. The main challenge IKEA was faced with upon entry in the US market was that furniture retailing was done much differently in the US than in its home market, Sweden, or other major markets, such as Germany and the UK. Positioning the brand and its product was a hard task as the industry had two main subdivisions – low-end and premium – in neither of which IKEA was able to truly embed itself in. The main issues that caused the difficulties can be categorized by either product attributes, or service-related characteristics. The product quality of IKEA´s furniture, being the first of product attributes and probably the most important one, was rather similar to that of low-end retailers. They focus mainly on the quality of the furniture´s surfaces and use lower quality materials on less visible parts. Innovation and creativity are emphasized more than longevity of the products, which is not something that Americans are satisfied

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