HOW DOES IKEA DO IT?

To create a better everyday life by providing good home furnishing for people belonging to any class is the Vision of IKEA. IKEA is a Swedish-founded multinational group which is owned by the INGKA Foundation and not listed on any of the Stock Exchanges. This is a purposely formulated strategic decision as being a company owned by a charitable trust, it enjoys taxation benefits as well as prevents hostile takeovers.

IKEA is a one-of-a-kind furniture retailer. They have more than 400 giant stores that attract 900+ million visits in the whole world. They can be easily differentiated from any other furniture dealer. If you ever got a chance to visit an IKEA store, you must be familiar with their layout which is a combination of Warehouse and the store itself as one entity. They offer quality furniture at affordable prices. Their key strategy which contradicts from other competitors is that they spend less money to increase sales. They aim to minimize their labor costs, use resources sustainably and increase their productivity by shifting service activities to their customers itself.

If you like a piece of furniture at IKEA, you need to work for it. From the tag attached to the showcased model, you need to write information about it on a paper and then locate this furniture in their warehouse using that information yourself and load it in a trolley. The last step would be to wait in the checkout line to buy it. Moreover, if you have bought any fragile material, then they have a self-wrapping area too.

One might think about why to go to a store where a customer needs to make efforts to buy the product. The key advantage that IKEA provides to its customers is that they offer affordable quality furniture along with a customization option as per their individual preferences. Their official website is thisismykea.com where anyone can customize furniture online. 

To achieve quality at affordable prices, IKEA optimizes the entire value supply chain by emphasizing building long-term supplier partnerships and investing in highly automated and mass production. They tend to save money from an efficient supply chain which in turn decreases the cost of production thereby saving their customers a lot of money too. They spend no money on fancy packaging, thus using plain flat brown boxes for transportation. These containers are sent directly from factories to stores to ensure a reduction in the use of fuel. IKEA redesigns packaging every time to make sure that no bit of space is left unutilized while transportation. They believe transporting the furniture in bits and pieces would double the efficiency by affixing them as per consumer preferences and reducing carbon emission by making fewer trips from warehouses to stores. Hence, they offer furniture which is cheaper to manufacture with a wide variety and no assembly costs. When it comes to using resources sustainably, IKEA never fails to surprise us. It uses leftover materials from one product for making another one.

You might be amazed to know that IKEA earns a significant portion of its revenues through psychological tactics. Any person spends an average of three to four hours in an IKEA store. Since an IKEA store is usually located far away from the cities, IKEA restaurants came into the picture. These restaurants are made inside the premises of their store and don’t require the customers to go out for food. The tactic here is that the food available is of very minimal price. A frozen yogurt ice cream for 1$ tricks the customers into thinking that the sofa set available for 800$ is also economical and pocket-friendly. Another strategy is the layout of these stores. An IKEA store is a bunch of little different sections carefully constructed together like a maze with only one exit at the end. After picking your favorite furniture, this layout makes you walk through the entire maze displaying all of their products. Consequently, many people forget about the exit and end up picking pieces of stuff they weren’t planning to.

When it comes to giving back to society, IKEA is a step ahead. They have taken steps to manage their external resources to achieve long-term goals. Being a furniture company on such a large scale, it uses a lot of wood leading to deforestation, but they have pledged to grow at least as much wood as they use by 2020. Millions of trees have already been planted by IKEA as of now.

The way in which IKEA maintains a good partnership with its customers is also very appreciable. People from IKEA go and visit homes all around the world. They talk with people, look for their closets, measure their cabinets and so on. This serves as a starting point for them to develop products of different designs and create home furnishing solutions. They believe having one-to-one conversations with people gives them valuable insights and advocates continuous refinement of production and distribution. They are never satisfied and constantly look for new and better ways of doing things. Their business model proves that by getting a little creative and innovative with a few of the various factors involved in a supply chain, one could go a long way. IKEA has a passion for life at home. It comprises of individuals from all over the world united by a shared vision and values that they believe are more relevant today than ever before.