What makes Americans such fans of IKEA?

Discussion
Photo: Adamo Di Loreto, Getty Images
Feb 09, 2017
George Anderson

In an era when many big box retailers are experimenting with scaled-down store formats, IKEA has just opened its largest warehouse in the United States at a location in Burbank, CA.

The 456,000-square-foot unit, which opened for business yesterday, drew a crowd of more than 1,500. A line began forming at the store at 6:00 a.m. as many hoped to be among the shoppers who would win free furniture, such as a free Landskrona sofa ($799) or Poang armchair ($109). The first 100 kids on line received a soft toy from the flat-pack furniture retailer.

The new store, which has 1,700 parking spaces and is situated on 22 acres, was opened as a replacement for IKEA’s oldest store in the Western U.S. That location, which opened in 1990 and closed last weekend, was 242,000-square-feet.

While the store in Burbank is massive, IKEA has begun opening smaller locations of its own. Last year, the company opened 19 IKEA pick-up and order point stores in urban centers across the globe. The stores offer customers the means to order items online and go to a location to collect them for a flat $20 fee. Customers can also place orders online at the stores for pick-up.

The Swedish retailer, which operates 392 stores in 48 countries including 43 in the U.S., saw overall sales increase by 7.1 percent in 2016. Comparable store sales improved 4.8 percent.

The chain’s growth has continued unabated despite some high-profile product recalls. Last year, IKEA recalled 29 million MALM chests and drawers after four children died as the result of the furniture tipping over on them.

“Growth and profitability give us the freedom to choose our own way, the flexibility to move fast and the independence to think and invest long term,” said Peter Agnefjäll, president and CEO, IKEA Group, in December. “We are in a good place and we have an exciting journey ahead with a strong focus on continuous growth and efficiency in our operations.”

DISCUSSION QUESTIONS: What has made IKEA so popular with consumers in the U.S.? Do you expect that popularity to continue or is the current IKEA business model susceptible to disruption?

Braintrust
"Shopping is about discovery isn’t it? Add some measures of price competitive necessities and treats and you’ve got a winning retail concept."
"What’s made IKEA popular? The Swedish meatballs!"
"It’s probably a small subset of the passionate IKEA customer, but IKEA-hackers have a large following online."

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9 Comments on "What makes Americans such fans of IKEA?"

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Mark Ryski
BrainTrust

IKEA is a perfect example of how a great concept with excellent execution can thrive — even in the age of Amazon. As is so often the case, successful concepts are an alchemy of many factors including great products, brilliant marketing and efficient processes all rolled into a store experience and sensibility that connects with consumers. While every business is susceptible to disruption, and others have attempted to copy IKEA (like JYSK, a Denmark-based retailer), IKEA continues to prevail and I expect they will for years to come.

Chris Petersen, PhD.
BrainTrust

IKEA wins on differentiated good value plus consumer-centricity.

As far as “flat furniture” goes, the quality is generally consistent and it’s a good value. IKEA customers know what to expect, so they trust the brand for products in these categories. What IKEA does a great job of in their large store space is creating displays so that the consumer can visualize what their room can look like with IKEA.

As George describes in his post, IKEA has designed stores in ways that allow shoppers to choose how they want to shop and purchase — including click and collect options. Consumers can choose the experience of wandering through 2 KM of displays to get to the meatballs in the cafeteria, or they can use their phone to narrow their choices to find what they want. Customers are in charge of their experience … they can “have it their way.”

Kim Garretson
BrainTrust
4 months 13 days ago

It’s probably a small subset of the passionate IKEA customer, but IKEA-hackers have a large following online. Because both the complete IKEA furniture items and all the separately sold pieces and parts lend themselves to creative interpretation, there are several blogs devoted solely to these creations. I would say that the DIY possibilities with IKEA’s offerings are perhaps more fun and fast than trying to create a similar project with goods from Home Depot and Lowe’s.

Lyle Bunn (Ph.D. Hon)
BrainTrust

Shopping is about discovery isn’t it? Add some measures of price competitive necessities and treats and you’ve got a winning retail concept.

Chuck Palmer
BrainTrust

When it comes to IKEA, my strategy hat goes out the window. I have trouble analyzing it because it’s so damn good.

For my family it has always been about aspiration and inspiration. When we were young, we saved up for the large bank of family room storage that filled a wall. When our TV got super thin and our kids didn’t play with all the toys in the baskets that fit in the lower cubbies, it was sad to see that stuff go.

As we helped our parents downsize, those inexpensive, infinitely re-configurable shelves were our go-to for efficient storage.

It’s hard to imagine IKEA being disrupted. The scale and vertical integration prevents that, I think. If anything, they need to focus on their digital layer and how consumers now are blending information, creativity and their products to make their homes and offices unique.

Shep Hyken
BrainTrust

What’s made IKEA popular? The Swedish meatballs! Seriously, when you offer the public a good product with competitive prices and throw in a little “experience,” you have a great value proposition. The experience comes in the form of a bit of “WOW” when the customer walks in the store. The size of the store, the vast selection and the displays are impressive.

Craig Sundstrom
Guest

Well they’re cheap. or more to the point they’re “value price” (I believe is the appropriate jargon). I expect the popularity to continue, though the danger of saturation may be approaching. IKEA’s model seems tied to scale to an unusual degree and they may have maxed out the metro areas able to support them.

Ken Morris
BrainTrust
IKEA has done a phenomenal job of understanding customers’ needs and delivering unique products and experiences that resonate with consumers of many demographics. IKEA’s vision “to create a better everyday life for the many people” and business idea “to offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them,” translates well for many cultures — especially for Americans. Passionate, IKEA brand enthusiasts flock to the stores on a regular basis to get their IKEA fix. IKEA has develop a cult like following by offering smartly designed products that are inexpensive in a fun multifaceted shopping environment. Many shoppers start by perusing the IKEA catalog and making their shopping list for their next trip to IKEA. And many people will travel quite a long way for this destination shopping excursion. Consumers like the theater of shopping at IKEA. With its labyrinth like layout, is a perfect forum to provide a theatrical experience and inspire impulse purchases. They also love the price points and even well healed consumers mix and match their modern Swedish design aesthetic. Oh, and by the way, their cafeteria and fast food… Read more »
Ricardo Belmar
BrainTrust

It’s all about customer experience. IKEA focuses on both parts — the customer, and the experience — and they do it exceptionally well.

For the customer: they expect good value and get it. They get to shop however they want and expect to get the same value and great experience no matter the channel. IKES delivers.

For the experience: they’ve made furniture shopping into an adventure with personality. The cafeteria is icing on the cake.

wpDiscuz
Braintrust
"Shopping is about discovery isn’t it? Add some measures of price competitive necessities and treats and you’ve got a winning retail concept."
"What’s made IKEA popular? The Swedish meatballs!"
"It’s probably a small subset of the passionate IKEA customer, but IKEA-hackers have a large following online."

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