The IKEA Difference
By Ryan Mathews, Founder, CEO, Black Monk Consulting
(www.blackmonkconsulting.com)
One thing most people seem to agree on is IKEA is not your average, run-of-the-mill retailer. In fact, being different from others is perhaps the most significant advantage the furniture retailer holds over the competition.
IKEA’s Group President Anders Dahlyig told an audience at the recent ECR Conference in Stockholm, the company has a goal to “…be different, not just better.”
Being different covers many areas, including the shopping experience itself, store design and layout, product quality, offering solutions for consumers and attracting the best in retailing talent to work in its stores.
A major difference at IKEA that applies to few others in the broad retailing community is a sense of fun when shopping. According to Mr. Dahlyig, IKEA gives its customers an enjoyable “day out.”
According to Mr. Dahlvig, IKEA “is not just about building a reputation, it’s about building a relationship with your customers.”
Another significant difference for IKEA is its ability to attract top talent to work in its stores, according to The Detroit News.
Retail workers from companies such as J.C. Penney and Bed, Bath & Beyond have found IKEA offers them greater opportunities to put their own ideas to work.
Melissa Jablonski, who previously worked at Penney, said that directives on merchandising displays from her former employer all “came from corporate.”
Pia Carli, a nine-year veteran of IKEA, said it is easy to understand why the retailer attracts workers from other companies. “There’s that IKEA mystique they want to participate in,” she said.
George Anderson, Editor-in-Chief, RetailWire contributed to this report.
Moderator’s Comment: Is IKEA really that different from other retailers? If yes, what differences do you believe make it the force it has become in retailing?
If no, why not? – Ryan Mathews – Moderator
Perception is reality! IKEA has succeeded in convincing the consumer that it is different and special. It works to build a relationship with its client which, perhaps, they succeed at better than many others.
Additionally, if they are attracting a higher caliber of “top-talent,” this translates into a higher caliber of attention to detail and to the customer. Allowing the top-talent to be creative and thus giving them job satisfaction is usually the number 1 priority for employees.
Happy and satisfied employees enable creativity and establish better customer relations.
Not having been to one, yet…
I can only share second hand knowledge and second hand experiences. What I have heard today is a whole lot of good surrounding what might be described as a great place to make an outing, spend a lot of money on things that don’t last very long, but make you feel good for a short time – make you feel stylish. The excuse is that ‘It’s for the kids!’ In reality, there isn’t a lot that I am hearing here that builds loyalty, unless of course you have a whole lot of kids.
It does, however, further the notion that successful retailing is far more about the experience. Yet, in the hard goods and soft goods world, if part of the experience is the product, then there are concerns I would have concerning long term success. But then again, Americans do have a real passion for inexpensive goods (okay, cheap) made elsewhere. It remains a further example of consumer words not matching the behavior of their wallets.
They are an interesting company. I will be borrowing Doc’s friend Bubba’s truck soon and making a trip off to Chicago for my child’s college fare. We’ll see…
It begins with the short, weird name that requires the explanation that it’s not pronounced “icky,” and continues through Christmas Eve “assemble it yourself” sweat-inducing fear. On the other hand, you can take most of the stuff home in your SUV, Minivan, or Bubba’s borrowed pickup; and everything makes you look like you have decorative taste.
But, as their food and daycare services strongly suggest, visits to IKEA take a day and a committed (non-whining) partner. Fortunately there are lots of restrooms. They should sell beer and wine, though, and provide motorized carts with big rubber bumpers. A day at a theme park with no sunscreen required!
IKEA has been analyzed into oblivion, or “into Bolivia” according to Mike Tyson (at various times he’s said he’d “fade into Bolivia” and “eat myself into Bolivia”). All of their best points have been provided in comments today.
However, IKEA experiences a sort of glass ceiling in terms of appealing to customers choosing their second or third sets of furniture. It’s almost as if grownups don’t consider IKEA their first choice. And here’s a question I’ll bet you’ve never considered: When owners of IKEA furniture move, do they disassemble their stuff or just throw it on the truck (where, trust me, the fragile, irreparable joints crack and break)?
IKEA provides value to its customers in many ways — in store and online. Not only is the store different, but it is consistent in its offerings and the solutions if provides. As a sampling of customer-focused solutions, IKEA provides great product selection at reasonable prices, trained employees, great products for all ages, a play area for kids and restaurant as well as unique online services. Their website has a “shopper helper” assist the customer in finding the product they want. Unlike another previous panelist, my online experience was the exact opposite. IKEA was the only store which had the exact size white desk that would accommodate the space in my daughter’s room. Not only did they help me find it by the exact measurements but they told me it was in stock at my nearby store and held it for me to pick up the next day. And this was a week before Christmas.
A retailer who is focused on customer solutions as well as developing a relationship with the customer will see its business grow and prosper.
IKEA is probably the only (clearly) “foreign” retailer that has found success in the U.S.; and apparently it has done that with little, if any, variation on its business model. So — ethnic pride notwithstanding — I think it should be applauded for being an example of multiculturalism that really works…a UN without all the hand wringing.
Bottom line:
Affordable is not synonmous with ugly and tacky.
IKEA realized this even before Target — they’re still trying to wrap their heads around this concept in Bentonville.
It works equally as well in Stockholm, Singapore, and Seattle — enough said.
IKEA is different, but I think the important differences are along the great value, great design line. The in-store experience is efficient, and it works for IKEA, but I don’t find it all that amazing. The nearby IKEA sometimes feels like a conveyor belt, and if you want to go back and browse something you passed along the “path” you can feel like a salmon swimming upstream.
As for employees, I think it depends on the available raw material. Last time I was at IKEA, a surly check out clerk was rolling her eyes and talking back to a customer, and eventually literally walked away.
I recently started working on an itinerary and “must visit” list for my next trip over your way and have now put IKEA firmly at the top. I can hardly wait to see how a US outlet differs from one here in the UK – it sounds a great deal better. One of the main reasons why IKEA and its customers have a relationship is because its stuff is so cheap that it is disposable and people go back for more every time they feel the urge to change the way a room looks. In this, they were certainly market leaders over here. We had cheap flat pack furniture pre-IKEA but it was never lively or colourful or attractive. IKEA has a rotten reputation for delivery of all the correct bits simultaneously, poor stock levels and they don’t do any online selling here but that has never deterred (or perhaps it has encouraged) the hordes. Even I was tempted by the meatballs but have to admit I bought a bag to take home rather than eating in the cafeteria, bright and cheerful as it was (it was also 9am and breakfast looked absolutely too disgusting to eat although my son managed to clean his plate). The meatballs, too, were pretty disgusting and I still have most of the bag in my freezer where it will sit until I next defrost. As for furniture and housewares, yes, cheap and cheerful but I wouldn’t have any qualms about chucking them out after a couple of years. That is if they lasted that long. So yes, they are different and definitely satisfy a need although I absolutely cannot agree with those that like the store layout. My first experience caused a major panic attack and it was a good ten years before I went through the door again and then only so early in the morning that barely another soul was to be seen.
For a while there I thought I was the only one who had not drank any of the IKEA Kool Aid.
Yes, they are a great retailer, who prior to my first visit I definitely had put on a pedestal. Something unusual for a jaded old retailer like me. Well they are good but not perfect.
My mother and I made the 90 mile trek (or should I say pilgrimage, certainly this was to be a religious experience!) to our nearest IKEA location. Upon entering we were immediately overwhelmed, but we had a mission not only to make a day out of it, but my mom had already scoped out a loft type bed to get my son for Christmas.
We soon found the bed and figured out that we had to write down stock number and pick it up elsewhere. So far so good. Now off to explore the rest of the store.
It was difficult finding a cart, without any easily visible signing, but we managed. Unable to figure out how to use the cart escalators (or even knowing for sure that was what they were) we left our partially filled cart to go up for lunch. Apparently we weren’t the only ones who had difficulties finding a cart, because when we returned, the cart was gone, but we managed to locate most of our selections stashed on a nearby display. Back to find another cart (at least now we knew where they were!)
After a bit more shopping we found a fabulous chair and ottoman that fit a need my mother had not anticipated filling that day. Again we wrote down the stock numbers and decided to call it a day.
By this point we had seen someone use the cart escalator, so we understood that this was indeed what it was for, and gave it a shot. Down to pick up our big items in the aisles.
This is where it really fell apart. It was confusing trying to find the items we were looking for. The loft bed, only had 2 of the 3 boxes available. Trying to find someone to help us was next to impossible, and then he came over only reluctantly. He looked through the boxes and confirmed that the box was missing and he said we would just have to come back some other time! No other offer was made to help us out!
Although we were frustrated, we weren’t totally sold on the bed, so we moved on to find the chair and ottoman. Well we found the chair, but they were out of the ottoman. At this point we knew better than to ask.
Will I ever go back to IKEA? Probably, for many of the reasons others cited, especially if the rumored new store in our community comes to fruition and it isn’t quite such a hike to get there. But I don’t think I will ever put them or any other retailer on such a pedestal again!
I got to know the IKEA difference while I was raising my family in Canada. IKEA was, pure and simple a god-send especially when it came to buying my kids furniture for college. They had variety, it was very affordable and it was great stuff. Of course we all muttered about putting it together – but that was part of the experience too. After a while you had a drawer full of those little hexagonal wrenches.
Why we are so afraid of being different I don’t know. From churches to schools to cars to politics and certainly in retail we all clamor for the luke-warm mushy middle ground. The fear of being different and perhaps losing a customer or two who doesn’t like your stuff is actually costing you customers by an order of magnitude. As the Scriptures say: Be hot, be cold but for goodness sake don’t be luke-warm. Some good retail advice there!
There’s at least one area in which IKEA is different for the worse: Online.
Ordering from IKEA online is a nightmare. I made a recent purchase, and I expected to see my merchandise some reasonable number of days later. Instead, I get an email. It said this:
“Your merchandise will be held for you for 48 hours. If we do not receive a response from you confirming your order, your e-Shop order will be canceled. Your credit card will not be charged until the following charges are confirmed:
xxxxx
xxxxx
xxxxx
Here are two options for confirming your order:
1. Respond to this email by stating that you accept the above charges and we will use your credit card number ending with XXX to process your order.
2. Call us at 1-800-434-IKEA (4532) with your order reference number. Our hours are : Monday – Saturday, 8am – 10pm EST or Sunday, 9am – 8pm EST.”
Como say WHAT!!? Is this an online order in 2006? I love IKEA. I’ve been shopping there since college. My kitchen is IKEA and so is my sister’s. It seems incomprehensible to me that a company so advanced in other ways could be so backwards online.
IKEA is one of the few design-driven moderate price retailers. They’re also among the few retailers whose public relations sloganeering resembles the truth. “First we design the price.” They’re smart about getting every last cent of value out of their designs, including the minimization of freight costs. They know they can keep their costs down by minimizing the number of locations, so cannibalization isn’t a factor. And they don’t torture their customers. The food service is creative, low-priced, and decent (like the furniture!), and they supply decent day care for shoppers’ kids. They treat their customers better than almost every store in the country, regardless of price. What department store, specialty store, supermarket or shopping mall feeds their customers decently and watches their kids?
You can’t be different, and have a competitive advantage, based on price
first, and the ‘old thinking’ that shoppers will come to my stores for that.
Just read the case studies of Woolworth’s, the old J.C.Penney, Kmart,
Albertsons, Winn-Dixie, G.M, etc. This is why Wal-Mart is bringing in
high-powered brand management and marketing executives from stellar consumer
marketing companies.
W-M same store-sales aren’t growing like they used to, so they are bringing in power marketers to focus more on the consumer, and drive more upscale shoppers. They are starting to think about shopper engagement and marketing their business and brands the proper way. The “new” and much more consumer-oriented Wal-Mart is coming soon, to your local market. Ouch. The rest of the marketplace needs to stop focusing on the same old pricing (EDLP), dated merchandising practices, lowest-price “ever” sales, and what has been going on for years.
Shoppers are changing, Wal-Mart is changing, and other retailers better change too, or they will soon be singing the old Rolling Stones song, “Gimmee Shelter.”
Yes, IKEA, the largest home furnishings retailer in the world, is (and always has been) noticeably different from their US competition. Off the top of my head…
-Perfected the “great value, great design” formula before Target (most products have at least one component that makes one appreciate that it is “better than it has to be”).
-Original and attractive product design (even when they take inspiration from competitors’ products, which isn’t often, they add their own unique twist).
-Innovators in attractive, efficient-to-ship, ready-to-assemble furniture.
-Good cross-merchandising among their product lines.
-Successful with only minor deviations from their standard format across the globe.
-Low “everyday” prices with annual markdowns of discontinued products.
-Uncompromisingly unique and willing to take risks.
-Individual stores are much larger than competition.
-Products are in-stock.
-Definitely more fun – from entrance to exit, a well-thought out experience.
-Full parking lots.
The IKEA store is only the tip of the iceberg. Their product development process with an unrelenting focus on keeping costs down from production to the customers home is a big competitive advantage. Integration and quality control in the manufacturing process is also key. They are also good at knocking off good design.
Several years ago, I was Managing Director for a retail design firm office in Australia. We had a retail furniture client who developed a relationship with IKEA, and built/leased a building for them adjacent to their own building. We had an opportunity to work with IKEA, merging ideas between the two stores. At the time, we were pretty annoyed by the IKEA designers reluctance to take any of our advice, particularly as these suggestions were based on years of successful retail experience of our team.
As I look at it now, IKEA was right. While we were trying to install principals of design that were based on experience with typical retail stores, IKEA has their own brand image. This image is known to be contrary to the way customers are used to shopping, and therefore different and more memorable. My hat is off to IKEA and its goal to be different from any other retail store.
I’m not convinced anybody commenting here “gets it.” Yes IKEA has succeeded because it is different but that is not the story. It is different because it has tailored its whole operations to serving the customer with value-for-money (VFM) (different thing from low price in isolation). Supply chain and store operations are all directed towards this so customers do not mind paying for plastic carrier bags or other seemingly penny-pinching practices as it all translates into items with a good price and a reasonable level of quality.
In the case of IKEA, VFM means offering new and changing products at a low price that fulfill their role adequately for a length of time that serves a purpose. Young couples setting up a home for the first time can do so gradually and without breaking the bank. Stylish consumers can spend a little on some signature items and basic staples so they can change the look of their home as they go and keep it fresh and store up their income to spend on high ticket items.
The Swedish idea of simplicity, practicality and style will probably never go out of fashion. Neither will IKEA’s approach to continually evolving. Other stores have always looked to the past to see what has traditionally worked. This misses the point that the consumer landscape is changing. Looking in the rearview mirror does not show the road ahead.