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
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17 Comments on "The IKEA Difference"
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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.
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 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!
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.
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.
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.