Ikea Case
IKEA’s competitive advantage came from the fact that it provided stylish, quality functional designs at low prices so most people could afford them. IKEA’s furniture had minimalist lines, which it got manufactured in a cost efficient way by establishing contracts with suppliers. IKEA’s ‘democratic design’ was based on reducing assembling costs through machine production. Sales started to take off when a widely read Swedish magazine called Allt i Hemmet promoted IKEA’s products (to middle-class households) saying that they were 65% cheaper when compared to its competitor’s products.
IKEA’s expansion plans in Europe were a success due to the fact that its elegant, clean-lined functional designs; inexpensive prices, and immediate availability through a self- service store format were a refreshing change. IKEA’s stores were typically situated on city outskirts, instead of downtown, which meant that IKEA had several access roads and good parking space for customers. IKEA solved the traffic problem through self-service pickups. Shoppers were allowed to enter IKEA’s warehouses, load the flat-packed furniture of their choice onto trolleys, and quickly take them away through the checkout area. The self-service store format was extremely successful to the extent that IKEA made it a norm for all its stores.
After experiencing slow business in United Kingdom due to a local competitor named Habitat (which was similar to it in many ways), IKEA decided to venture into North America. The most important lesson that IKEA learnt from its experience in North America is that in order to be successful in North America, the company had to understand American needs and redesign its European-style products. IKEA is now attempting to tap into America’s shifting culture, reemphasize its designs, and promote itself through ad campaigns that target a young demographic.
Prior to its expansion into North America, IKEA used a one-style-fits-all strategy. Though the core strategy was always to provide stylish