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JINHAN FAIR TOP BUYERS:Ikea’s strategy for becoming the world’s most successful retailer
Ikea’s forward-thinking strategy made it the top furniture seller in the world.
It also changed retail forever, analyst Warren Shoulberg writes on industry website The Robin Report.
“There is perhaps no other retailer on the planet that has moved its basic model into so many places with so much success,” Shoulberg writes.
The furniture store has an impressive 298 stores in 26 countries, selling US$36 billion a year.
Here are a few crucial aspects to Ikea’s success.
1. Solving the worst part of buying furniture.
Before Ikea existed, people saw furniture as an investment for the next 20 years.
This resulted in a lot of anxiety and indecision, according to Shoulberg.
“They created products that were nicely designed, if not particularly durable, that were intended to be used immediately… and disposed of when they wore out or, more likely, when the user had moved on to a different taste level or purchasing strata,” he writes. “It’s a seminal change in the home business and one that conventional furniture stores are still trying to come to grips with.”
2. Hitting the right demographic.
The products are clean, with a simple aesthetic and “whimsical” names.
Ikea is also known for paying workers a living wage and being transparent about the production process.
“They have Gen Y written all over them,” he says.
3. Not expensive, but not too cheap.
Ikea’s price point is perfect, according to Shoulberg.
While prices are cheaper at deep discounters like Aldi, shoppers feel they are getting a good value at Ikea.
Still, Ikea is much cheaper than competitors like West Elm and Bed, Bath & Beyond.
4. Stores are a destination.
As e-commerce becomes more popular, shoppers need incentive to come into stores.
With its elaborate showroom and cafeteria, Ikea has become a unique destination for shoppers.
While many retailers enter shopping centers hoping for traffic, Ikea is a standalone store that shoppers seek out with a specific goal in mind.
“There is no mistaking why you are there,” Shoulberg says.