thestrategystory.com

• Ikea

The Ikea sustainable strategy

and

Choosing sustainable materials

Ikea.com

• Nathan Mahr

Sustainable marketing

study.com

• Sanna Z Lönngren & Andreas Zätterqvist

Scandinavian Design

The history of ikea, the furniture and the designers

The market of home furnishings that he was entering was fragmented, with a great amount of competition to consider. The top 5 furnishing companies only accounted less than 8% of sales value in a 331 billion dollar market in 2011. The market was saturated by category specialists who focused on selling in specific locations.

This was an opportunity for Ingvar, who decided he wanted his company to be a global seller. He slowly expanded into new countries, carefully monitoring each new stores success and profit. According to Johnson (1988) managers may find themselves managing incrementally in this way, however they have to consider environmental changes. He had done this perfectly however, considering and taking advantage of the lack of a global company in the market.

Despite their global reach, Ikea are known for poor shipping time. Customers are told they will receive products quickly but this is almost never the case, and products have frequently arrived with missing components, meaning a longer wait for these pieces causing further inconvenience for the customer.  Improving this service may increase sales as fast delivery like amazon prime has become a major selling point for modern companies.

By the end of 2013, there were 345 Ikea stores in 45 countries. The stores each averaged $85 million in annual sales. This led to them becoming the leading home furnishings seller in 2011 with no comparable competitor. Their stores however are mainly found in North America and Europe.

One major factor which contributed to the stores iconic brand image is the use of the original Swedish names for products, and the in-store experience offered nowhere else.

The shops themselves are designed to maximise the amount of time each customer spends in store, with pathways in a route which lead you through all departments. The rooms are decorated as if they are real living spaces, almost like a catalogue page displayed in real life. These layouts show the possibilities of the furniture, as well as the layout of the store encouraging customers to pick up items they didn’t intend on purchasing upon entering the store. Seeing the rooms allows buyers to consider purchasing matching items they see displayed together.

As a successful global brand, Ikea must consider its sustainability and its public image relating to this. Consumers are becoming more interested in where their products are sourced and how they are made, and finally if these are done in an ethical and sustainable way. Most global transportation systems rely on oil as fuel or its derivatives e.g. diesel or gasoline to harvest raw materials, although companies are moving towards using electricity.  

Ikea created the role of Chief Sustainability officer within each of their management groups to tackle issues such as this and has vowed to focus on improving and innovating their sustainability. Despite this, Ikea use huge amounts of wood, contributing significantly still to deforestation issues. Combatting this issue can be challenging when trying to keep production costs low. Ikea is greatly known for their range of cheap furniture which does allow a wider range of customers; however the quality of the product does suffer. As a result, customers will be lost, and new market potential might be diminished by people leaving negative reviews.

To attract more customers concerned with environmental issues, Ikea could look at joining further programmes such as plant a tree for every product purchased etc to reduce the negative impact of their production. Allowing scalable quality assurance is a major flaw for Ikea. Due to heavy focus on cost leadership, and with the rising costs of raw materials, financial performance is failing, and quality of products has become a concern for long term loyal customers.

However, this cost leadership is a great opportunity for Ikea. Despite causing some quality issues, customers continue to buy their products as they still receive their money’s worth with relatively low prices compared to the overall market. This, paired with their environmentally conscious promises for the future, create an expanding market. Their development into emerging countries around the world also allows domination in untapped client bases which can create further profitability. Plans to focus on expanding the brand in China are in motion and are expected to be a major success for the firm.

3, Dyck, Robert G, Mulej, Matjaz, 2014

Social responsibility: sustainability, education and management

https://eds-s-ebscohost-com.proxy.library.lincoln.ac.uk/eds/ebookviewer/ebook/ZTAwMHh3d19fODE4ODYzX19BTg2?sid=007a2471-7c6d-498a-b599-08de63091405@redis&vid=0&format=EB&lpid=lp_3&rid=0

2 , Hollensen, Svend 8/7/2010

Global marketing: a decision-oriented approach

https://www.vlebooks.com/Product/Index/1999706?page=0&startBookmarkId=-1

4Ikea’s biggest threats  

https://businesschronicler.com/swot/ikea-swot-analysis/

Leizel Estrellas, 2023, a brief guide to environmental analysis.  

https://safetyculture.com/topics/environmental-analysis/

1 V. Kasturi Rangan, Michael W, Toffel V Toffel et al. Harvard business school sustainability at Ikea group 9-515-033 20/11/17 https://services.hbsp.harvard.edu/lti/links/content-launch

photos:

Ardjian, KEA Ad HEMNES Cabinet Advertising Analysis, medium.com

IKEA Catalog 2021 - Valid from 01/01 until 12/31/2021

IKEA AD ASSIGNMENT, behance.net

Uzina, fresh at ikea, adsoftheworld.com

-Olly Stevenson (27738579)