Ethan Hoffman
March 31, 2015
BUA 445

IKEA: Furniture Retailer to the World

IKEA is one of the most successful global retailers in the world. They have over 300 stores in 35 different countries and have been visited by 583 million shoppers. IKEA is known for their low priced and elegantly designed merchandise. They have high sales and continue to grow greatly. Established in 1943, the goal overtime was to provide stylish functional designs that could be manufactured cost efficiently and priced low enough to allow most people to afford them. Self-assembly is a big part of IKEA’s success. While trying to find a way to efficiently pack and ship a long-legged table, they realized that they could reduce transport and warehouse costs, as well as damage costs. Customers liked the idea of self-assembly as they didn’t mind the trade off for low prices. After a lot of success, IKEA would expand internationally. The company expanded rapidly into Western Europe and this was very fast-paced. IKEA then slowly entered the United Kingdom since there were similar businesses there. They then went on to open 7 stores in Canada and then opening a store in the United States. Things did not go well in America. Problems that occurred included measurements in centimeters, sizing issues on products, and exchange rates when going from the Swedish Kroner to the U.S. dollar. However, IKEA had solutions for these problems. Products needed to be redesigned to fit American needs, prices changed to dollars, and there were factories made in the U.S. to reduce transport costs. IKEA aims for a target market of young married couples, college students, and 20- to 30-something singles. The changes in this resulted in revenue growing and by 2008 the U.S. was IKEA’s 2nd largest market. IKEA’s concept and business model is very interesting. Inside an IKEA store, it is set up like a maze. This requires customers to pass through each department to checkout. The goal of this concept is to get more impulse purchases from customers and sell more. IKEA purchased Swewood which was a Swedish manufacturer. They used Swewood to get products to Eastern Europe and this allowed them to keep prices down and gain knowledge about the manufacturing process. The management and organization of IKEA has not changed much since being founded. Their views reflect those of their founder which is informal and frugal. IKEA was mission driven and nonhierarchical. They are a very team based company that is not concerned with titles and privileges. The pay of their workers is not high and people generally enjoy working there for the atmosphere. Everyone that works at IKEA is called a “co-worker” and called by their first names. The CEO even mentioned that he has helped unload trucks and selling products in the stores. As IKEA