PRODUCT MARKET FIT - IKEA Overview
Category
Details
WHAT
1. Furniture & Home Finishings
- Modern Scandinavian designs with slight local adjustments
- Knockdown, flat-packaged furniture
- Own designs only, no third-party products
- Product range ~9,500 items
2. General Home Products & Accessories
- Lamps redesigned (33 to 9 components)
- Vases and glasses
- Apparel related items
3. Food
- Self-service restaurants; hot dogs under $1
4. Not Selling
- Exquisite designs, appliances, electronics, general supplies
WHO
Primary Target: Young families furnishing first home/apartment
Not Target: Customers seeking high-end luxury, specialty products, rejecting self-service
WHERE
- Origin: Älmhult, Småland, Sweden
- First intl. store: Spreitenbach, Switzerland (1973)
- US store opened 1985; expansion resumed 1999
- Expanded to Asia, Australia, Russia
CHANNELS
1. Brick-and-Mortar Stores
- Suburban locations
- Cash-and-carry model with showroom and self-service warehouse
2. Online Sales
- 1.9 billion website visits in 2015; catalog in 32 languages
3. Click-and-Collect Stores
- Launched 2015; 22 stores in 11 countries by 2016 (excluding US)
- Smaller size (~5-10% of traditional store)
- Limited product display, customer service, some charge collection fees
WHY (Customers Buy)
- Lower prices via cost reduction
- Selling experience: long visits, play areas, cheap food
- Functionality & modern design with local adaptation
- Empowered independent decision making
- Knockdown packaging
WHY (IKEA Makes Money)
- Low cost via target costing, long-term contracts, supplier strategy
- Low price but high volume sales
- Ancillary profit from restaurants etc.
- Logistical efficiency
- Private ownership for long-term strategy
- Tax efficiency via corporate structure
HOW (IKEA Makes Money)
Procurement: 90% products from 1000+ suppliers, long-term contracts, supplier development
Logistics: 30 service offices, 33 distribution centers, automated warehouses
Operations: Slow design process, factory floor input, retail standardization
Tech: 3D printing, software for packaging, automated distribution
HR: Culture of thrift, training, 155,000 employees (2015)
Finance: Private, target cost design, complex structure, $18.9B cash (2015)
General Admin: Split groups for design/distribution and brand control
Marketing: Catalog in 32 languages, local customization, price focus
Sales & Distribution: Suburban stores, self-service, multichannel shift, click-and-collect
Post Sales: Click-and-collect support for complex purchases
