It might come as a surprise to some, but the world’s most successful retailer is not a supermarket giant or a fashion conglomerate – it is a furniture chain from North Europe: Ikea. “Ikea has influenced more of American retailing today than any other single retailer”, writes analyst Warren Shoulberg on industry website The Robin Report. Ikea can boast 298 stores in 26 countries and $36 billion in revenue per year, making it the largest seller of furniture in the world.
But how did Ikea become so prominent?
Here are some key business strategies that were crucial to its success – and here’s your chance to steal them:
1. Bringing fast fashion into furniture shopping
Until a few short decades ago, furniture was meant to be a lifetime investment. This made choosing of a piece of furniture a difficult task: before buying, shoppers would ask themselves “Am I ready to live with this wardrobe for the next 40 years?” By creating inexpensive and not-so-durable products, Ikea made furniture shopping anxiety-free. Customers enter Ikea stores looking for affordable and fashionable furnishing which they know they’ll have to replace in just a few years – and they’ll do so happily, taking it as a chance to renew their home’s style. Want to steal this winning idea? Re-think the items you are selling. Ikea made furniture into a cheap product with a short shelf life; how can you rethink your merchandise to increase your margins?
2. Targeting the right segment
Ikea products are a perfect fit with the ideals and tastes of the Millennials. From the clean design and quirky colors, to the ease of transport (which makes the purchase of furniture less burdensome, suiting the Millennials’ need for speed and immediacy), to the low prices, many of Ikea’s characteristics have contributed to making it a success with the world’s largest generation of customers currently alive. Want to steal this winning idea? Know your customers, and meet their demands in new ways. Ikea packs its products with features that resonate with its public – starting from the colors and design, to the convenient packaging, to the furniture made for small environments, like the flats where most urban Millennials live.
3. Exciting in-store experience
The Ikea flagship stores are not just outlets where customers can buy furniture. The smart use of floor space and the rich displays, which showcase the company’s products in a semi-real environment, transform the stores into environments where shoppers become part of the Ikea experience, 360 degrees. Want to steal this winning idea? Think of your shop as a way for your customers to step into your brand: create a lifestyle space which will inspire, give your customers ideas and make them wish to become part of the special experience your brand offers.
4. Right pricing
Appropriate pricing of its products helped Ikea conquer a large segment of the market. Ikea’s furniture is affordable, but not cheap; by extension, customers feel like the items they are buying are inexpensive, but not low in quality – in other words, a bargain. Want to steal this winning idea? Do not discount your wares too much, or your customers will start seeing them as low-value. Find the pricing that maximizes your sales without affecting your products’ perceived quality.
5. A memorable name
If you want your brand to succeed, find a name that is easy to remember and different enough to be unmistakable. When customers search Ikea online, they get to-the-point info: no one but the Swedish giant uses that name. Want to steal this winning idea? Find something short and memorable, and make sure that it works (and that it doesn’t mean something embarrassing) in different languages, if global expansion is what you are after. Even if you are not in the furniture business, many of the traits of this successful retailer can be replicated in different industries. Are you ready to become the most influential retailer of the next 25 years?