IKEA Challenges and Solutions Essay

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Future of IKEA / IKEA: Challenges and Solutions

IKEA

IKEA was started just before the end of the Second World War. Ingvar Kamprad who was in his late teens at the time, named the company after himself, his farm named Elmtaryd and the place where he was raised, Agunnardy. Since its inception when it sold household goods, the store has experienced rapid growth, moving from carrying furnishings to designing furniture, all the way to becoming a large-scale furniture seller with outlets around the world. It is one of the preferred stores for value-based consumers.

Factors that Account for IKEA's Success

Many factors account for IKEAs success, but chief among them is the cost advantage that it possesses, differentiating it from its competitors. The firm is known for delivering quality and practical furniture that it customers are able to assemble. The company takes advantage of the good relations with its suppliers, thus, ensuring low costs in producing efficient goods at minimal costs. It has also carefully chosen its market segment to include the youth, comprising of college students below thirty, and newly weds (Moon, 3-5).

There are several things that set the company apart from its competitors. One of these is the provision of practical furniture at low prices in the market. IKEA has been able to achieve this by exercising economies of scale; it produces large quantities of products due to their worldwide demand. In addition, it has focused on lowering costs, inculcating this as a company value, thus, ensuring minimum wastage at all times.

Secondly, IKEA over the years has paid attention to the design of its furniture, ensuring that the products are not only functional and affordable, but also aesthetically appealing. Thus, the democratic design concept was adopted to ensure that the products were low cost, but not cheap-looking. This improvement in design is a great progression from what was previously described as tasteless furniture.

The third factor contributing to the success of IKEA is their shopping design, which has been developed to ensure the customer has a wonderful experience, right from when they enter the shop. They have deliberately designed large stores with decorated model rooms, which their customers can walk through as they shop for furniture. The atmosphere is inviting and memorable. This focus on the environment has caused the shoppers to really enjoy the IKEA shopping experience, wanting to go back for more (Moon, 3-5).

The fourth factor is that they ship and sell their furniture unassembled, lowering shipping, storage and transportation costs. In this way, they have been able to undercut their competitors by selling their products at 50 to 70% of their competitors' selling prices ((Moon, 3-5). This greatly increases the brand's market share as people from all walks of life are looking for bargains.

Other than the cheerful decoration of the model rooms, it offers various features unique to its brand, such as a restaurant that sells Swedish food and children's playroom. This works very well for the target market that most likely has small children that it has to tend to during shopping. Shoppers can thus view the whole IKEA experience as an outing, rather than a boring trip to the furniture store.

Another important factor is that this store knows how to communicate its value to its customers. It strives to understand what its customers need, and create products that are unique and unavailable elsewhere. The brand also has the flat package concept of shipping so that maximum product quantity can be shipped at a time, ensuring cost savings. The self-service concept, which allows customers to collect their unassembled furniture and assemble it themselves, ensures that costs are kept low, impacting the prices offered (Moon, 3-5).

The Downsides to Shopping at IKEA

There are, naturally, some downsides to the IKEA experience. One of this is that it is impossible for a consumer to get a unique product. As it is able to offer low prices due to economies of scale, it must mass produce everything (Samantha, 2-6).This does not allow for originality. Customers, therefore, always have the consciousness of owning something that is available to all, and thus not special.

Secondly, locating something in one of these stores can be a mammoth task. One has to go through a huge number of products before locating what they are looking for. IKEA recommends that customers come to the store with a list of the things they need, plus specific measurements of the same to aid in locating the items.

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This means shopping at an IKEA store can be tedious, especially when looking for something that is an exact fit for your measurements (Samantha, 2-6).

The store also does not have a presence in many places, causing some consumers to place orders from catalogs. While this might save the time and hustle of going through the store, it also denies a customer the physical interaction with the product before the purchase is made. This denies them the whole shopping experience, which would have enabled them to make a better choice.

Fourthly, IKEA requires that shoppers should collect their unassembled furniture and put it together themselves. This may be easy for those who have the skills or are gifted in this way. However, many people would find this task daunting, taking a great deal of time to put the furniture together correctly. It might, sometimes, require getting outside help to assemble the same, and this might mean extra costs (Samantha, 2-6).

Lastly, the furniture on offer at IKEA is not long lasting as they need replacements after a few years. When it comes to furniture purchase, most people want to make a purchase of a product that is bound to last long, if not a lifetime. They cannot get this at IKEA. Consumers, thus, have to keep in mind that they are not shopping for a product that can last a lifetime.

Recommendations for IKEAs Further Growth

The store must constantly adjust itself to the dynamic environment and be attentive to changing customer inclinations. There are some strategies that it can adopt in order to ensure further growth.

Generate Customer Awareness

Potential and target consumers must be made conscious of the advantages that the unassembled furniture offers. Some of the things that can increase this awareness are capturing presentations of furniture arrangements on video and having them online so that customers can see their various options. This will be quite appealing, especially for those customers that shop via catalog. Rather than having customers walking through decorated rooms, they can have events where various themes are show-cased, such as business, college and home themed events.

Modified Designs for the Shop

The current design of the IKEA stores is one that lets the customer walk through most of the stores, and this has worked well to increase the awareness and shopping experience of the customers. However, in the same breadth, it has also served to confuse, tire and irritate customers looking for a specific product, in addition to wasting a lot of time. A different design should be chosen, such as a spine or grid layout to reduce the confusion and time wasted while shopping. The design should also entice the customer by highlighting key products, without frustrating the customer. Layout is a key marketing strategy, which when taken advantage of, can yield great results for the company (Tozer, 5-8).

Homogenize Strategy

The strategy here should ensure that the products and the prices offered on the IKEA stores are the same all over, given the fact that the company has a wide range of products and a worldwide presence. This will enable the store to be competitive all over the world and will positively impact sales (Moon, 5-8).

Establish a House Furnishing Business

IKEA can diverse its business to generate more income by starting a house furnishing business to help its customers improve their interior spaces. Many people get tired of their home designs after some time, but feel that they cannot afford to redesign them. However, IKEA is great at cutting costs and can thus be able to refurnish houses using its own low cost furniture, lowering the costs involved. This would enable the firm to have another revenue stream. It would also offer an alternative to customers who do not want to assemble the furniture for themselves. In addition, more furniture would be purchased by one customer that requires a furnishing job than one who is looking for just a single product.

Television Programs

The company can come up with a television show where, through competition or bids, customers can vie for the chance to have their homes renovated or remodeled. A show like this would increase awareness of the products that the company offers, not only to potential customers, but also existing ones. In fact, this is one of the ways that the company can ensure that its existing customers do not look to competition for products that they do not know are on offer at IKEA......

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