Ikea Invades America

In less than a decade IKEA Group has managed to become the top furniture retailer worldwide not only due to its low prices, but most importantly due to its shopping concept.

To begin with, IKEA’s customer value proposition is based on its corporate slogan “Low price with meaning” and is actually a bundle that combines low price, as a result of its cost efficiency efforts and self-service / assembly philosophy, with a good functional design and a relative good quality, along with a wide range of products, and a whole shopping experience that is very appealing and convenient for the customers. IKEA aims at engaging the customers in working together “to save money for a better everyday life” .

As far as its business strategy is concerned, one should mention IKEA’s mission, “Democratic Design: low price with meaning”, which sums up its intention to provide a “wide range of home furnishing… at low prices…for as many people as possible” . To be more specific, the IKEA customer enjoys products of a unique form, design, and functionality at very affordable prices. In relation to the growth patterns during all these years, IKEA has initially followed a product development strategy (intensive growth), being finally in the position to offer a range of 10.000 products. The company later on introduced its in-house restaurant, a concept well embraced by the customers, making the company the 15th largest food chain in America. Despite the fact that the restaurants do not operate as another business entity, this development could be identified as a diversification strategy, since IKEA moved outside the furniture retail industry and expanded to the food industry. Nowadays, IKEA aims at opening more stores in America (its goal is to have 50 stores in the United States by 2013), which constitutes a market penetration strategy, since the firm expects to expand its business regionally and increase its market share. As a last remark, one could use Porter’s model for generic strategies...