Ikea in China

In Europe and America, IKEA prides itself in a vast variety of good-quality home furnishings and a relatively low price. Its target market is the middle and low-income groups of people.

In the West, with large-scale purchase, its own logistic network, DIY assembling, and fewer shop assistants, IKEA has successfully cut down its cost, leading to a price edge in the competitive market.

IKEA Group, a franchisee of Inter IKEA Systems BV, entered China in 1998 when it opened its first store in Shanghai. IKEAs mainland China stores belong to the IKEA Group and operate as joint ventures. In early 1999, IKEA opened its first Beijing store. Until now, seven store locations in China which included Beijing, Chengdu, Dalian, Guangzhou, Nanjing, Shanghai, and Shenzhen.

After entering China, IKEA found that even the "relatively low price" in Western society was high for the Chinese consumers and its goods even became a luxury for average people. Moreover, even though the Chinese customers have accepted the environment-friendly concept and cost-cutting effort of IKEA, it’s still complain that no free home delivery and installation does not match IKEA's position as a furniture giant. Its service is not as satisfactory as IKEA demand.

For instance, the fashionable DIY mode could not work well in China where the customers are used to the free home delivery and installation. The Chinese customers tend to believe those are the most basic services that have to be offered by retailers, and are common practices of many domestic retailers. To Chinese customers' disappointment, IKEA charges to provide delivery.

IKEA first entered China, the store was considered too expensive for its target consumers-young, professional couples-and the company lowered its prices. The store's prices are now considered mid-range and the target customers from 20 to 35 years old increasing to age 45, most likely a result of the store's market repositioning. Many customers are families with...