Ikea Case
1. Within a highly fragmented furniture market in the US, the top ten retailers in 2002 accounted only for 14.2% of total market share. The market was primarily split between low-en and high-end retailers. Low-end retailers primarily focused on offering a wide array of merchandise including furniture on the basis of low prices. Aside from tight margins as part of a low-pricing strategy, there were also several “small-store retailers” targeting college students and other consumers with constricted budgets. Most of these stores were inconsistent with the environment and displays portrayed, further contributing to poor inventory management practices and below-par customer service.
On the other hand, high-end retailers carried either single brands or multiple brands as part of their product portfolio. Most high-end retailers employed expensive sales executives and focused more on offering value-added services including (but not limited to): measurement and product selection, customizable designs for complete makeovers, product delivery and installation, high number of SKUs stemming from a base product, and even relocation of old furniture. Quality and service was the basis for these types of sellers, constantly reminding customers that their products would last a lifetime and that going through the installation hassle could easily be avoided.
2. When furniture titan IKEA finally consolidated its business strategy in the US by the mid-90s, customers where typically defined as well-traveled, sophisticated yet practical in taste, likely risk-takers, technologically-savvy, and connoisseurs of fine food and wine. Customers at IKEA look for a shopping experience that fulfills and exceeds their expectations by finding multiple types of furniture and other compliments (i.e. kitchenware, decorations, etc) that are practical and can accommodate a “good-living” standard.
Aside from fulfilling the need for new furniture, customers at IKEA also valued complimentary
On the other hand, high-end retailers carried either single brands or multiple brands as part of their product portfolio. Most high-end retailers employed expensive sales executives and focused more on offering value-added services including (but not limited to): measurement and product selection, customizable designs for complete makeovers, product delivery and installation, high number of SKUs stemming from a base product, and even relocation of old furniture. Quality and service was the basis for these types of sellers, constantly reminding customers that their products would last a lifetime and that going through the installation hassle could easily be avoided.
2. When furniture titan IKEA finally consolidated its business strategy in the US by the mid-90s, customers where typically defined as well-traveled, sophisticated yet practical in taste, likely risk-takers, technologically-savvy, and connoisseurs of fine food and wine. Customers at IKEA look for a shopping experience that fulfills and exceeds their expectations by finding multiple types of furniture and other compliments (i.e. kitchenware, decorations, etc) that are practical and can accommodate a “good-living” standard.
Aside from fulfilling the need for new furniture, customers at IKEA also valued complimentary