The Swedish company, IKEA, is currently the largest furniture retailer globally. Due to this, IKEA is prone to many problems and backlash from competitors and consumers. Also, IKEA has reached a point in its lifecycle where it can either continue to grow into maturity, or begin the slow transition of decline. In order for IKEA to prevent this from happening, the company needs to address a few problems. While IKEA’s model works in Europe, their model does not work in the U.S. Also, IKEA needs to utilize its low cost structure to its fullest potential. The final problem which IKEA is facing is their lack of online presence. In order to compete in the 21st century, every company needs to have the ability for consumers to purchase products online and have the item shipped to them.
IKEA can successfully combat these problems by altering their strategic and marketing models. This can be done by increasing the company’s online presence, creating a new line of products directed towards the “baby boomers”, reduce the amount of catalogues in circulation, and increasing their brick and mortar locations.
The problems which IKEA is facing are not different than what other companies have previously dealt with. This being said, the solutions to the stated problems are not simple. One of the largest problems which IKEA is currently being faced with is their lack of online presence. While customers currently have the ability to design a room on IKEA’s website, they do not have the entire store inventory at the tip of their finger. As stated in the case, IKEA only has about 30% of their inventory available for online purchase. As of 2012, the top reasons for consumers to shop online are to save time and to have more variety1. Currently; IKEA is not giving their consumers what they want. If IKEA offered more products to be sold online, they would be able to increase their overall sales. Not every country prefers to shop online. Due to this, IKEA should increase the amount of products offered to countries where IKEA does not have a lot of physical brick and mortar locations. A prime example is the U.S. Since there are only 38 stores in the U.S., IKEA is missing a large target market by not offering a sufficient amount of product online.
Stemming from the lack of online presence, IKEA needs to differentiate its strategic model in order to compete in the U.S. What works in other countries, may not succeed to the same extent in the U.S. IKEA is currently focusing its efforts on being a “high quality, low cost” provider. While this may work in other countries, consumers in the U.S....