The IKEA Approach
The IKEA approach
Kevan Scholes*
‘In times when many nations and people face economic challenges our vision of creating a better everyday life for the many people is more relevant than ever. To make it possible to furnish functionally, individually and sustainably – even when the economy is tight.’
This was Mikael Ohlsson, IKEA’s Chief Executive, speaking in 20121 while reporting a sales increase of 6.9 per cent (to b25.2 billion), profits of b3 billion and share gains in most markets. At the same time average prices had fallen by 2.6 per cent. IKEA had become the world’s largest home furnishings company with 287 stores in
26 countries and employing 131,000 people.
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Multinational furniture retailers (like IKEA) all of whom were considerably smaller than IKEA. These included the Danish company Jysk (turnover ~ b2.5 bn).
●
Companies specialising in just part of the furniture product range and operating in several countries – such as Alno from Germany in kitchens.
●
Multi-branch retail furniture outlets whose sales were mainly in one country such as DFS in the UK. The US market was dominated by such players (e.g. Bed,
Bath & Beyond Inc. with revenues of some $US9 bn).
●
Non-specialist companies who carried furniture as part of a wider product range. In the UK the largest operator was the Home Retail Group whose subsidiary
Argos offered some 33,000 general merchandise products through its network of 340 stores and online sales. Despite this more generalist offering Argos was number one in UK furniture retailing. General DIY companies such as Kingfisher (through B&Q in the UK and Castorama in France) were attempting to capture more of the bottom end of the furniture market.
●
Small and/or specialised retailers and/or manufacturers.
These accounted for some 90 per cent of the market in Europe.
The home furnishings market2
By the late 2000s home furnishings was a huge market worldwide with retail sales in excess of $US600 bn in items such as furniture,
Kevan Scholes*
‘In times when many nations and people face economic challenges our vision of creating a better everyday life for the many people is more relevant than ever. To make it possible to furnish functionally, individually and sustainably – even when the economy is tight.’
This was Mikael Ohlsson, IKEA’s Chief Executive, speaking in 20121 while reporting a sales increase of 6.9 per cent (to b25.2 billion), profits of b3 billion and share gains in most markets. At the same time average prices had fallen by 2.6 per cent. IKEA had become the world’s largest home furnishings company with 287 stores in
26 countries and employing 131,000 people.
●
Multinational furniture retailers (like IKEA) all of whom were considerably smaller than IKEA. These included the Danish company Jysk (turnover ~ b2.5 bn).
●
Companies specialising in just part of the furniture product range and operating in several countries – such as Alno from Germany in kitchens.
●
Multi-branch retail furniture outlets whose sales were mainly in one country such as DFS in the UK. The US market was dominated by such players (e.g. Bed,
Bath & Beyond Inc. with revenues of some $US9 bn).
●
Non-specialist companies who carried furniture as part of a wider product range. In the UK the largest operator was the Home Retail Group whose subsidiary
Argos offered some 33,000 general merchandise products through its network of 340 stores and online sales. Despite this more generalist offering Argos was number one in UK furniture retailing. General DIY companies such as Kingfisher (through B&Q in the UK and Castorama in France) were attempting to capture more of the bottom end of the furniture market.
●
Small and/or specialised retailers and/or manufacturers.
These accounted for some 90 per cent of the market in Europe.
The home furnishings market2
By the late 2000s home furnishings was a huge market worldwide with retail sales in excess of $US600 bn in items such as furniture,