IKEA is a global furniture retailer with a presence on five continents on Earth. The company started in 1943 by Ingvar Kamprad, in Sweden. Kamprad had a vision of selling affordable furniture to the middle classes, so he set up a business which will sell low-cost furniture. IKEA launched the idea of flat-pack furniture, which can easily be attached to the end consumer, using the instructions manual(Kripa Pattabiraman, 17:07:28 UTC). The idea kicked off and resulted in IKEA becoming a multinational retailer with around 318 stores in 38 countries. This essay is about how IKEA maintains its global presence in the face of intense competition from newcomers.
Despite all odds, Ingvar Kamprad’s dream of selling low cost, easy to assemble furniture became a reality(“Analysis For IKEA | Marketing Essay,” n.d.). However, during the course, IKEA lost track of its quality. The company ended up with making furniture that is unsafe and of low quality. In the past few years, there have been several incidences where children have died or gotten injured because drawer fell on them. Many occurrences have been reported in which IKEA’s product; Malm Dresser, fell on children; crushing them. These products had to be called back with complaints from angry parents.
As if this wasn’t enough, IKEA also has to face intense competition from newcomers in the industry. The most substantial competition is from e-commerce companies; like Amazon, Wal-Mart and Wayfair. These companies sell furniture online, through a third party. The overall process incurs reduced costs, making their furniture less costly. IKEA on the other hand mostly sells furniture through onsite retail outlets(“IKEA Competitive Positioning,” n.d.).
To manage the situation, IKEA needs to work on its quality. It has to upgrade its quality control department which will check its products. Besides, the company also has to make a website, through which it can sell furniture online(“Here’s How IKEA Plans to Fend off New Rivals,” n.d.). This will reduce costs incurred on managing retail outlets. Switching to an online store and outsourcing logistics to a third party will save expenses incurred on salespeople, operating retail stores and logistics. The saved money can be used to upgrade the furniture.
Analysis For IKEA | Marketing Essay. (n.d.). Retrieved December 7, 2017, from https://www.ukessays.com/essays/marketing/analysis-for-the-furniture-company-ikea-marketing-essay.php
Here’s How IKEA Plans to Fend off New Rivals. (n.d.). Retrieved December 7, 2017, from http://fortune.com/2016/07/08/ikea-quality-improve-competition/
IKEA Competitive Positioning. (n.d.). Retrieved December 7, 2017, from https://www.ukessays.com/essays/marketing/critically-analyses-the-competitive-position-of-ikea-marketing-essay.php
Kripa Pattabiraman. (17:07:28 UTC). Ikea – Competitive Analysis. Business. Retrieved from https://www.slideshare.net/kripap/competitive-analysis-20947685