IKEA Competition
Now Viewing IKEA's competition in: Home Furnishings Stores
Call Preparation Questions
Customers, Marketing, Pricing, Competition
Who are the company’s target customers? - Typically a woman, age 25 to 55, who is fashion- and brand-conscious with better than average income.
What types of marketing vehicles are most effective? - Home furnishings retailers use newspaper inserts, direct mail, catalogs, and the Internet.
What is the company’s merchandising strategy? - Many retailers are integrating products into display environments focused on a particular style or area of the home.
How often does the company change its merchandising displays? - Companies typically change displays frequently to reflect seasonal changes and give their stores a “fresh” look.
What is the company’s pricing strategy? - Major chains have adopted an “everyday low prices” strategy to attract customers and compete with mass merchandisers.
What role does customer service play in the company’s competitive strategy? - Smaller companies can compete against large chains and mass merchandisers by offering superior customer service.
How does the company monitor trends in customer preferences? - Most retailers review daily sales reports from stores to detect changes in buying patterns. Trade shows are also an important source of information on market trends.
How is the company building customer loyalty? - Customer loyalty programs include private-label credit cards, advance notice of sales, and frequent buyer discounts.
Competitive Landscape
Demand is driven by consumer income. Large companies compete through volume purchasing, breadth of products, and effective merchandising and marketing. Small companies focus on a market segment and compete through depth of products and superior customer service. The industry is labor-intensive: average annual sales per employee is $125,000.
Business Challenges
CRITICAL ISSUES
Consumer Income Drives Demand - Home furnishings are usually discretionary purchases that can be postponed when consumer income declines. Sales for home furnishings stores fell 9 percent from 2007 to 2008, as consumers deferred purchases during the downturned economy. Sales rose over 6 percent annually during the stronger economy from 2005 to 2006.
Imports Driving Down Prices - Consumer prices for home furnishing products have been steadily falling the past five years, driven by low-cost imports and competition from national chains and mass merchandisers. Prices for window coverings fell 5 percent from 2003 to 2008; for linen, 23 percent; and for other home furnishings, 15 percent.
Industries Where IKEA Competes
- Retail
- Home Furnishings & Housewares Retail(primary)
- Floor & Window Coverings Retail
- Construction
- Construction & Design Services
- Leisure
