IKEA: Creating a Meaningful Cult Brand Experience
IKEA has become a cult brand. Blogs such as OHIKEA extol the brand. IKEA's popularity is so compulsive and has created such devotion, that when they open a new store, people camp outside the store so that they can be in line for promotions, sometimes even for days. Many American cities are so keen to have a store opened that they clambering for IKEA to choose their city next. And the brand has become so attractive that most of its growth is powered by word of mouth from its devout customers. So how has this unique Swedish business been able to garner such devotion and interest? Intelligent design innovation and customer-focused experience staging, which are starkly different from anything else offered by other furniture retailers, are the fuel cells of this amazing brand.
From Discount Retailer to "Sanctuary of Cool"
Ingvar Kamprad, founder of IKEA, has always believed in the brand truth creating "a better life for many," as stated in his 1976 thesis, A Furniture Dealer's Testament. In 1943, when he founded IKEA in a shed on his family's farm, he was selling Christmas cards and seeds. When he first opened the company it served as a discount retailer that looked to bring cheap products into the market, and only offered furniture a few years later. It was in 1955 that IKEA starting designing their own furniture, and that was only because they were being boycotted by suppliers who were up in arms about their low prices. IKEA has never looked back.
Their furniture design principle was simple: design functional, cost-effective, but elegant furniture. A big part of their focus was to make furniture that customers could assemble easily themselves, and this allowed them to make the furniture more cheaply than their competitors. The rest, we guess is history. Not only did IKEA redefine the design of furniture, but they also changed the way we think about buying. Discount stores don't have to display humorless caverns of piled-high products. They can be fun-even hip. IKEA's success also lies in the simple, but striking designs they use. Their furniture is distinctive, graceful, and alluring. And because all their pieces fit so well together, it has become common for people to fill their homes with IKEA furniture-and, did we mention, it is so easy to set up.
Today hundreds of IKEA stores can be found in countries around the world, each boasting record-breaking openings and an ever-expanding customer base. It seems that everyone, regardless of race, religion, or income wants neat stuff that looks cool-so much so that Business Week recently referred to them as a "sanctuary of coolness."
The IKEA Experience
IKEA's success can be attributed not only to their values, products, and unique store layouts, but also to the experience they provide and the lifestyle they encourage. Going to IKEA is definitely less of an errand and more of an adventure. Their stores are as hip as their furniture, filled with eye-catching goods. IKEA calls their stores "furniture exhibitions". Some shoppers dutifully bring in their marked catalogs, scouring for exact products and accessories, while others come with a more open mind and willingly give themselves up to the 250,000 square feet of consumer bliss. Even those with a specific goal in mind tend to get sidetracked by the too-good-to-pass-up deals tempting them at every turn. "I didn't know I needed this 200-count pack of tea light candles, or this nifty rubber oven glove, but for two dollars, how can I say no?" You can't say no to good design, to reasonable prices, or to the delightful decorating ideas that infuse their locations with an exotic European charm. Friendly and helpful staff are only too happy to guide you through the store and help the temptation along.
IKEA considers its store design gentle coercion, and they want each shopper to have a tantalizing experience, a day-long excursion. They provide special facilities for children, including a supervised play area, where kids only too happy to explore. Their stores also provide a delightful restaurant, where you can pick up a delicious breakfast before you shop, or relax as you ponder your purchase. IKEA certainly understands that customers want an all around shopping experience, instead of just a way to access products. People also like IKEA because they feel like they're getting something worthwhile; economic and environmental efficiency is a hard thing to pass up.
Competing Against Non-Consumption
Thanks to Ingvar Kamprad, the whole company from executives to salespeople see the value in making their business cost efficient. From the corporate execs flying economy class to the retail associates acting as catalog models, IKEA knows how to be thrifty, and more importantly how to make thrifty attractive to their customers. In addition to their low-cost practices, IKEA also believes in a strong, down-to-earth business culture that can be most readily seen during their Antibureacracy Weeks, a time when CEO's get down and dirty on the sales floor, doing everything from handing out tape measures to loading and unloading trucks. IKEA's designers thrive in their annual challenge to make a better product for a lower price. Boundaries such as space (everything has to be collapsible for shipping), to materials (nothing in danger of becoming extinct), to cost (no high costs even if the design is flawless) keep this innovative team on their toes.
Of course, there are plenty of low-cost furniture retailers. One has to look no further than Walmart. Why is IKEA different? The answer is clear. They understand the job that consumers are trying to get done. None of IKEA's competitors have been able to build such a strong customer experience. None of their products have the functional design links that is fundamental to IKEA. Certainly none have made it their focus to provide appealing, cool, attractive products the way that IKEA has. IKEA has been able to tap into the fact that we want our houses to look beautiful, or trendy, or elegant. We care about looks and we care about style, and IKEA has mastered that process, and made it a fundamental part of its business, and what it offers to clients. And then there is the simplicity, ease of use, and durability that is part of the IKEA experience. As Clayton Christensen said about disruptive innovation, it needs to compete against non-consumption , or the activities that people already do but can't do well enough. In this case that job is creating a sense of style, and the ability to look and feel cool. The job is creating a lifestyle.
A Culture that Cares
But there is more. IKEA was voted one of Fortune Magazine's "Best 100 Companies to Work For" for 2006. And they are 1 of only 2 retailers in that list. IKEA has made it a fundamental part of their business to make their employees happy, and provide them room for growth. They offer unique education training, career development, and a number of family-friendly initiatives. Not only does this mean happy employees, but makes for a much friendlier in-store experience for customers. One of the striking elements of the IKEA experience is the willingness of employees to be part of the IKEA experience. IKEA is also involved in a number of social responsibility projects that have helped them to weather much of the negative press that other retailers have faced. They are eco-friendly, family friendly, and they even spend time developing their suppliers in poorer countries so that they can make those businesses more effective, and raise the standard of living for their employees.
$18 Billion and Going Strong
And what is the end result of this customer experience? IKEA's business is exploding. They plan to open 19 new IKEA locations in the US by August of 2006, and they show no signs of slowing down. And this doesn't take into account growth in other parts of the world. IKEA's sales growth is up 14.8% for 2005, and has been above 10% for the last 5 years. Their total worldwide sales for last year was up at nearly 18 billion dollars, and they had nearly 400 million shoppers participate in the IKEA experience.
You only have to look at customer responses, such as these from Business Week to see how IKEA has become a cult hit. At least once a year, Jen Segrest, a 36-year-old freelance Web designer, and her husband travel 10 hours round-trip from their home in Middletown, Ohio, to IKEA in Schaumburg, Illinois, near Chicago. "Every piece of furniture in my living room is IKEA-except for an end table, which I hate. And next time I go to IKEA I'll replace it," says Segrest. To lure the retailer to Ohio, Segrest has even started a blog called OHIKEA. The banner on the home page reads "IKEA in Ohio-Because man cannot live on Target alone." And then comments like this: "Half the things we own are from IKEA. They have lasted for years." That's customer satisfaction.
With people already willing to drive hours to make an IKEA pilgrimage, there's no telling what will happen as this furniture giant becomes more accessible to the masses. What's next for IKEA? They have recently moved into the design of office furniture and provide tailored solutions for small businesses. A number of companies already have IKEA designed offices, and it's no wonder when you see the eye-catching design concepts they offer. IKEA has also moved into construction and is involved in a project to provide modular homes-but homes that are still beautiful as well as functional, and all filled with IKEA furniture. They're onto something. Maybe entire schools will be furnished with IKEA Educationware or maybe nursing homes will get a revamped image to uphold the age-ain't-nothin'-but-a-number truth. IKEA is far from being a perfect company, but they show that innovation and providing customers a lifestyle experience is a wonderful formula for business success.
http://www.ikea.com