“To create a better everyday life for the many people”
Sales & Distribution
IKEA sells their products in 2 ways, a direct visit to their store by the customers, and via online shopping. In the past year, IKEA welcomed nearly up to 600 million visitors to their stores all around the world.
IKEA and the Do-it-Yourself Concept
Another main reason that allows IKEA to have such a low price tag on all of their products is the “Do-it-yourself” (DIY) concept. This is generally known as when the customers assemble the products by themselves. Furthermore in IKEA, the DIY concept is not limited only to the assembling step, but from choosing your product to collecting and bringing them home. This allows both labour cost for IKEA in every step, and the price tag to the customers to be reduced significantly.
The DIY concept can also be seen as the ‘price’ the customers pay for low price tags. However, the DIY concept trade-off is not seen as attractive to everyone. Therefore, IKEA’s delivery and assembly services are also available at an extra charge in most countries.
Figure 1- Delivery Charges in UK
Selling Environment
Furthermore in the stores, IKEA concentrates on the store’s environment, making sure that the room settings are adjusted to fit with local tastes, sizes of rooms etc. making the customers feel like home.
Figure 2- IKEA bedroom layout in UK – Plain and Modern
Figure 3- IKEA bedroom layout in China - All in one
Entering India
Sales and Extra Services
Even though the DIY concept is becoming increasingly accepted, it is only true for the developed countries such as Sweden and UK. The DIY concept is not yet acceptable in countries where labour is significantly lower, for example China and India. Thus, when IKEA starts an operation in India, the after sales services such as delivery and assembly services at reasonable prices are essential.
On the other hand, IKEA can also use the cheaper labour force available in India. This can be from having them to handle the delivery and assembly services, which are essential in India, to having more staff in the main stores to help develop customers’ understanding of how IKEA works.
Selling Environment
This approach will also need to be taken into account when entering India to ensure IKEA’s success. The modifications on store environments can ranges from matching the display room’s size with the customers’, to adjusting the colour of the products to customers’ taste.
Figure 4- Possible IKEA bedroom layout in India