Ikea has a long history as a biggest furniture retails of the world. But, how does it respond and grow under this uncertain ecomonic development? let us review the develop history of Ikea [1].
1926: IKEA is born in southern Sweden
1943: the name “Ikea” is officially registered
1947: Ikea begins to sell furniture
1951: publish the first Ikea furniture catalogue
1956: Ikea starts to develop flatpack furniture
1958: Ikea opens the first brand furniture store in Älmhult
1976: Ikea opens the first store in North America
1980: Ikea launches the koi-pan sofa
1987: In Warrington, the first Ikea British store opens
1998: first Ikea store opens in China
2000: First Ikea store opens in Russia
In these histories, Ikea also experienced many setbacks, but Ikea passed through difficult times by changing the operating model.
Nowadays, with the development of digital economy, Ikea as the biggest furniture retail of the world will also need to modify their operating model to accommodate the development.
In 2013, IKEA increased its sales and market share and was driven by its expanding online shopping. According to the August 2013 financial year [4], online sales increased by 29%, when IKEA UK retail manager Gillian Drakeford said that IKEA will continue to invest in online and physical store shopping channels,”
According to Jesper Brodin [2], the president and chief executive of Ikea Group, in the face of growing urbanization and the digital economy, IKEA needs to develop its business in a more flexible way, and this time the acquisition of TaskRabbit is a major leap in IKEA’s transformation, TaskRabbit has operations in more than 40 cities in the UK and the US, and IKEA can connect customers and merchants through its app, users tag the jobs or tasks they want, and staff can The ratio of choosing to work nearby or choosing to pay is large, depending on the staff member itself.
After that, Ikea has joined companies as John Lewis and Debenhams, which means Ikea see service as a development method.
Brodin said, many digital expertise will be learned from TaskRabbit, and at the same time, the acquisition can provide more methods to get service solutions which with flexible and right price.
This acquisition will take gig economy into Ikea, the staff of TaskRabbit are classified as individual subcontractor. they can according to their willings and rate set to choose work when they want, but they are not necessarily have the right to enjoy the minimum salary or the salary of holidays.
Excepting the method which is mentioned above, the UK boss of Ikea pushed a spin-off chain of kitchen and bedroom showrooms and Ikea Planning Studio, the first one was opened in the center of London, which provide the one to one consultation service for consumers, and this level of service typically will not appear in out-of-town warehouses. And these just parts of transformation of Ikea, and Ikea is still looking for other city center stores, they hope to open more stores like that and other formats of home furnishing accessories and a food offer and it is also representing the changes of business model for appealing to online shoppers [2].
IKEA’s sales growth in 2017 was much lower than the average of 7% in the previous five years [3]. In that year, IKEA’s profit in the UK fell by nearly 40% to 87 million pounds. The reason for this result is considered to be wage increases and the investment in online stores is too large, but Javier Quiñones [3], the national retail manager for the UK and Ireland, insists that the concern for high-street stores does not mean that IKEA wants to change its business model. What IKEA is doing is looking to the future and becoming the way customers want IKEA to be. Although most of the growth in sales is now in online, the sales of physical stores are also growing. According to data from the data firm Retail Economics, nearly 15 billion pounds of furniture and flooring market, the first turbulent meal situation has been reorganized, online sales this year will exceed 30%.
The furniture market and the real estate market are inseparable [3]. The recent real estate market is very bleak, and with the depreciation of the RMB in 2017, after the commercial interest rate has risen sharply, customers are controlling the beginning of life, because they need cash more, so they need cash. Many people go to rent a house instead of buying a house.
[1] Life and Style, “The history-Flatpack fortunes”, The 17 Jun 2004, [https://www.theguardian.com/lifeandstyle/2004/jun/17/shopping.homes2]
[2]Sarah Butler, “
Ikea enters gig economy by buying freelance labour firm TaskRabbit”, Thu 28 Sep 2017, [https://www.theguardian.com/business/2017/sep/28/ikea-buys-taskrabbit-gig-economy-tradespeople]
[3]Zoe Wood, “Mini Ikea spin-off store opens in central London”, The 11 Oct 2018, [https://www.theguardian.com/business/2018/oct/11/mini-ikea-planning-studio-spin-off-store-opens-central-london]
[4] Gwyn Topham, “Ikea’s online expansion helps boost sales by 3.1%”, Fri 22 Nov 2013, [https://www.theguardian.com/business/2013/nov/22/ikea-online-expansion-boost-sales]
BEMM129 Digital Business Models 
Hello.
I really like your blog because IKEA is my favorite home decorating brand. In your blog, you mentioned that IKEA is investing more in online store shopping channel every year, but its sales growth in 2017 was much lower than the average of 7% in the previous five years, the profit in the UK fell by nearly 40% to 87 million pounds. And one of the reasons for this result is considered to be large investment in online stores. Obviously, the advantage of online marketing is that it brings the brand closer to the consumer and makes deals easier. But overall the company is about furniture, lighting and home accessories, which means a lot of products may have a better shopping experience after tying them.
So do you think there will be any marketing strategy to make Online and offline market associated closer and more improvements in the digital way(like right now they only provide pictures about their home inspiration maybe they could build a 3D model to make it more visually int he future)?
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Yes, I think this is a really good idea
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Hi there!
I am also a fan of Ikea because of its simple and creative design. There is a significant development for Ikea in the online field. Especially in China, it only took more than two months from the IKEA Fiscal Year Conference in August 2018, which announced that it would cover 149 cities by the end of the year, to the full landing, after nearly two years of testing e-commerce in Shanghai. At the same time, IKEA China has become fashionable from the traditional stability. At the end of August, IKEA even cooperated with Wechat to open a flash store with small programs function in it. But in terms of online shopping, I think IKEA still has a lot of problems to pay attention to. Such as relying on their own website traffic or with the help of third-party shopping platform? Profit or scale of the sale? For example, the use of corrugated board packaging, saving materials and transportation space, but only suitable for IKEA own logistics after years of running-in, once the introduction of third-party logistics, corrugated paper packaging alone is too fragile. The cost of packaging for IKEA products will increase by about 15%, and the cost of logistics and installation will increase by 10%. IKEA’s original system is relatively weak in transportation, door-to-door installation and so on, and it will take a long time to make up lessons. The question is, even if the packaging cost is increased, how to ensure the experience after introducing the uncontrollable factor of third party logistics? E-commerce distribution links are many and far away, so it is difficult to identify which link has problems. IKEA, known for its strict quality control, is reluctant to bear the blame for its partners’ mistakes.
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Hello ,
I like ikea very much. Its style is popular all over the world.Ikea has reformed its digital business not only in the UK, but also in China.The e-business platform was launched in China at the end of 2018. Through the official website of ikea in China, ikea products can be bought online in 149 cities across the country.
It is known that ikea China began to pilot online shopping services in Shanghai two years ago, and the distribution is in cooperation with amazon, new brother logistics and other third-party logistics, which can be divided into “small express” and “delivery by truck”.
Besides e-commerce, ikea is also considering the possibility of cooperating with various digital platforms. On August 27th ikea will launch a small app “pop-up store” on WeChat, offering a limited number of five packaged “solutions”.
In the future, “IKEA flash store” will introduce limited-edition concept sets with different themes from time to time, sell them from time to time, and include social bfunctions such as gifts from friends.
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Hi,
On the one hand, according to your post, the IKEA company got an execting increase by online sells in 2013, but the words form IKEA UK retail manager Gillian Drakeford illustrates that IKEA would focus on physical and online sells, which means for IKEA in British, the physical stores took a big part of the furniture market. Additionally, for pushing a spin-off chain of kitchen and bedroom showrooms and Ikea Planning Studio, IKEA has opened a new physical store in the center of London.
On the other hand, indeed, IKEA has done lots of measures for increasing online sales. A good example might be the acquisition of TaskRabbit. After that, the company has more experienced staffs for online transformations. What is more, for motivations, IKEA does not only cancel what the workers have to do, but also no permission for the minimum salary and salary holiday.
Actually, this blog presents plenty of things which I did not know before, and it is my pleasure to see it.
Thank you!
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