According to the agency that created the spot (which was directed by Spike Jonze of Being John Malkovich and Adaptation fame), many consumers are reluctant to part with old furniture and other accessories, so IKEA would like to help them feel better about buying new items. The audacity to tell viewers that their attitudes are crazy and that they need to get over guilty feelings is typical of the Swedish furniture retailer's approach of going against common assumptions.
That approach has helped the company rack up worldwide sales of more than €9.6 billion a year (US$ 11B), along with a reputation for selling inexpensive, sturdy, self-assembled furniture.
Ingvar Kamprad founded the company in Sweden in 1943. He named his fledgling business by using his initials and tacking on the first letters in Elmtaryd and Agunnaryd, the farm and village where he grew up. Initial offerings consisted of inexpensive products such as pens, watches, and jewelry. In the late 1940s, Kamprad added furniture to the mix, and in 1951 he published his first catalog.
In the mid-1950s, Kamprad discovered he could ship his furniture unassembled and have his customers put it together after purchase. This lowered his production costs as well as his shipping charges, since he could send the furniture out in economical, flat packages that customers could bring home more easily than pre-assembled furniture. How the customer feels about this varies, depending on one's predilection for complex assembly.
The first IKEA store opened in the late 1950s. Today the company runs 174 stores worldwide, with plans for 50 more in the next 10 years, and employs more than 75,000 people.
The key target market comprises those just starting out who are in need of relatively cheap, sturdy furniture. That can mean a young family, college students or single people heading out for their first apartment away from home.
Usually placed outside of urban areas isolated from other shops, IKEA has the customer all to itself, and it doesn't miss the opportunity to wrap the shopper in a 360-degree retail experience. Recognizing that a large factor of shopper decline can be traced to hunger, the store strategically places a cafeteria midway through the vast building to give shoppers an opportunity to fuel up before tackling the rest of the store. The alternative would be to pack everyone in the car and drive to a nearby restaurant, lessening the chance of return.
Bearing in mind its target market's preferences, the furniture needs to be strong enough to accommodate frequent moves and/or young, rambunctious children. IKEA uses in-store displays to demonstrate product sturdiness and assembly. The store’s size also allows it to easily accommodate entire design layouts so the customer can imagine how his kitchen may look and what sort of accessories would go with it.
In June 2003, IKEA became the first European company to use its own trains to transport goods. The company says it will be able to ship the equivalent of 60 trucks a day via IKEA Rail while reducing carbon dioxide emissions by 70 percent. Environmental protection is reportedly a priority for Kamprad and his fellow board members; for example, their reliance on wood in their products is in part due to its renewable qualities.
That concern for the environment doesn't always help IKEA avoid the "bad corporate monolith" tag that dogs other large retailers like Wal-Mart and Home Depot. Some communities balk at the company's offer to put a store in their area because of concerns about traffic snarl and the fact that IKEA's stores typically occupy more than 300,000 square feet of space, larger than an average Wal-Mart.
However, similar to the frenzy that surrounds American doughnut maker Krispy Kreme, IKEA also attracts a rabidly loyal customer base. Fans flock to new store openings, and sales remain steady even after the initial euphoria wears off (which offsets some of the local community protest by creating jobs and tax revenue). Last month, a marriage was held at a store in Canada; in addition to joining in matrimony, the couple were awarded a US $3,500 gift certificate. (According to news reports, the lucky couple seemed more interested in the IKEA gift certificate than the wedding ceremony.)
As other companies with solid brand communities know, all they have to do is nurture their customer base and their fans will spread the news through word-of-mouth. In fact, thanks to the enthusiastic crowds, IKEA usually garners plenty of newspaper coverage every time it opens a new store, amounting to free advertising.
However, IKEA is not invincible. There is a certain amount of brand fatigue in countries like Sweden where the brand has furnished entire houses for generations. It also faces stiff competition from furniture close-out stores and even the cheap knock-off designs offered by larger retailers. Here IKEAs competes on price, but it is hoped that discerning customers will choose IKEA for its stylish design and higher quality materials.
As long as the furniture retailer can convince shoppers to keep discarding furniture and replacing it with IKEA products, the brand will continue to furnish our lives.