Ikea's Stores In The Uk example essay topic

Coventry University School of Engineering 313 MFT Technology Thomas Puccianti 19/12/03 Laboratory Two Material Recognition Investigation, Results and Submission Section 1. Tensile strength: a measure of the ability of a material to withstand a longitudinal stress, expressed as the greatest stress that the material can stand without breaking. Hardness: one of several measures of resistance to indentation, deformation or abrasion... Ductility: able to sustain large deformations without fracture and able to be hammered into sheets or drawn into wires and to be moulded...

Density: measure of the compactness of a substance, expressed as its mass per unit volume... Youngs Modulus: a modulus elasticity, applicable to the stretching of a wire... , equal to the ratio of the applied load per unit area of cross section to the increase in length per unit length... Non Ferrous: non containing iron in the divalent state. Section 2. Peugeot 206 car body panels: - both group - class - type. Jaguar "X" type body panels: - both group - class - type.

De-Lorean car body skin: - both group - class - type. Lightning conductor: - both group - class - type. Bells in St Michael's Tower: - both group - class - type. Clock pendulum for a top quality clock: - both group - class - type Section 3 1 Milk bottle 2 Baked Bean tin 3 "Evian" Natural Mineral water bottle (500 ml) 4 Fizzy drinks bottle (2 litres) 5 "Eden Valley" spring water bottle 18.9 litres 6 Kitchen Foil 7 Non-PVC food wrap 8 Metal Spectacle frames 9 Skewers for cooking baked potatoes 10 Tweezers 11 Cooking pan uncoated 12 Cooking pan coated 13 "Imperial leather" Foaming shower Gel 14 Lynx 2 BODY SPRAY 15 "Superdrug" aerosol shaving foam 16 "Johnsons Baby Bath" 17 CD case Coventry University School of Engineering 313 MFT Technology Thomas Puccianti 19/12/03 Laboratory Two Material Recognition Investigation, Results and Submission Section 1. Section 2. Clock pendulum for a top quality clock: - both group - class - type Section 3 1 Milk bottle 2 Baked Bean tin 3 "Evian" Natural Mineral water bottle (500 ml) 4 Fizzy drinks bottle (2 litres) 5 "Eden Valley" spring water bottle 18.9 litres 6 Kitchen Foil 7 Non-PVC food wrap 8 Metal Spectacle frames 9 Skewers for cooking baked potatoes 10 Tweezers 11 Cooking pan uncoated 12 Cooking pan coated 13 "Imperial leather" Foaming shower Gel 14 Lynx 2 BODY SPRAY 15 "Superdrug" aerosol shaving foam 16 "Johnsons Baby Bath" 17 CD case 1999 IKEA numbers 53,000 co-workers across a global network of over 150 stores in 29 countries on four continents.

IKEA founder Ingvar Kamprad initiated the Big Thank You Event as a millennium reward to the many co-workers within the IKEA group. The total of all sales worldwide on this special day was given to the employees. The goal for the day was high, but the actual result was higher-approximately 187 million NLG. Every co-worker, from the snack bar staff and stock clerks to the president, got the same bonus. For most, this bonus was more than a month's pay.

It turned out to be a great way to thank the hard working IKEA co-workers for contributing to the success over the last millennium. And this is only the beginning. IKEA wins an international design award for V"ARDE kitchen. V"ARDE is a whole new way to think about the kitchen. Because of V"ARDE's unique, modular design, you can create an entire kitchen from scratch or simply add a piece here or there. This and its attractive design in classic birch veneer with white details helped it win the Red Dot for Highest Design Quality award.

The Red Dot prizes are internationally recognised seals for innovative design and are awarded annually in the "Design Innovations" competition held by Design Zentrum Nordrhein Westfalen in Germany. Judges evaluate entered products on their degree of innovation, functionality, ergonomics, ecological compatibility, and durability. 2000 The first IKEA store opens in Russia. IKEA and UNICEF join together to build community in India. Together with UNICEF, IKEA initiated a broad community program in the north of India in August 2000.

The aim is to prevent child labour by creating awareness and addressing the root causes. The three-year project focuses on 200 rural communities, involving the villagers in strategies for preventing child labour. UNICEF and IKEA encourage school enrolment and have established alternative learning centres (ALCs) as a transitory measure to formal primary schools. Through the formation of self-help groups, the project also helps rural women to enhance their economic status by improving access to credit and income generating opportunities. IKEA Rail 2001 - IKEA establishes IKEA Rail AB. Railways were always an important part of the company's early transport strategy.

Now IKEA has re-established links between these early traditions and the more advanced logistical and environmental thinking of today. From suppliers and central warehouses in Germany, Belgium, the Netherlands and Sweden, IKEA Rail provides door-to-door transport of IKEA materials and furnishings, with IKEA trains conveying the goods for most of the journey. Increasing our use of railways is an innovative approach to goods management that has already begun to benefit the environment. By reducing our reliance on other transport methods such as large trucks, carbon dioxide emissions have been lowered by around 70%, particle emissions have more than halved, while hydrocarbon emissions have been slashed by around 80%. third PS collection launches 2002 - The third IKEA PS collection launches. PS stands for POST SCRIPT UM, or the latest additions to the world of IKEA design. The PS collection is one way of sharing our design values - form, function and a low price.

The first PS collection was presented in 1995 in Stockholm and Milan and caused a great stir in the design world. In 1999 the second generation of IKEA PS products debuted, and PS instantly became a more natural complement to the IKEA range. The theme of the 2002 collection is the area between indoors and outdoors: a place suited to our individual needs for relaxation and enjoyment. The goal is the same as always: to make top-of-the-line design available to the many people. IKEA marketing strategy The IKEA vision, business idea and market positioning statement provide a framework for all IKEA marketing communication worldwide. The IKEA vision is "To create a better everyday life for the many people".

Our business idea is "To offer a wide range of well designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them". Our market positioning statement is "Your partner in better living. We do our part, you do yours. Together we save money".

By communicating the content of this framework and encouraging customers to experience the IKEA concept, we are building the IKEA brand. The IKEA brand is the sum total of the emotional and rational values that consumers associate with the IKEA trademark and the reputation of our company. The brand image is the result of over 50 years work by IKEA co-workers at all levels all over the world. What we do, what we say, the products we offer, the price we offer them at, the presentation of our range and the information we provide our customers all contribute to our image. The overall task of IKEA marketing communication is to build the IKEA brand and inspire people to come to the stores. The IKEA concept builds on a relationship with the consumer.

Nine key messages are used within the IKEA marketing communication to build this relationship and give an understanding of how we can fulfil our customers needs. These are briefly described below. the IKEA concept is based on the market positioning statement. "We do our part" focuses on our commitment to product design, consumer value and clever solutions. By using inexpensive materials in a novel way and minimising production, distribution and retail costs, our customers benefit from low prices. the IKEA product range is developed to be extensive enough to have something that appeals to everyone and to cover all functions in the home.

The products are modern not trendy so they are practical enough for everyday use. IKEA is the home furnishing specialist. IKEA products are functional and appealing, and enable many people to improve their home life through practical solutions to everyday problems. low price is not appealing unless it represents good value for money. This is where IKEA is able to make a real difference.

IKEA is committed to having a good relationship with our suppliers and so we are able to purchase good quality, economically produced designs that are bought in bulk to keep costs down. By making all our furniture flat packed we cut down on transportation and assembly costs. function IKEA products are based on a functional approach to design. IKEA design means products that are attractive, practical and easy to use. They don't have unnecessary features, they give genuine solutions for specific home furnishing needs and are made of the most suitable materials for their purpose. the right quality The quality of a product must be appropriate for the intended use. For example there is no need for an expensive back panel on a bookcase if a less expensive alternative does a good a job as long as the bookshelf is used for the purpose it was intended for.

IKEA products are subjected to rigorous tests to make sure that they meet national and international safety standards. convenient shopping The IKEA store offers "everything under one roof", most of it available for immediate take-away. IKEA offers service where you need it, but allows customers to make most of the decisions themselves. This means that we need to make it easy to choose the right products by displaying them correctly, describing them accurately and having a simple returns policy. a day out for the whole family IKEA aim to look after our customers by planning for their needs. Not only do we provide inspiration and ideas, but we also encourage people to touch, feel and use the products on display to see how they would fit into their own home. We have new products arriving all the time, seasonal themes, play areas for children, special events and a great value family restaurant. Swedish IKEA, The key IKEA messages all have their roots in the Swedish origin of IKEA.

Swedish furniture is light and fresh yet unpretentious. The warm welcoming Swedish style has become a model of simplicity, practicality, and informality that is now world renown. the IKEA marketing mix IKEA has a long tradition in marketing communication focusing primarily on printed media which has proven it's values and success to the company over the years. Other media now being used to an increasing degree include TV, radio, and internet based communication. The IKEA marketing mix consists of 4 different areas of focus. the IKEA product range is our starting point. All other marketing communication is used to amplify the product range. the store is the IKEA retailers primary medium for presenting and communicating the range, it's low price and the IKEA concept. the IKEA catalogue is the main marketing tool with around 70% of of the annual marketing budget being spent on this alone. It is produced in 38 different editions, in 17 languages for 28 countries.

110 million catalogues were circulated last year - three times higher than that of the Bible, with 13 million of these being available in the UK. the IKEA advertising, PR and other types of communication are complements to the IKEA range, store and catalogue are used to spearhead the penetration of our target market. the UK marketing department IKEA advertising in the UK is intended to raise awareness of the IKEA brand and drive traffic to the stores. Some people love our unique style of retail advertising, some hate it, but everyone who sees our advertising has a strong opinion and subsequently it provokes conversation and debate. Despite having some of the most controversial television advertising campaigns in the UK, we have raised awareness of our brand, let people know we are different to other home furnishing companies and most importantly increased sales. The advertising department includes all aspects of advertising and brand communication from television advertising and sponsorship to magazine and radio promotions.

Advertising is used to support many different areas of the business including brand awareness, store themes, catalogue drops and store openings. brand research To remain at the forefront of a changing market we need as much research on customers, the home furnishing sector and our competitors, as possible. Many different areas of market research, reports and statistics both internal and external are taken into consideration when planning any communication or marketing campaign. room magazine This is a European IKEA magazine that is available in all stores in Europe. It is also mailed out to 150,000 IKEA Home Card holders in the UK. It contains lifestyle features on IKEA customers and how they live, product news, and tips and ideas for the home. Similarly to the catalogue, this is produced centrally, but each country has control of a number of pages to communicate their country specific messages. IKEA food services The IKEA restaurants are important in providing our customers a place to eat and relax while shopping.

There are 3 different concepts offering food in IKEA stores in the UK currently. The main restaurant serves meals based on our Swedish heritage, with traditional dishes such as Gravadlax and meatballs with Lingonberry relish. There are also bistro areas which sell localised snacks such as; hot dogs in the UK, baguettes in France, and pizza in Italy. The IKEA Swedish food markets are also in every store and encourage customers to take home a taste of Sweden. The wide range of traditional Swedish foods helps customers understand our Swedish origins and also lives up to our low price promise. internet IKEA. com is the global site where you have an overview of IKEA as a company. From the global site it is possible to access all local sites.

One of the main tasks of the internet is to display product information and availability which is updated constantly. Background information about the company and store information is also crucial. Each store also has their own space with contact details and directions, events, special offers and local information. communication and interior design Com-in are a "unique" resource who work actively to secure our competitive advantage through the development of the IKEA retail concept and the store as a media. All Com-in specialists are from either an interior design background or visual merchandising, and are responsible for the presentation or our product offers using all current range presentation medias and techniques. The Com-in department gives the store inspiration and vitality and works closely with the store sales and logistics teams to ensure our customers always see something new and exciting, and want to come back again and again. public relations The primary concern of this function is to protect the IKEA corporate identity but also to communicate our vision, business idea, brand values, concept and trademarks. By informing journalists of news and information within IKEA through press releases, website information, catalogue distribution and product launches, we are able to communicate with a huge audience through their readers.

The overall identity of IKEA is based in Smal and, historically and thrift are strong characteristics of the region and it's people. All IKEA policies live up to this standard from the products we sell to our internal travel and recruitment procedures. All areas of the IKEA marketing department work together to give consistent messages to our customers and strengthen our brand identity. By focusing on communicating the key messages of the IKEA concept, our vision and business idea we can work together to create our vision of " a better everyday life for the many people".

IKEA are delighted that the First Secretary of State, the Deputy Prime Minister, has granted planning permission for a new Store at Edmonton, North London. The proposed store, which will create 500 new jobs, is 28,000 square metres in size and will be built at Glover Drive Upper Edmonton, next to the existing Tesco Retail Park. A new store will regenerate the disused brown field site and create jobs for local people. A new IKEA store at Edmonton shall allow us to reach many more of our potential customers and shall make life a lot easier for existing customers from the Edmonton catchment area, who currently have to spend a lot of time travelling to other stores to buy their IKEA goods. This is consistent with our strategy to bring IKEA closer to our wide spread customer base, reducing travel time and taking trading pressure off our 12 existing stores in the UK. Our ambitions are for another 20 stores throughout the UK, representing an inward Investment of some lb 1 billion pounds and bring forward 10,000 jobs.

For further information please contact Shirley Jones or tel. 0208 233 2378 notes to editor- IKEA is the world's largest furniture retailer and the UK is IKEA's second largest market. - IKEA group sales for the last fiscal year were nearly lb 7.7 billion with turnover in the UK of lb 794 m. - Almost 286 m people visited an IKEA store worldwide last year.

In the UK, 33 million people visited IKEA last year. - The vast majority of the 500 jobs will come from the local community; which will include sales jobs, skilled chefs, engineers, administrators, designers, carpenters and customer service staff. - We believe in supporting the local community, including schools, and in letting the community use our store as a resource. - The UK's first IKEA store was opened in Warrington in 1987. Other UK stores are Brent Park, North London, Birmingham, Newcastle, Croydon, Leeds, Thurrock (East London), Nottingham, Bristol, Edinburgh and Glasgow. Our 12th store opened up it's doors on the 6th November 03 in Cardiff.

How a regional press publisher helped IKEA achieve record returns from one of their regional stores As the Henley Centre observe in their recent report The Future of Local Marketing, Theodore Levitt's exhortation "think global, act local" has never had more resonance. This case study looks at how a leading furniture retailer successfully utilised the facilities and local knowledge of a regional newspaper publishing group to promote their Gateshead store and increase their local customer base. Background North East Trinity - the sales representatives for several leading regional newspapers in Tyneside and Teesside - first approached IKEA via their advertising agency to ascertain whether there would be any advertising support for the Gateshead store to celebrate the store's fifth anniversary on 10 July. Having confirmed that there was no regional advertising support planned at that time.

North East Trinity arranged with the store manager and operations director at IKEA Gateshead to promote a competition in the Newcastle Evening Chronicle. Children born on the store's opening date were asked to send in their names and addresses from which five were chosen at random and invited to come and play in the IKEA 'ball pool'. Hidden amongst the balls was a single golden ball worth lb 250 in IKEA toys to the child who found the ball, while the four runners-up were given toys from IKEA's children's range. Marketing Objectives A number of objectives were identified that the store wanted to meet, including: . to increase public perception of IKEA in the retail marketplace. to enhance the IKEA brand name. to maintain develop and expand the local customer base. to establish IKEA as a key player in the furniture market The store was also particularly keen to drive awareness and purchasing of larger items of furniture within the IKEA range. The Campaign Strategy North East Trinity prepared a creative campaign strategy designed to meet these objectives and to capitalise on the expected windfall opportunities presented by several Building Societies.

It was noted that as many as one in three households in the local region were likely to benefit from the Northern Rock share issue in October 1997 with an expected pay-out of lb 600 m estimated for the local economy. Upon approval of the creative campaign by the store manager and operations director, a full marketing document, which included an economic overview of the region, was prepared and presented to the UK marketing manager. This included local buying habits, market trend data, a report on Building Society windfalls, plus draft press schedules and visuals of their creative ideas with explanations for the thinking behind them. The Creative Strategy The idea was to target certain types of consumer by using real customers photographed in the Gateshead store. Studio sets were created depicting rooms furnished with items from IKEA and the ads appeared to have been written by the customers explaining why they had chosen selected items of furniture. North East Trinity organised the in-store photo shoots and wrote all the ads, while the Evening Gazette (Teesside) undertook the production work and supplied film for the other press titles on the media schedule.

The creative work started in August 1997. The original four advertisement were so well received by the client that the number of executions was increased to twelve to also include the Children's IKEA range and the Christmas sale. The Media Strategy The entire package, worth around lb 200 k at rate card, was approved and confirmed. The campaign opened on Tuesday 2 September in the Evening Gazette and the Newcastle Chronicle and widened to include The journal and the Sunday Sun over the weekend of 6/7 September. These four titles sustained the campaign over the next eleven weeks with regular insertions (mostly full tabloid page). To maintain freshness, the copy was rotated between the titles.

The rationale behind the timing of the campaign was to build awareness prior to the Northern Rock flotation as well as the traditional pre-Christmas buying season. Research shows that most people who buy furniture have planned their purchase several days in advance and only visited one or two stores beforehand. By the time of the Northern Rock flotation, when most of the local stores commenced their autumn campaigns, IKEA Gateshead had already been advertising for four weeks. The Results The campaign proved to be a great success. Research was conducted to establish the awareness and effects of the local press advertising and the impact of the Building Society windfalls, whilst exit polls monitored store traffic. The results of this survey must remain confidential, but, IKEA confirmed that - During October and November, IKEA Gateshead achieved record figures for customer traffic and revenue and was the top performing store in the UK.

"When North East Trinity approached us with their advertising proposals we were both impressed by their local knowledge and professionalism and amazed by their ideas, which were exciting and creative but stuck closely to IKEA's principles and strong corporate identity. IKEA Gateshead took a local initiative and used the services of North East Trinity rather than the IKEA UK appointed agency (which was) a real first. Such enthusiasm, energy and friendliness made the relationship between us and them an enjoyable experience. The thirteen week campaign was an unrivalled success, introducing thousands of new customers to the store as well as strengthening IKEA as the number one Home Furnishing retailer in the North East".

Tony Pearson, Store Manager - IKEA Gateshead "North East Trinity have proved that, with some lateral Ikea began trading in Sweden in 1943 and over the last 60 years it has expanded its trading locations to 29 countries. It produces 110 million copies of its catalogue in 34 different languages. It began trading in the UK in 1987 with its first store in Warrington. There are now 11 stores throughout the UK.

Its main product range is furniture but also sells a vast range of other items for the home such as soft furnishings, housewares and pictures. The company's philosophy is one of good design and function at low prices. In 2001 it turned over EUR 10.4 billion (lb 6.6 billion) with 12% of sales coming from the UK. Ikea began trading in Sweden in 1943 and over the last 60 years it has expanded its trading locations to 29 countries. Furnishings retailers Key points: . 11.3% growth since 1997.5.

5% increase in 2001.4. 9% of total retail sales - down from 5.2% in 1997.10 reporting entities included in Retail Review account for 35.3% of category sales - up by 8.2 percentage points since 1997. The top three retailers hold 18.9% of category sales, up from 14.1% in 1997. IKEA is the largest company in the category with sales of lb 744 million in 2000. Courts has the fastest growth rate since 1999 (+37%). Carpetright makes the highest net operating margin (13.8%).

One out of four companies reporting made a loss or had a margin of 3.0% or less in 2000/01. Two made weaker margins than in the previous year. Prospects and outlook The leading group of retailers seems set for expansion as several emerging multiples, such as Furniture Village, edge towards the lb 100 million barrier. It remains to be seen whether expansion by these companies results in further consolidation among the bigger companies in the market or is at the expense of small multiples and independents. Continued aggressive expansion by IKEA is bad news for the rest of the sector as additional space in existing stores and new stores will result in greater footfall and can only undermine share of expenditure held by competitors. A number of players intend to increase their space in out-of-town stores, but have been frustrated by the planning process and lack of suitable sites.

IKEA, for example, has ambitions to develop up to 30 stores in the UK and has around 20 sites under consideration. It has stated that if it secures five of these new sites it will be pleased given the strictures of planning policy. Higher level of furniture purchasing at specialist stores, Argos and IKEA Figure 17 shows the trend in furniture purchasing by broad types of outlets over the last four years. There was a higher level of purchasing in the last 12 months to September 2002 compared to the research conducted in 2000, indicating a more buoyant market.

Specialist furniture and hardware stores recovered their position as the most popular type of outlet for furniture purchasing in 2002, but are now facing an increasing challenge from multichannel retailer Argos and from IKEA, neither of which were more than minor players in the market at the beginning of the 1990's. Other types of retailers which have increased their popularity include the DIY multiples / kitchen specialists and department and variety stores. MFI saw a sharp decline in popularity between 1998 and 2000 but shows a slight uplift in 2002, indicating that the company's efforts to improve its product range and introduce a more aspirational appeal into its stores may now be working. Retail sales look at specialists only Source: Mintel Retailers's tore numbers Figure 44 illustrates the fragmentation of the furniture retailing sector and the number of different types of retailer involved.

It is not necessarily the players with the largest numbers of stores that are the leaders in the sector: IKEA has only 11 stores, and yet has overtaken MFI in recent years, despite the fact that MFI has over 200 stores. The success of IKEA illustrates how vulnerable the UK furniture retailing sector is to new entrants which can offer a distinctive product offer and good value, backed up by a powerful and aspirational brand. The high level of fragmentation in the furniture specialist sector makes it highly likely that further consolidation will occur as smaller chains are taken over or find it harder to compete. Since the last edition of this report in November 2000 two furniture specialists have gone out of business, Convoys and Landmark, indicating that some smaller players are finding it hard to compete even in a buoyant market. Sofa Workshop has recently been bought by MFI, taking yet another smaller chain out of the market. IKEA Ltd Ownership and structure IKEA, founded in Sweden, is now the world's largest furniture retailer and also the leading furniture retailer in the UK.

In 2001 the IKEA Group had 143 stores in 22 countries plus a further 20 stores owned and operated by IKEA franchisees. IKEA's stores in the UK now account for 12% of group sales, just behind the US with 13% and the leader Germany at 21%. Store portfolio, design and refurbishment IKEA opened its first UK store in 1987 and currently has 11 stores in the UK. It is currently planning to invest up to lb 50 million in extending its 11 UK stores by up to 25% over the next five years.

Stores ten and 11 recently opened in Glasgow, with a new store in Cardiff due to open in 2003. All IKEA stores are large destination superstores in out-of-town retail parks with around 200,000 sq ft of space. They all have the same format, which requires customers to walk through the entire store, past all the product ranges, before they can reach the checkout. The stores also provide playrooms for children and restaurants offering Swedish cuisine, including hot meals. Market positioning IKEA is a volume retailer offering good design and quality at low prices.

It attracts a young and fairly affluent audience through its quirky advertising campaigns but has also established a very strong appeal across the mass middle market on the strength of its value offer. Merchandising / product mix IKEA's product range covers everything needed to furnish the home, from fitted kitchens and furniture to beds and bed-linen, kitchenware, soft furnishings and garden furniture. All the goods are manufactured or sourced for IKEA and the same clean, simple, Scandinavian-style designs are sold in all IKEA stores across the world, providing significant economies of scale. Most of the furniture ranges consist of flatpack items which customers can pick up at the store, take straight home in their car and assemble themselves. Financial performance IKEA has managed to develop a successful retail formula that allows it to increase profits at an even faster rate than sales. Margins are very high compared to other mass-market retailers and have increased every year since 1997, demonstrating the success of IKEA's low-cost business model in a competitive market.

Figure 55: IKEA UK Ltd, financial performance, 1997-2001 Year end August 1997 1998 1999 2000 2001% change 1997-2001 Turnover lbm 363 481 585 745 801 +120.7 Pre-tax profit lbm 33.8 85.8 110.8 149.0 169.3 +400.9 Pre-tax margin % 9.3 17.8 18.9 20.0 21.1 - [ Download CSV ] Source: Annual Company Reports and Accounts / Mintel Advertising and marketing IKEA is one the major advertisers in the sector, spending lb 4.6 million in 2001. It uses TV, press and poster advertising in seasonal bursts, with quirky messages such as 'Chuck out your chintz' and 'It's time to Live Unlimited'. IKEA does not have sales periods, as its prices are fixed at the beginning of each year and maintained for the next 12 months, but it does offer up to 55 days' interest-free credit. The IKEA catalogue is a major marketing tool, showcasing products in colour photographs with detailed descriptions and prices. Catalogues are supplied free in-store and also often door-dropped in store catchment areas or included as inserts with newspapers or magazines. Operational issues IKEA only sells own-brand goods and has 33 of its own production plants in ten countries, although it also purchases products from approximately 2,000 suppliers in 55 countries.

Costs are kept low by dealing only in flatpack furniture, which reduces transportation costs, and by the use of in-house designers. IKEA does not offer free home delivery of items for customers, but larger items can be delivered for a charge. Home shopping IKEA does not offer home shopping either through its website or the catalogue. Strategic evaluation IKEA has succeeded through its combination of strong, contemporary designs, a strong brand personality and very good value. These factors all have a strong appeal for young people setting up home for the first time and for people with young children who want a stylish home but without spending a fortune on furniture which can be damaged by the wear and tear of family life. IKEA is a lifestyle retailer, offering people everything for their home at affordable prices, but still with a reputation for good design and good quality.

The expansion of the store chain in the UK, coupled with IKEA's successful retailing formula, should lead to a further increase in market share. IKEA also has a high spend relative to its low number of stores, but has used this money to build the brand and distribute the catalogue rather than to engage in price-based offers like the rest of the furniture retailing sector. Figure 71: Main media advertising expenditure, by furniture retailers, January to December 2001 lb 000 DFS 29,925 Courts 10,441 MFI Furniture Group Ltd 8,949 Furniture Village 5,687 Magnet Ltd 5,169 Moben Kitchens Ltd 4,876 IKEA UK Ltd 4,565 Harveys Furnishing Group Ltd IKEA sets the standard The Swedish group IKEA has, to some extent, dominated the retail scene since its arrival in the UK. Although smaller than MFI, with just eight stores, the IKEA concept of good design at affordable prices has improved the credibility of all self assembly furniture. Other players have had to match IKEA's quality, especially in key areas like ease of assembly and stability when assembled, which have not always been the most prominent features of the self assembly market. The other major challenge to MFI is coming from DIY multiples, while specialist outlets are suffering from lack of the necessary space to offer consumer choice.

The arrival of this Swedish business in the UK improved the image of flatpack furniture and turned it into a viable alternative to rigid ready assembled products. More contemporary design and the use of higher quality raw materials were the two key elements, but the products were also genuinely easy to assemble and offered a considerable price benefit. In addition, IKEA was able to service the demands of owners of smaller houses, already identified in this section of the report, in which it was sometimes impossible to transport larger items like wardrobes to the designated room in ready assembled form... IKEA IKEA is a Swedish-owned furniture retailer that offers a small range of home appliances to complement its kitchen range. Company overview Founded in the 1950's by Ingvar Kamprad, IKEA is controlled by the same family today, through a complicated structure of charitable and industrial trusts. IKEA Group controls all IKEA retail operations, while Inter IKEA Group owns the brand name; a third strand of the empire, I kano Group, has owned Habitat since 1992.

IKEA currently has 11 out-of-town superstores in the UK, located as follows: Brent Park, London Bristol Croydon Edinburgh Glasgow Gateshead Leeds Nottingham Thurrock, Essex Warrington Wednesbury, Birmingham Glasgow was the latest store to open, in September 2001. IKEA has an aggressive expansion programme in the UK, planning to open 20 new stores by 2010 and at least two new distribution centres. Areas targeted for new openings include London, Manchester, South Birmingham, South Wales, the South Coast and the M 1 corridor. However, it is rumoured to be having trouble finding suitable sites, and therefore may be considering splitting showrooms from warehouses.

IKEA stores are large - around 200,000-250,000 sq ft - and contain both showroom and warehouse. In the showroom area, room-like displays encourage consumers to sit down and try the sofas, beds, etc. Each area has a sales desk staffed by an expert in that product sector, but in general, staffing is at a minimum. Merchandising / product mix IKEA's core range is furniture, with a fully stocked store featuring almost 10,000 items, increasing to 80,000 when colour and size options are taken into account. Almost all the merchandise is own-brand, with Scandinavian product names. In white goods, IKEA sells only one brand, Whirlpool, and all appliances are free-standing.

Its small range is restricted to dishwashers, refrigeration equipment and microwaves. Financial performance The Kamprad family no longer releases profits figures for IKEA, but 2000 sales were estimated at lb 700 million. No indication of sales of white goods are available. Home shopping Although it produces a catalogue, IKEA does not offer any goods for sale by mail or telephone order. It has an informational website (web), and in 2001 was testing online ordering through outlets in Sweden, Denmark and Norway. However, it is likely to be a long time before transactional capabilities are extended to the UK.

Strategic evaluation IKEA has a marginal presence in the white goods market, and this is likely to remain the case, as it concentrates on own-brand furniture and housewares Ikea Ikea began trading in Sweden in 1943 and over the last 60 years it has expanded its trading locations to 29 countries. Today, consumers are less loyal to brands in general but more loyal to lifestyle brands. Lifestyle brands are those which tell others something about ourselves, they are a physical sign of who we are. These brands define the individual and identify him or her as a member of a specific social group or tribe. Modern brands are increasingly moving over to a lifestyle position. Brands are no longer aspirational, today they are increasingly lifestyle-orientated, they present ideas to live by.

The most successful modern brands like Nike, Ikea, Virgin and Body Shop are all lifestyle brands. The problems facing retail brands like Marks & Spencer is their failure to define themselves in terms of their customers' lifestyle. Of the lifestyle brands, the leaders are those that have combined high creative content with low prices. Some commentators have labelled these maverick brands, because they defy the traditional logic that quality products and products with high creative input must necessarily be expensive.

Like consumers today, who wish to beat the system (see next), maverick brands do likewise. Maverick brands provide high fashion at high-street prices. Typical maverick brands are Ikea and Virgin. Lifestyle and maverick brands have succeeded because, in today's crowded consumer markets, with several thousand new products hitting the market every year, these brands have managed to make a distinctive position for themselves. The UK furniture retail trade has been losing share of retailing.

The sector is dominated by large space out-of-town retailers, most notably IKEA, MFI, Carpetright, Allied Carpets and DFS. The large companies are under threat from a number of rapidly growing smaller businesses that are beginning to make their mark nationally. Within the sector Homestyle has grown rapidly through acquisition and its rate of growth has been helped by the takeover of Sleep masters and the Bed Shed group. Within the furniture sector IKEA is a highly successful company which has traded very strongly in the UK.

IKEA is expanding through adding new space in major conurbations. The company has its own distinctive styling and has not significantly redesigned its stores in recent years. In order to compete, a Conran Design for MFI has helped the company to implement a turnaround plan. Courts is another example of a furniture retailer which is implementing new store designs in order to compete effectively in the sector. The most successful company in the sector in recent years is, without question, IKEA. From a standing start in the late 1980's, the company is outright market leader among specialists and has an ambitious expansion programme that sees potential for nearly twice as many stores as it has at present.

It is only the fact that it cannot get the sites it wants as quickly as it wants that prevents the company from achieving its ambitions. It is having to satisfy its expansion needs by a programme of extending existing stores, where space permits, to meet demand. IKEA IKEA, which now has ten stores in the UK, publishes a 350-catalogue annually, but has no home ordering service either from the catalogue or online. Home delivery from its stores of goods purchased by personal shoppers can be arranged at the store with a third party contractor.

An independent retailer to attract attention for developing an online presence is London-based Lordship Furnishers. It has opted for the route of offering significant discounts over high street prices for brand name furniture. It carries over 3,000 products in its online range and provides free delivery in London and the Home Counties. The company has attracted media attention by public ising the fact that several leading brand name companies are refusing to supply its online operation due to its price discounting policy. The company intends to capitalise on its name for discounting by developing its online operation under the furniture busters brand name.

IKEA regularly invests in main media campaigns, and in September 1997 launched a poster campaign emphasising the idea that a person's character can be defined by the furniture they buy. The campaigns focused on individual items, which were used to illustrate how people could express themselves through furniture. IKEA IKEA has become a household name in the UK, voted the favourite furniture retailer among UK consumers in a survey in the Cabinet Maker trade magazine in 2002. The company, formed as a mail order business in Sweden in 1943, operates from 11 stores in the UK. IKEA has plans to open 20 new stores in the UK. IKEA is clearly committed to the home office furniture sector, in that it has a dedicated in-store department and 28 pages in its 2003 catalogue devoted to home office furniture, using the theme of 'comfort and efficiency, with style'.

The 2003 catalogue also promotes IKEA's "Cubic" theme, offering products that make greater use of wall space for storage above its range of compact desks. Products are self-assembly and mainly positioned at the budget to mid-market areas of the market. To further reinforce its role as a leading supplier of home office furniture in the UK, IKEA now also offers a separate 70-page Work IKEA catalogue. A wider range of products is offered, including ergonomically designed furniture and accessories for general workspace, storage and business meetings, which is likely to appeal to small business and domestic users alike.

IKEA As a major player in the market, IKEA has become known for good-quality design and value for money. Indeed, it has been commented that the retailer has been instrumental in raising the profile of design among UK consumers through advertising campaigns such as 'Chuck out your chintz'. Recent reports give it around 8% of the total furniture market in 2002. Virtually all of its furniture is sold in flatpack format, thereby giving the retailer strengths in the non-upholstered living room and also the dining room furniture sectors.

This emphasis on flatpack has itself done much to elevate the profile of this segment within the market. Leading to practical involvement for the family Entertainment values have encouraged families to watch the makeovers, but it is also becoming common for whole families to be involved in projects around the house. This is a key trend for the 2000's, with outlets such as B&Q and Ikea seeking to broaden their consumer appeal. The end result may well be a family room for games, redecoration of rooms in a style favoured by children, or the creation of a garden for family activities.

This trend can also be seen as a part of general cocooning - the desire to spend most leisure time in the home, entertaining friends for meals or barbecues, and investing in home entertainment products, such as DVD and widescreen TVs.