How to Clean the Living Room Furniture
To send the company back on a growth track, IKEA has plans to make 1,000 house calls a year at customers' homes, poking through their cabinets, observing how their kids play and determining the biggest headaches people encounter when running their households.
The goal: learn what customers in different markets need and make stores - largely filled with the same streamlined, modern furniture no matter where you are in the world - more local and personalized.
"It's not so much about the product, it's about understanding how life is spent," IKEA U.S. president Lars Petersson told USA Today. "To create IKEA to become the leader in life at home." That means employees show up at customers' homes for an up-close look at how they spend their time. While the home visits aren't new - right now, IKEA conducts 500 to 600 each year - the company is set on picking up their pace as more stores open in the coming years. That's because as IKEA celebrates 30 years in the U.S. on Friday, its growth has started to falter.
Since opening the first U.S. store in Philadelphia on June 12, 1985, IKEA has grown to 40 stores and become the second-largest furniture retailer in the country by market share behind Ashley Furniture, according to market research company IBISWorld.
But its U.S. expansion has been relatively slow, opening an average of less than one store a year - last year it opened two new stores; this year it plans to open one in St. Louis in the fall and two more are planned for 2016. The company doesn't have a target for the number of stores it wants to open, but Petersson said "plans are quite ambitious." IKEA revolutionized do-it-yourself furniture. But the Swedish company, which built its name on getting scores of customers to buy the same inexpensive products such as the "Lack" coffee table and "Billy" bookshelf, doesn't just want to peddle furniture. It wants to create solutions that make life easier, Petersson said.
To do that, the company will invest in more stores, enhanced online services and moving beyond its standard minimalist, mass-marketed furniture to localize products.
The company is trying to lift traffic and increase awareness of the brand as sales have cooled in recent years. U.S. same-store sales increased 4.2 per cent in 2014, down from 6.7 per cent the year before and eight per cent in 2012. Plus, IKEA has been slow to invest in e-commerce, where more and more shoppers are headed, even for big purchases such as living room furniture. IKEA still doesn't have all of its products available online - about 7,500 out of more than 9,000.
On the web, brands such as Wayfair, Williams-Sonoma and Overstock.com dominate with large selection and often free shipping. IKEA's shipping rates vary depending on how large the item is. Plus, smaller, flash-sale home decor sites have changed the way people shop for furniture, said Marcie Merriman, retail brand strategist at EY Advisory.
"The industry has become a lot more fragmented," she said. "More and more, you're seeing furniture and home accessories becoming impulse purchases because of the Internet." Which means there's less consumer spending to go around, particularly when it comes to big-ticket items such as sofas. "The fight for the wallet is our major competitor," Petersson said.
To compete, the company wants to roll out online services such as buy online, pick up in store. Petersson said that's a goal, but it will take time to implement.
One thing IKEA doesn't plan to do is make stores smaller or closer to city centres. Walmart and Target have found success opening trimmed-down neighbourhood stores - around 40,000 to 125,000 square feet - aimed at urban customers.
That doesn't fit IKEA's business model, because its supply chain and low prices rely on warehouse-sized stores big enough to keep its selection of more than 9,000 products on hand. IKEA's 250,000- to 400,000-square-foot behemoths require 20- to 35-acre lots, which means they must be built in somewhat remote locations that can be difficult, or at least a major time commitment, to get to.
"We have 45 per cent direct delivery from suppliers to stores," Petersson said. "There's no reloading point or middleman. If we had smaller stores, repackaging and redistribution of that would be a big cost, and we think it's more important to deliver the lowest price to you." To get customers to continue schlepping to stores, Merriman said bigger, suburban-based brands have to create superior shopping experiences. That's where the home visits come in, Petersson said. He wants store employees, or "co-workers" as IKEA calls them, to better reflect what they learn during home visits in the way merchandise is arranged and marketed in stores.
"The analysis of home visits I would like to see more visualized in stores," he said. "That is the way to meet the customer and to have better accessibility... if they recognize themselves." So the IKEA in Brooklyn might be more hyper-focused on how to outfit a 400-square-foot apartment in Manhattan, while a store in New Jersey would show customers how to arrange basement playrooms with sectional sofas and big-screen TVs.
Petersson doesn't want to invade U.S. homes with cookie-cutter IKEA style - "People think that I have everything from IKEA, but I don't," he said - but make products that fit well with what people already own.
"We cater to a lot of the needs people have," Petersson said. "Function, form, design, low price, sustainability. That applies to everybody." - USA Today
