{"id":1346,"date":"2015-12-05T19:00:08","date_gmt":"2015-12-06T00:00:08","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/ikea-worlds-most-successful-furniture-retailer\/"},"modified":"2015-12-06T20:43:38","modified_gmt":"2015-12-07T01:43:38","slug":"ikea-worlds-most-successful-furniture-retailer","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/ikea-worlds-most-successful-furniture-retailer\/","title":{"rendered":"IKEA: World\u2019s Most Successful Furniture Retailer"},"content":{"rendered":"

\u201cTo design a desk which may cost $1,000 is easy for a furniture designer, but to design a functional and good desk which shall cost $50 can only be done by the very best. Expensive solutions to all kinds of problems are often signs of mediocrity.\u201d\u00a0<\/em>\u2013 Ingvar Kamprad, Founder of IKEA<\/p>\n

Today, IKEA<\/a> is the world’s largest furniture retail chain with 315 stores in 27 countries generating over $35 billion of revenue. At a time when online shopping is disrupting the traditional retail model, the Swedish retail icon has drawn more than 715 million visitors to its stores in 2014. IKEA has positioned itself in a highly competitive industry as the provider of affordable, high-quality furniture to the masses<\/strong>. But how does IKEA do it? How can it consistently offer innovatively designed furniture at such a low price?<\/p>\n

Business Model<\/u><\/strong><\/p>\n

IKEA\u2019s business concept is \u201cto provide well designed, functional home furnishings at prices so low that as many people as possible will be able to afford them.\u201d Traditionally, people have viewed furniture as a meaningful investment and more of a permanent product within the household. IKEA has revolutionized the consumer\u2019s way of thinking by introducing furniture that is well designed, but intended to be used immediately and disposed of in a shorter time frame (i.e. when worn out or when the user has moved on to a different taste level). This is achieved by producing home furnishing products with a focus on combining function, quality, design and value.<\/p>\n

IKEA has successfully capitalized on a differentiated low price business model by having this vision permeate through every part of the organization, from design, sourcing, packing and distributing. Low prices require sustainable low cost and efficient operations at every step along the way. IKEA is a clear \u201cwinner\u201d by its proven ability to consistently offer high quality products at affordable prices through optimizing its entire supply chain, operations, and inventory management to support a low price, value oriented product offering for the consumer.<\/p>\n