IKEA – How to go International?

Ingvar Kamprad Elmtaryd Aggunaryd

• “If retailers are to succeed in an overseas market, they must not only master the traditional skills of the market but also the cultural and economic traditions of the host country”

-Ingvar Kamprad,

IKEA at a glance..

• Currently the world’s largest furniture retailer

• Pioneered the flat-pack design furniture at affordable prices

• Has 1220 suppliers in 55 countries• Was founded in 1943 by 17-yearo ld Ingvar

Kamprad in Sweden

IKEA’S global reach

IKEA’S global reach…Top 5 Sale countries

Germany 16%

USA 11%

France 10%

UK 7%

Italy 7%

Top 5 purchasing countries

China 20%

Poland 18%

Italy 8%

Germany 6%

Sweden 5%

Current Performance

1954 1964 1974 1984 1994 2004 2006 2007 2008 2009

0.0 0.0 0.21.2

4.4

13.6

17.7

20.722.5 22.7

Turnover (in Euro Billions)1954 1964 1974 1984 1994 2004 2006 2007 2008 2009

1 2 9

52

114

201

237260

285301

Stores

Sweden

• Business Strategy• Complete Shopping experience• Selling Innovation• Creating a Brand

Marketing Mix

• Low Prices• Price -Material-

Design-Make

Price

• Standardized Products• Do it Yourself• Scandinavian Design• Flat Packaging

• Lifestyle Products• ‘Love your Home’• Lounge and See• Large price tags

• Large stores -out of city• Middle Class +Students• Local International

Product

Promotion Place

Rest of Europe

• Global Strategy • Issues faced

– Cultural diversity• Imposing IKEAN culture

– Environmental issues

• Adaptations

Internationalization

Europe

• Marketing Satellite• Pure Global Strategy• Country Offices

Rest of the World

• Rationalized Manufacturing• Mix of Global and Local• Fully owned Subsidiaries

North America

• Initial Shocks• Sizes, Softness• Sourcing, Currency movements• Free Deliveries• Sales Reps• Easy Payment Options

• Adaptations

Asia

Problems Psychic distance Degree of adaptation to retail offer Pricing strategy Strong domestic competition Corruption in government ranks in Russia

Adaptations Understanding local needs Creation of supplier relationship Store appearance and pricing strategy

Thank you

– Group 8Amitav Pattnaik

Balaji B RamamurthyChetan GoenkaJemi VarugheseJohnson Chacko