CASE STUDY

SUBMITTED BY:

Saad Rathod (02-111211-057)

Muhammad Ahsan (02-111211-045)

Kinza Qamar (02-111211-067)

Arooba Yousuf (02-111211-073)

Abdullah (02-111211-126)

Hadi Raza (02-111211-099)

Muhammad Jawwad Arshad (02-111211-196)

 IKEA
HISTORY OF IKEA
Ingvar Kamprad founded IKEA in 1943, a Swedish business that revolutionized the industry with
self-assembly flat-pack furniture in 1956. The company expanded globally, entering the United
States in the 1970s. IKEA's success is attributed to its commitment to sustainability and affordable,
well-designed furniture, making it a significant player in the international home furnishings
industry.

MISSION OF IKEA

Our mission as a business 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 vision
also goes beyond home furnishing.

Summary of IKEA's Products:

1. Furnishings: IKEA has a large selection of furnishings for living rooms, bedrooms, kitchens,
dining rooms, and offices, among other spaces in the house.

2. Home Decor: IKEA provides a range of decorative products such as wall paintings, pillows,
carpets, and curtains.

3. Kitchen equipment and Accessories: IKEA sells a variety of cookware, utensils, storage and
other kitchen Accessories.

4. Textiles: IKEA provides a variety of textiles, such as carpets, curtains, towels, and bedding.

5. Kids' Furniture and Games: They provide a selection of games and toys for different age
groups in addition to furniture and accessories made specifically for kids' rooms.

Summary of IKEA's Services:

1. Delivery and Assembling: IKEA provides delivery services for goods ordered online or in-
store. For clients who might want assistance assembling their furniture, they also provide
assembly services.

2. Planning and Installing Kitchens: IKEA offers services, such as consultations with kitchen
specialists, to assist clients in planning and installing their kitchen areas.
 3. Tips and Advice for Home Furnishing: IKEA provides guidance and recommendations for
interior design and furnishings via its website, catalogues, and in-store seminars.

4. Exchanges and Returns: IKEA offers a simple return policy that lets consumers swap or
return items within a given time frame if they fit the requirements.

5. Online shopping: Clients may peruse and buy IKEA items online, with the option of in-store
pickup or home delivery.

Business Model:
Ikea has a special way of doing business. They make furniture and things for your home that are not
only nice to look at but also don't cost a lot. They take care of everything from coming up with the
designs to making the products and selling them.

➢ Customer Relationship: IKEA wants to keep a good relationship with its customers. They
offer a family card that gives customers discounts on their purchases. They also provide
assembly and delivery services to make the shopping experience more convenient for
customers.
➢ Cost Structure: IKEA spends money on making their designs and marketing their products.
They also have costs related to distribution, getting the products to the stores and customers.
➢ Key Resources: To make their products, IKEA works with about 1400 suppliers from over
60 countries. These suppliers are important for IKEA to expand into new markets. IKEA
also relies on skilled and semi-skilled workers who play a vital role in their supply system.

Pricing strategies:
Ikea wants to make sure that their products are affordable for everyone. They try to keep their prices
low so that people with different budgets can buy their furniture.

➢ Value-based Pricing: IKEA prioritises quality products over low prices, attracting value-
conscious customers who value affordability and good quality.
➢ Psychological Pricing: IKEA employs a unique pricing strategy, often ending in odd
numbers, like 5 to 9. to entice customers with the impression of affordability and
encourage purchases.
➢ Flat-pack advantage: IKEA designs their products to be easily flat-packed. This helps
reduce storage and transportation costs, allowing them to offer lower prices to customers
like us.

Product Selections:
Ikea offers a wide range of home furniture, decorations, lights, and rugs, all designed in a modern,
simple style with clean lines and bright colours, and smart solutions for small spaces.
Target Audience:
Ikea offers stylish and affordable furniture for students, young professionals, and families, catering
to all lifestyles and preferences, ensuring everyone can create a comfortable and stylish home.

Website design and user experience:

IKEA's website is modern and user-friendly, featuring a search bar for quick item searches and
detailed product information. The homepage showcases their latest products and promotions,
making online shopping a breeze. IKEA also offers a virtual room planner for designing your dream
home and a shopping list for easy organization and reference.

DIGITAL MARKETING STRATEGIES

➢ Social Media Engagement: IKEA uses social media platforms like Facebook, Instagram, Twitter, and
Pinterest to showcase products, share home design inspiration, engage customers, and run
interactive campaigns.
➢ Content Marketing: IKEA utilizes a robust content marketing strategy, including blog articles,
videos, and interactive tools, to assist customers in home decoration and organization.
➢ Email Marketing: IKEA regularly sends email newsletters to subscribers, providing updates on new
products, promotions, and design ideas, often personalizing them for individual customer
relevance.
➢ Augmented Reality (AR) and Virtual Reality (VR): IKEA has developed mobile apps that utilize AR
technology to enhance customer experience and purchase confidence by allowing visualization of
furniture's potential in homes.
➢ Influencer Marketing: IKEA has partnered with interior design and home improvement influencers
to create content showcasing IKEA products' versatility and style in real-life settings.
➢ User-Generated Content: IKEA encourages customers to share photos of their IKEA-furnished
spaces on social media using specific hashtags, promoting engagement and free advertising on
their accounts.
➢ E-commerce Optimization: IKEA enhances customer experience through a user-friendly website,
mobile app, catalogue, and home delivery services, providing convenience and convenience for
online shopping.
➢ Search Engine Optimization (SEO): IKEA prioritizes optimizing its online presence for search
engines to make its products and content easily discoverable to users searching for home
furnishings and related topics.
➢ Sustainability Campaigns: IKEA has been promoting its sustainability initiatives through digital
channels, emphasising its commitment to eco-friendly products and practices.

Challenges and Issues Faced by IKEA:

Ikea faces various challenges and issues, including:

 ➢ Global Supply Chain Disruptions: The COVID-19 pandemic disrupted global supply
chains, causing product and material availability issues, delays, and increased costs for
IKEA, a global company heavily reliant on global supply chains.
➢ Sustainability: Meeting sustainability goals while providing affordable products is a
constant challenge.
➢ Local Regulations: IKEA, a global brand, faces challenges in adhering to local
regulations and labour laws in various countries.
➢ E-commerce Competition: The rise of online competitors challenges Ikea's
traditional retail model
➢ Product Safety: Ensuring the safety of products in a global market is a significant
concern.
➢ Expansion into New Markets: IKEA, a global furniture company, faced
challenges in adapting its product range to local preferences and cultural
differences during its global expansion.
➢ Competition from fast-fashion and Low-Cost Retailers: IKEA faces a
challenge in maintaining its market share due to competition from fast-fashion
retailers and low-cost furniture stores.

Continues to Grow:
➢ Global Supply Chain Disruptions: IKEA can diversify its supplier base and
establish backup plans.
➢ Sustainability: IKEA can continue to prioritize sustainability by using eco-
friendly materials, promoting recycling, and upcycling, and educating customers
about the environmental benefits of their products.
➢ Local Regulations: IKEA can navigate local regulations by building strong
partnerships with local stakeholders, conducting thorough research on each
market's legal requirements, and adapting their operations accordingly.
➢ E-commerce Competition: IKEA can enhance its online presence by improving
its e-commerce platform, offering personalized shopping experiences, and
leveraging social media and digital marketing strategies to reach a wider
audience.
➢ Product Safety: IKEA should maintain rigorous quality control measures,
conduct regular safety audits, and maintain open communication channels with
customers to address any safety concerns promptly.
➢ Expansion into New Markets: IKEA can invest in market research to understand
local preferences and cultural differences, customize their product range
accordingly, and establish strong relationships with local suppliers and partners.

➢ Competition from fast-fashion and Low-Cost Retailers: IKEA can differentiate

itself by emphasizing its unique value proposition of affordable yet high-quality
furniture, emphasizing sustainability, and continuously innovating its product
 offerings.

Direct and Indirect Competitors:

IKEA has both direct and indirect competitors in the furniture and home goods industry.

Direct Competitors:
• Wayfair
• Ashley Furniture
• Crate & Barrel

Indirect Competitors:
• Home Depot
• Target
• Walmart

There are many other competitors in the market. It’s always important to keep an eye on the competition
and stay innovative to stand out.

Competitive analysis:

When it comes to competitive analysis, IKEA has a few key strengths that set it apart:

➢ Wide Product Range: IKEA offers a diverse range of affordable furniture and home goods, catering
to various tastes and budgets.
➢ Strong Brand Identity: IKEA is known for its iconic blue and yellow logo, as well as its Scandinavian
design aesthetic, which resonates with many customers.
➢ Cost Leadership: IKEA’s focus on cost efficiency allows it to offer competitive prices, attracting
price-conscious consumers.
➢ Sustainable Practices: IKEA is committed to sustainability, using renewable materials and
promoting eco-friendly practices, which appeals to environmentally conscious customers.

Of course, it’s important to also consider the competition and their strengths, but these are some notable
aspects that make IKEA stand out.

Also, Competitive analysis involves evaluating your competitors’ strengths, weaknesses, strategies, and
market positioning to gain insights into your own business. Here are a few key steps in conducting a
competitive analysis:

➢ Identify Competitors: Make a list of direct and indirect competitors in your industry.
➢ Gather Information: Research their products, pricing, marketing strategies, target audience, and
customer reviews.
➢ Analyze Strengths and Weaknesses: Identify what sets your competitors apart and areas where
they may be lacking.
➢ Assess Market Positioning: Determine how your competitors position themselves in the market
and how you can differentiate your business.
➢ SWOT Analysis: Evaluate your competitors’ strengths, weaknesses, opportunities, and threats.
 ➢ Identify Opportunities: Look for gaps in the market or areas where you can offer unique value to
customers.
➢ Develop Strategies: Use the insights gained to refine your business strategies and stay ahead of the
competition.

Competitive advantage:
IKEA maintains its competitive edge by offering affordable, stylish furniture and home goods, with a flat-
pack and self-assembly concept. They emphasize sustainability with eco-friendly materials and energy-
efficient practices. Their unique shopping experience and iconic showroom layouts set them apart. Their
success is attributed to a strong brand identity, efficient supply chain management, and global presence,
along with continuous research and development.

Technology and Trend:

IKEA has been leveraging technology and digital platforms to enhance the shopping experience and reduce
barriers to in-store shopping. The company has developed a new visualization experience that allows
customers to design and visualize their living spaces from computers and smartphones. IKEA Creative
combines decades of home living expertise with the latest developments in spatial computing, machine
learning, and 3D mixed reality technology. The easy-to-use experience inspires creativity and helps
customers visualize furniture's appearance, fit, and function in their homes. The IKEA Creative Scene
Scanner™ allows customers to create photorealistic, editable 3D replicas of their spaces without modifying
or using IKEA products. Customers can also "wipe" existing furniture from the scene, order new furniture,
and design rooms from scratch. Once they have designed their room, they can add products to their cart,
save decorating ideas, and share them with family and friends. The IKEA mobile app allows customers to
bring their rooms to the store for more confident shopping.

Financial Performance
Ikea is the biggest furniture retailer in the world and has been maintaining its position since 2008 even after
the economic collapse. Ikea sales during the financial year of 2022 generated sales of about 44.6 billion
compared to 2021 which was about 42.9 billion. The retail sales of Ikea grew about 5.3%, which was better
than the industry standards. Not to forget during this time the entire world was operating under the threat
of the COVID-19 pandemic. Further, due to the increasing cost of raw materials due to limited supply, the
cost of goods sold by the company increased exponentially which resulted in reduced gross profit. Another
scenario evident in IKEA's financial statement is the increased operations cost which might be due to
various reasons but mainly the contributing factor was SOPS. Further, the financial statement of IKEA
suggests an increase in production which is evident from the elevated level of inventories compared to
2021. Further another trend which could be witnessed is the increased sales on credit which is evident from
the increased accounts receivable compared to preceding years. The company’s Profit should have
increased compared to 2021 FY but on the contrary profit for the decreased due to elevated operating
costs. IKEA during the year opted for major short-term financing which could be a result of increased sales
on credit, repayment of loans or procurement of Tangible assets, Ikea also increased the dividend paid to
shareholders. The company gearing ratio had also decreased due to increased borrowing as can be seen in
the balance sheet that the liabilities had increased on a significant level. It can be analyzed that despite of
pandemic and increased costs Ikea has very effectively controlled its finances.

Conclusion:
• Ikea has a global presence with its sales spreading across 50 counties.
• Celebrity mentions it has been seen on many occasions that celebrities around the globe have
promoted IKEA furniture on several occasions without being paid.
• IKEA has given rise to DIY culture where they promoted consumers through social media platforms
to assemble their furniture and be part of the process.
• Ikea has a strong online presence compared to its contemporaries.
• Ikea also does CSR (corporate social responsibility) through its trust INGKA foundation.
• Ikea also offers its consumers professional help as well as offers DIY to assemble furniture.
• IKEA is also known for its simple designs and reliable furniture which among the consumers have
been known to be money value.