Lessons From IKEA's Shift In Strategy

IKEA was the flat pack furniture innovator and category king long before there were Asian imports.  The Wall Street Journal recently ran an interview with IKEA’s CEO Jesper Brodin, who related the strategy behind the biggest restructuring in the retailer’s history. IKEA plans to cut thousands of jobs, open 30 city-center stores and offer home delivery services.  

This shift responds to challenges from online competitors.  The CEO reaffirmed the company’s commitment to affordable and cost-effective pricing, but with a different focus. The "city-centric" stores will function more as showrooms with a much smaller footprint than the massive suburban locations. After performing some financial evaluations, Brodin said, “We could prove that playing it safe would, from a growth and bottom-line perspective, be the most risky thing to do.”  

IKEA’s commitment to city-center showrooms responds to the changing dynamic in the way people shop. The city-center stores will make it easier to buy IKEA products. IKEA discovered that many prospective customers don’t have the time or willingness to travel to suburban locations to see and feel merchandise. To enhance the customer experience, IKEA purchased TaskRabbit to provide home delivery and installation services.  

Another change for IKEA is to convert storage spaces at its large suburban locations to fulfillment centers and install lockers in parking lots so that customers can pick up merchandise at their convenience instead of having to wait for a store to be open.  

IKEA is also testing different store concepts around the globe. In Stockholm, the company has opened a kitchen-only showroom where everything is purchased online and the merchandise is delivered directly to customers’ homes. In Madrid, the company has opened smaller stores dedicated to the living room and another that offers merchandise for the bedroom and bathroom.  

The lessons for decorative plumbing and hardware showrooms are:

• Playing it safe is the riskiest thing that you can do.
• Determine how you can make it easier for your customers and prospective customers to buy from your showroom.
• Determine how you can become a 24/7 solution.
• Determine how you can make your displays inspirational, because those consumers who are renovating their baths and kitchens still want to see and touch products before buying.
• Ask yourself why customers should buy from your showroom instead of IKEA or an online etailer.