IKEA is the largest furniture retailer in the world. It was founded in 1943 by a 17-year-old boy named Ingvar Kamprad. The conglomerate sells everything from furniture to home accessories. IKEA is known for its flat packaging and building the items yourself. The customer is given the chance to build their items with the instructions provided by the company. They have a large range of products and offer good quality with designs that suit almost everyone’s taste. Another reason for their popularity is along with their high quality, they offer low costs. Furniture helps bring character and life to a home. With their range of products that caters to all of their customers’ needs, they ensure that every need and want of the customer is met. Here, we’ll know IKEA SWOT Analysis.
Just like IKEA, other competitors offer the same products and services that IKEA does. Even though IKEA is currently the biggest company in furniture, they must continue to research and look into their competitors. Market research is very important and helps make the necessary changes in tactics and so on.
SWOT Analysis of IKEA
IKEA is a large company that millions around the world shop at. This SWOT Analysis will help understand their current strength and how the company can hold such a large market share in the industry. The analysis will also talk about the weaknesses and how they could affect their company. Since IKEA has a large market share in the industry and so they are open to many opportunities. However, with those opportunities, comes threats. Threats are those factors that IKEA would need to take into account when they make any changes or even just generally surveying the competition.
Strengths
- Customer Service: IKEA believes in the importance of customer relations and ensuring that they get the best service. They value their customers and their opinions. Due to the diversity in their customers’ taste, they ensure that they have as many options available to choose from. IKEA’s products are easy to assemble with simple explanations given with their products. This customer service allows them to connect with the customers and leaves a lasting impression.
- Cost Leadership: It is a known fact that IKEA is the leading retailer in the furniture market. The cost leadership is a result of their cost reductions. They can afford to do this due to their Do it yourself (DIY) style of setting up the furniture. Their customers have the option to assemble their furniture themselves. Due to this method of selling, they can reduce costs and pass on those reduced costs to their customers. Customers now enjoy reduced prices for their furniture.
- Bulk quantities: IKEA maintains long-lasting relationships with the suppliers and they buy their materials in bulk. Since IKEA is established in the market with a wide consumer base, they can buy in bulk which saves costs and suppliers can empty their warehouses and not worry about storing them for a long time.
- Brand Reputation: IKEA has maintained its brand for a long time now and is well recognized. As a company, they are placed in 38 countries and also ensure low costs. This allows them to keep them in the market and retain their consumer base. Brand reputation is important to have especially when you have to work with the competition. Brand reputation helps build loyalty and keeps your customers within your base.
Weaknesses
- Quality: While IKEA does try to maintain uniform quality throughout its location, different places will have different suppliers. This makes it hard to maintain those standards all around the world. This may be due to the difference in the supplier and the material of the raw materials. Wherever the reason, maintaining the same standard of quality may be difficult. Since they need to maintain their low costs, increasing the quality may go over the budget.
- One of their main selling points is cutting costs and selling that furniture at low prices. This could affect the quality of the products that come through. At present raw material is growing expensive and with IKEA still focussing on ensuring low costs this could compromise the future quality of products. Many also associate raised prices to be a sign of quality. In these events, there may be customers that choose different brands to buy from in search of better quality and long-lasting furniture.
- IKEA has also had a bad run-in with the press. Many customers have complained about poor quality and the difficulty in assembling different products. This could hurt them, in the long run, because there are buyers who would not want to compromise on quality. This will tie back to brand reputation. Bad press can negatively impact reputation and if this is common enough, then you may have customers beginning to distrust your brand and move elsewhere.
Opportunities
- Market research: Since IKEA is an established player in the market, they have all the needed resources at their fingertips. This allows them to figure out how the market changes and make the necessary changes when needed. They are a big company with a stronghold in many countries. They can use this knowledge to their advantage and make changes needed to adapt.
- Online Shopping: In this day and age, everything is going digital. With online platforms taking precedence, it may be a good move for IKEA to take to online platforms. This could help them reach a wider customer base. Online shopping is a good idea as it can reach people even when there is no physical warehouse there. It can also help people save time and decide on what they would like on the website before coming to the store to check them out.
- Setting more stores and expanding: With IKEA’s place in the market it may be a good idea to increase storefronts and expand. This is also another way to reach a wider audience. IKEA also has a food outlet that it can capitalize on. Since it is already a reputed company in the market, they could think about entering the food market with its food outlets. With growing concerns over health and diet, this could be another way for the company to grow.
Threats
- Competition: IKEA isn’t the only sole provider of furniture in the market. Various companies have come in and pose a threat to IKEA. This competition gives more options for consumers to choose from. With concerns over quality and longevity, there may be consumers who opt for another brand.
- The bad press: Coming back to the topic of low quality from some of their products. This could result in losing customers and their confidence especially if they receive bad press for it. They may have to face lawsuits if there are people who have been injured by the IKEA products. They may receive bad comments on their social media and this could create a backlash. IKEA will need to find a way to tackle these problems if they need to continue to maintain their brand reputation in the market.
Competitors
Walmart: Walmart was established in 2000 and has a range of products to choose from just like in IKEA. They also promise quality and are also a trusted company that many Americans look into. It is a popular retail company and they have a range of furniture designs that can help build your ideal home. This way it is one of the main competitors of IKEA
Amazon: Everyone knows Amazon. Amazon is also a trusted company by millions. Many also look to buy from there especially with the millions and millions of their products as well others. Amazon has another advantage which is their online platforms. This allows them to reach a large consumer base. Just like IKEA, Amazon too has a lot to choose from even in their furniture. They have a huge range that can match any customer’s taste.
Bed Bath and Beyond: Bed Bath and Beyond is another trusted company by many customers. They have set up shop all over America and offer domestic and home merchandise.
Groupe SEB: This is another company that designs and manufactures household appliances and home care.
Sears: this company is also headquartered in the US and just like IKEA offers an array of products from furniture to home merchandise.
IKEA, while being the largest player in the furniture industry, still has close competition with various other companies. The ones mentioned above are just a few on the list. Each of the companies above promises quality and also has a considerable market share. In any industry, there will always be competition. The competition allows you to perform your best to ensure you give your best. IKEA is no different. Even though IKEA is the top player in the market, they must take into account their competitors and see how they are performing. Market research is very important and helps any company improve its game.
With the above SWOT Analysis given one can better understand the company and how they bring in the customers and stay on the top of the game. It also looks into every other aspect such as the weaknesses, opportunities, and threats.
