Ikea

Executive summary

IKEA group is undoubtedly one of the top furniture retailers in the world. With its unique combination of form, function and affordability, IKEA distinguished itself from other furniture retailers. With its overwhelming success in Europe, IKEA entered the American market with the hope of continuing its success. Though not very successful initially, through its market research and impulsive advertisements, IKEA captured major market share in the US market and also the reputation of being the fastest-growing furniture retailer in the US. Though IKEA's target of 50 stores in the United States looks optimistic, considering the market potential of the US furniture market, the target is realistic if IKEA could address the challenges ahead of it in the US market.

Changing strategy is it worth a try

Customers will be deprived of an unique IKEA shopping experience if IKEA decides to open smaller stores in shopping malls. It is very difficult to provide the same services in a small store as in a big IKEA store. The brand name IKEA is meant for its massive, bright and inviting stores. If IKEA starts operating small stores, the customer who expects the same sort of service in all IKEA stores may not get the desired service which in turn will create a negative impact on its brand image.

Challenges in low end American market

Cut-rate pricing creating low margins

High competition

Highly fragmented market

Challenges in high end American market

Serviced by high touch sales assistants

Additional service like interior design services offered by high end retailers.

Wide range of design