While many brands in several industries have achieved global ubiquity, there is only one furniture company that can be found from Nantes to Nanjing to Nottingham. Thanks, in part, to IKEA's localisation efforts, this flat-pack phenomenon is in a league of its own.
Founded by the late Swede Ingvar Kamprad in 1943 when he was just 17, IKEA started on a tiny scale. Kamprad, who until then had been a budding entrepreneur selling everything from fish to ballpoint pens, initially sold replicas of his uncle’s kitchen table, diversifying into other furniture soon after.
Kamprad, who started IKEA as a mail-order business, eventually opened the first store in his home town of Almhult, Sweden. Stores in other Scandinavian countries followed in the 1960s before he opened the first non-Scandinavian stores in Switzerland and West Germany in 1973 and 1974, respectively.
Painting the world blue and yellow
Since then, IKEA has expanded at an astonishing pace, especially because IKEA stores are often purpose-built and require lots of land (its largest store in the world is in South Korea and is 640,000 square feet). As of August 2019, 423 IKEA stores are operating in 52 countries.
Expanding into Western Europe has been relatively straightforward due to proximity, shared cultural values and lack of red tape. Indeed, when it comes to stores, its biggest market is Germany, with fifty-three outlets. That’s even more than the US, which has 50.
Yet when it comes to the rest of the world, IKEA's localisation strategy has had to adopt a more measured approach.
Uniformity... for some things
To some extent, IKEA’s many stores have a McDonald ’s-like uniformity. Store design, floor layout, the blue and yellow company colours, meatballs in the cafeteria and the system of jotting down your purchase on a slip of paper before picking it up in a different section – these things seldom change from country to country.
Even IKEA’s quirky product names have been part of the global strategy. By sticking with Swedish names for its products (Eg, “Fyrkantig” and “Ektorp”, meaning “square” and “collector”) it minimises the chance of the sort of dubious language translations that have embarrassed many global companies over the years.
But in other areas, the company has made significant tweaks to its modus operandi which have endeared it to local shoppers. And it does this in meticulous and slightly unorthodox ways.
Up close and personal
IKEA's localisation strategy requires researchers to go into the homes of regular people who live in the areas where they plan to launch stores.
IKEA Chief Executive Mikael Ohlsson told the news agency Reuters in 2013: “Most people don’t really know and can hardly imagine that we visit thousands of homes round every store in the world every year.
“We sit down in the kitchen and talk to them ... That’s the way we try to learn and understand. ‘What are you annoyed with? What are your frustrations? What would you like to have? How much can you afford?’” he said.
Talking of IKEA’s preparations for the opening of its Hyderabad store in India, Amitabh Pande, strategic planner at IKEA India, said that IKEA had conducted more than a thousand home surveys across the country over 18 months.
“There is nothing more powerful than watching and talking to those people in their natural environment. We watched how they cooked, slept and ate…”
Conquering the Chinese market
IKEA entered the Chinese market in 1998 and now has 31 stores there. But it has been a steep learning curve in the world’s most populated country.
For a start, the self-assembly of IKEA products was unattractive to Chinese customers who, like their Indian counterparts, are used to employing casual handymen to do their DIY. This goes for most other countries in Asia.
To counter this, IKEA stores teamed up with assembly service companies, based within the store, who deliver and put together the furniture for an additional price.
Store location also differs. Whereas in Europe they tend to be on out-of-town industrial estates, in China it builds them closer to customers as fewer people own cars.
In a country as vast as China there are also regional differences that have to be considered. For example, a sample in-store balcony exhibit in northern China where balconies are generally used for food storage, will look different to one in the south where they often double as laundry areas.
Naturally, there are some differences in the products sold – e.g., more chopsticks, fewer knives and forks - but the bulk of the 10,000 items sold in Chinese stores are from the standard range.
Impressing India
IKEA also localises its cutlery products. Indians, generally, either eat by hand or use spoons. So the company dispensed with its children’s plastic cutlery pack and instead sold different coloured spoons for 15 rupees (around 15 pence).
Also, in the cafeteria, taking into account India’s majority Hindu and large Muslim populations, IKEA took beef and pork off the menu and offered chicken meatballs, as well as additional vegetarian options.
Pertinently, IKEA postponed the opening of its first India store several times until it was confident it got it right. A contrast to the “open first, figure it out later” mentality of some companies.
Key takeaways from Ikea's localisation strategy
As we've uncovered, KEA's success can be attributed largely to its localization strategy.
Here are some key takeaways:
- Ikea conducts extensive home surveys and research to understand the needs and preferences of its target markets. Their data-driven approach allows them to understand local cultures and lifestyles.
- The company, alongside translation and localisation, adapts its products and services to cater to local customs.
- Ikea localises its product designs.
- Ikea partners with local partners to provide convenience to customers.
- Although generally maintaining a consistent store layout and design, Ikea does take localisation steps in its store formats.
- The furniture giant refines its localisation strategy to ensure ongoing success.
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