Merchandising Presentation and Store Design (Part 3)

Store Design

The following are three different elements used by IKEA for their store design:

·         Layouts

A Racetrack layout has a main section which directs towards various section of the store, loops through the store and returns customers to the front of the store. It draws customers around the store and is commonly used in department stores.

IKEA used Racetrack Layout (Loop) to encourage customer to explore and move around IKEA at ease. The Racetrack Layout (Loop) leads customers throughout the whole IKEA passing through different department. It makes sure that no section is missed out as the Racetrack Layout is design in a way that customer will have to follow the path in order to get to the end.

The Loop allows customer to have different viewing angles and to catch a glance of every item in the store within a look. This encourages exploration and impulse buying. Thus this is strategic for IKEA as to capture customers.

• Signage and Graphics

Location: Identifies the location of merchandise and guides customers

Category Signage: Identifies types of products and located near the goods

Promotional Signage: Relates to specific offers

Point of sale: Near merchandise with prices and product information

Lifestyle images:  Creates moods that encourage customer to shop

IKEA made use of the areas within the store to design different concept to capture customer attention. As shown in the pictures below, IKEA has made use of the space to come up with different living room concept.  It can be romantic, funky or flowery. With this different mini showcase, IKEA provides ideas and gives unique experience to their customer.

·         Feature Area

Merchandising Presentation and Store Design (Part 2)

Store Environment

IKEA design their store environment through visual communications, lighting, colours, music, and scent to stimulate customers’ perceptual and emotional responses and ultimately to affect their purchase behaviour.

1.      Lighting

IKEA made use of spotlights to highlight the special merchandise, to make the specific item stand out from the background, adding life to the product with the special feature. The lightings are different based on the different settings and set-up of the home displays; e.g. contemporary and modern designs will have cooler lighting whilst homely set-ups will have warmer lighting.

2.      Colour

To set the mood and tone of the department, for different sections of the store, IKEA utilises different colours for the walls, mainly pastel white for the home furniture, light greens for the garden department and brighter colours for the children section. 

3.      Music

IKEA occasionally plays slow and soothing music, to add to customers’ mood, to slow down their pace, increasing their patience and shopping time, so that customers stay longer, and look at more merchandise, having more patience to walk through the entire circle of the showroom, thus leading to higher chances of more purchases.

4.      Scent

The scent in IKEA is just a very light scent, so that it won’t be too strong for customers to handle, and the light scent will help lift the spirits and moods of customers. However, the scent is not as strong as scented candles’ scent, the scented effect is minimal, only to overcome the strong smell of furniture in the store, to maintain customers’ optimal comfort while shopping in IKEA.



Merchandising Presentation and Store Design (Part 1)

Merchandising presentation (Visual Merchandising)

IKEA placed their impulse merchandise near heavily trafficked area for example along the walkway towards the food area, along the staircase and near cashiering area. IKEA has maximised their impulse merchandise to increase impulse purchase. The products when placed near the aisles and walkways, it is placed strategically, where the customer traffic walks through the entrance of the showroom and the cafeteria. And price labels are done up in large fonts, even with ‘parking lots for shopping carts, where people can just grab items and leave it at the lots, while they proceed for a meal before continuing to shop.

Adjacencies Merchandise cluster complementary merchandise next to each other. In IKEA bed section they placed pillows and mattress at the back end as this merchandise are adjacency to each other. When customers make purchases for beds and mattresses, when pillows are placed just beside, customers will be triggered by the visual reminder that they might need a new pillow, thus making an additional purchase, using the strategy of placing adjacent merchandise near each other to compliment the both items’ sales.



Merchandising Management

IKEA features a merchandising strategy of providing products in the furniture, and home furnishings segment, offering customers complete home and extended solutions. Merchandise that IKEA offers, extends to complete room, bedroom, textiles, kitchen related, even storage, and simple home ideas like clocks, photo frames and scented candle sets. Customers can visit IKEA and have all their home furniture problems solved, from a shopping trip to a single store.

The product categories of furniture that IKEA offers, is aimed to solve all furnishing needs. Having cabinet and drawer customization, with design support, and installation, for beds, and extending to the kitchen furnishings. IKEA also has products catered to children furnishing needs, not just the mass market, with children sized furniture, and children interactive products, soft toys, and 

IKEA observes how consumers live, understanding the fact that consumers are global and different, with different customer profile like; needs, tastes, demographics, psychographics, spending power, etc. and in response, develop new products and innovations that can improve the way consumers live, with many ranges of products, through simple affordable storage solutions for example, with considerable impact on how consumers can reshape and rearrange their living styles.

The company has many functions that work on merchandise alone, with designers researching and developing new innovations on existing furniture. As well as buyers to source for suppliers with quality and lower priced raw materials, and by buying in bulk, globally, IKEA pushes down the costs, to provide customers with wide range of products at lowest prices.

By making all the solutions available all in one store, IKEA uses this strategy to manage their merchandise, to help customers shop with more ease, with merchandisers in frequent and even ongoing contact with the different functions of the store, like sales and logistics department, working cohesively to create efficient solutions for consumers. IKEA manages their merchandise, with a full range of product categories, and with efficient handling, to achieve and maintain a high level perception in consumers as a global retailer that creates solutions for everyday life at home, and beyond.

IKEA's Innovative Advertising - Flash Mobs!

Retail Store Strategy

Elements in Retail Strategy

The three elements in retail store strategy is IKEA target market segment, the nature of the retailer operations and sustainable competitive advantage. These elements contribute to their store strategy and come out with their retail mix and compete and differentiate themselves from their competitors in the market.

The first element in the retail store strategy is how IKEA target their market segment so that IKEA can focus its resources and retail mix and how attractive is their target market. Their business idea supports this vision by offering 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.

Thus IKEA is actually targeting price conscious consumers who look into the price tag when making purchase, especially in the furniture industry where every product provides almost the same function and the only way to differentiate themselves is through pricing and design of the product. And IKEA is trying its very best to provide 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.

The second element in the retail store strategy is IKEA retail format, which is the retail mix of the retailer. Retail mix is the mix of variables, including location, merchandise, communications, price, services, physical attributes and personnel, which form the overall strategic marketing components of retailing.

IKEA provides not only home furniture to the market; they also provide office furniture, kitchen and bathroom furniture so that they can maximize their mix of variables and merchandise available to the market. For pricing, they constantly lower their cost by reducing packaging, delivery and installations to lower their price so that more consumers are able to afford them.

For communications, IKEA spend a lot on advertising so that consumers are able keep track of their promotions. For example, IKEA will send catalogs to their existing customers via mailbox so that consumers are aware of their latest design and promotional pricing. Also, in order to reduce wastage, they have scaled down versions of the catalogue for consumers who belong to the lower spending power segments. These are some of the elements in the retail mix so that IKEA plan their strategy in the industry.

The last element is how they develop a sustainable competitive advantage over its competitors. Some of the methods found by our group are dropping the prices of their merchandise, increasing the level of advertising and providing better customer service.

The first method, dropping their price of their merchandise, as stated by their vision, they price their product so low so that they can target as many consumers as possible. With one of the lowest prices in the market, to target even the lower income groups, so that more people can afford modern furniture.

The second method, increasing the level of advertising, IKEA has come out with creative advertising campaigns so that they are able to attract the market. Some examples will be the catalog for existing customers so that they are able to update their customers with new designs and promotions. Other creative methods will be IKEA Sofa Billboard, IKEA Newspaper Ad, IKEA Park Bench, IKEA Apartment In a Box. Also not forgetting the online advertisings, they have YouTube advertisements about IKEA and also occasional random flash mobs in town area to increase awareness of their ongoing campaigns or promotions. These campaigns are all very expensive but they are very creative and with these campaigns they increase the level of advertising and differentiate themselves from their competitors, positioning themselves on a whole new level, instead of just another regular furniture retailer.

Stuff Kids say about Mother Nature, IKEA

IKEA's retailing environment

IKEA is a Categrory Specialist in Furnishing products.

Furnishing Products

IKEA offers a huge variety and deep assortment of furniture. They have furniture catered to people of all walks of life including babies, children, youths and adults. Their furniture is divided into many different categories for different areas in the house including the living room, bedroom, kitchen etc. Various categories of their furniture include: cooking, decoration, laundry, eating, outdoors. IKEA believes that play is the basis for how children learn, develop and become who they are. Therefore, they have catered a category range specially for children called Children’s IKEA. Products include toys and furniture for children for all ages. For example, Children’s IKEA offers fun furniture such as tents and canopies as well as hanging and swivel chairs. Toys have different categories such as soft toys, wooden toys, role play etc. IKEA provides a comprehensive series of furniture to suit the different needs of customers.

VARIETY
A S S O R T M E N T	Living Room	Bedroom	Kitchen	Children	Textiles
	Sofas and armchairs	Beds	Kitchen Cabinets	Baby cots and toys	Rugs
	TV stands and media solutions	Mattresses	Interior Fittings	High chairs and changing tables	Curtains and blinds
	Coffee and Side tables	Bedroom Storage	Appliances	Children Beds and mattresses	Blankets and throws
	Living Room textiles and rugs	Mirrors	Work tops	Children furniture and storage	Place mats and dining textiles
	Living Room Lighting	Bedroom Lighting	Sinks and Mixer taps	Children toys	Cushions and cushion covers

Some of the myrait of choices available:

Other Category; Food and Beverage

IKEA offers a wide variety of food in its restaurant to cater to its customers.  Choices of food include their very own Swedish cuisine as well as local delights. IKEA even has a special menu catered to customers who are Halal or vegetarian. IKEA also has a food market that offers Swedish delicacies in the form of food products. The company believes that it can not only provide Swedish furniture but also Swedish food products as well. Examples of food products include frozen-packed Swedish meatballs and salmon, Lingonberry syrup and Horseradish sauce. Furthermore, IKEA outlets also have a bistro specially catered to shoppers who want to grab a light snack or drink after shopping. They offer food items such as chicken hotdog, ice-cream etc.

VARIETY
A S S O R T M E N T	Breakfast	Traditional Swedish Dishes	Vegetarian Dishes	Local Delights	Halal	Desserts
	Scrambled Egg Set	Swedish Meatballs	Pizza	Curry Chicken	Halal Nasi Padang	Princess Cake
	Pancakes with Hard Boiled Egg	Cold Water Prawns	Pasta with tomato sauce	Nasi Lemak	Halal Meatballs	Punsch Roll
	French Toast Set	Shrimp Sandwich	Organic Pancakes	Local Fried Rice	Halal Chicken Wings	Raspberry Cheesecake
	Waffle	Baked Chicken Leg		Scoop Laksa	Mee Rebus	Swedish Apple Cake
	Tuna Breakfast Platter	Salmon with potatoes and vegetables		Mee Siam	Mee Soto	Chocolat Mousse

Some of the yummy food available:

Challenges IKEA faced

IKEA, the world's largest furniture retailer also faced challenges either in their competitors, retailers or their supply chain.

One of the challenges IKEA faced in on their challenge in enforcing supplier sustainability. This is due to IKEA who aims to be an eco-friendly company by reducing the emissions of CO2 and greenhouse effects and had plans in using 100% renewable energy in its long-term goal. IKEA is also trying to keep to their minimum requirements in terms of environmental and their social and working conditions.

However IKEA faced this problem in China, which is their largest source of home furnishing where they produced and manufactured most of the products in that country. The percentage of the direct suppliers of IKEA did not meet the IKEA requirements in terms of workers compensation and environmentally. Hence there are still major challenges related to wages, working hours, overtime compensation, lack of unions and social insurance. And one factor that is contributing to the difficulties is the high presence and mobility of migrant workers in China.

They did not meet the IWAY code of conduct which is known as IKEA way which comprises of IKEA supplier Code of Conduct. It comprises of the IKEA minimum requirements relating to the Environment and Social & Working Conditions including child labor.

Hence this is a challenge for IKEA in terms of managing their workers in the supply chain which is to make it more sustainable because the workers are working more than 60 hours per week which did not meet the requirements of the code which they are trying to reduce. And by reducing to the requirements when enforcing it will be another challenge for IKEA because they would have to make trade-offs due to its low-cost furniture that IKEA markets. Therefore it would mean that IKEA may have to use less quality products and lower unit margins in their furniture to meet their IWAY requirements.

Challenge 2

Another challenge IKEA faced is in Singapore which is in regards to the accessibility of IKEA in Singapore. Much speculation has been made about the accessibility of IKEA in Singapore in local forums and blogs and most of them find it very inaccessible to shop in IKEA.

In Singapore there are 2 IKEA outlets which one is located in Alexandra and the other in Tampines. For the Alexandra outlet, it was stated in their website that getting from anywhere from the MRT either from Queenstown MRT, Red Hill MRT or Commonwealth MRT, it does not reach IKEA directly and it is required to take bus trips from there which has became quite a hassle for travelling there. Adding on, previously there is a shuttle bus going from Seng Kang to Alexandra IKEA, the shuttle bus is not functioning anymore. The sources are actually taken from SgForums where people complained there. Although IKEA had made plans to counter their inaccessibility by implementing a free parking promotion scheme for IKEA Alexandra from Aug 2010 to July 2011, not everybody drives.

For the outlet in Tampines which is the one that our group visited, we personally feel that it is really inaccessible too. Firstly it is located only in the very East of Singapore which is Tampines and hence people from the central and the west part of Singapore would unlikely go visit as there are other furniture stores out there like Courts and Harvey Norman in most shopping malls. Next, the shuttle bus came after 45 minutes of waiting beside the Tampines MRT station and we find it very time consuming and troublesome. That was from our personal experience. Based on their website on how to go to IKEA Tampines, you have to take bus there from Tampines MRT, Punggol MRT, Buangkok or Seng Kang MRT in order to reach there. And the bus trip usually takes around 20-30mins depending on where you take from.

Hence the accessibility of IKEA is hard to reach in Singapore for normal Singaporeans which is a challenge faced by IKEA in Singapore. As quoted from one of the posts in SgForum by a user,

“shuttle services are always crowded.... because its free
Suntec City, Turf City etc.
If charge money, no one will want to go there already.
especially so for turf city and tampines.. so inaccessible for those using buses.”

Therefore this shows that other Singaporeans find it difficult to access there too.