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.