Ikea At A Crossroad

Everybody thinks that Amazon is the retail sensation of the 21st century but its path to success was actually ambushed years ago by two different iconic companies – Ikea and Sears. Both Ikea and Sears disrupted the retail environment when they introduced key innovations in pricing, marketing and merchandising.

At present Sears is struggling to stay afloat amidst a world that is driven by online shopping. On the other hand, Ikea has grown in the last 31 years and it operates around 300 stores in 27 countries including the first US store that it opened in the Philadelphia-area mall. Every year, Ikea earns about $36 million making it a leader the retail industry. However, Ikea today is at a crossroad because it wants to elevate its standards from the inexpensive, low quality but well designed merchandise.

Customers expect Ikea to do more. When customers buy a product from Ikea they want it built to last. However, experts say that reassembling Ikea’s image can be a challenge because the company has to do away with the signature low prices. Ikea has to overcome the challenge without turning off their loyal customers who do not have issues with quality.

Ikea has a reputation for low quality and difficult to assemble furniture but it minimalistic aesthetic is somewhat appealing to many consumers particularly those who are budget-minded. Ikea has loyal customers among college students and young professionals who want to outfit their tiny apartments with cheap furniture. Ikea has great designs and its merchandise is functional but it cannot boast of very high quality because in some instances, furniture is not built to last.

Transforming Ikea requires more than just upgrading materials and fabrics; it has to change marketing and stores must be improved. Ikea also pledges to be more active in ecommerce where majority of businesses are being conducted.

MAP policy is particularly critical to manufacturers who want to protect their brand image. Manufacturers request retailers to use the minimum advertised price (MAP) to prevent price wars with stores that tend to sell products for lower prices. MAP helps small retailers and authorized resellers to compete and sell based on value.