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IKEA is a leading retailer having huge customer base. This multinational company was founded in Sweden and it now carries out operations in almost every continent across the globe. It produces and sells readymade furniture, home and kitchen accessories (Camara Rodrigo, 2023). The company places immense focus on sustainability and it has formed a code of conduct that govern the operations of all its suppliers and makes sure that there is zero wastage and ensures sustainable practices in the process of production. The main purpose of the study is to analyze the issues in the marketing and supply chain of IKEA, the main prerequisites meant for successful IKEA supply chain operations, evaluate the main elements of customer service and at last, the stance of the company on ethics, sustainability and digitization.
The base of suppliers of IKEA is geographically diverse and thus, acts as the major issue that the corporation encounters while measuring the sustainability of suppliers' operations (Dalalah et al., 2022).
The corporation constitutes to serve a huge base of customers that belong to varied cultures and backgrounds. In this relation, IKEA faces challenges to adapt and customize its goods and marketing policies to the preferences and expectations of consumers of distinct nations.
The changes in the market conditions have directed the increase in the rates of raw materials needed by IKEA and also in the cost of transporting the finished items to the nation wherein they are dispersed (Baglioni et al., 2020). The operating cost of IKEA skyrocketed after entering the US market since it used to buy its products from European suppliers. Shipping these items to US markets depicted substantial logistical challenges, making sure about the appealing customer base.
Few of the major markets catered by IKEA are encountering the phase of demand saturation and also an increase in competition that in turn become an issue for the marketing operations of IKEA. IKEA initially used to rely on word of mouth, restricted marketing and the disbursement of catalogues to clients residing in regions where furniture shops had formed a presence (Spinoglio, 2020). However, after making entry into the American market, the management of IKEA speedily realized that traditional methods of marketing could not generate positive outcomes because of the aggressive retail market and customer diversity.
IKEA follows a few standard quality and design formats that act as the brand signature. But while making an entry into the emerging market, it becomes quite challenging for the brand to integrate the local requirements of the consumers without any sacrifice to the value of the brand. For instance, all customers could not purchase IKEA's European-style mattresses as they were longer and thinner than ordinary American beds, in spite of their finest quality and economical prices.
IKEA’s supply chain is a well-known supply chain that primarily comprises of main 4 elements logistics, customer service, sourcing and production. The supply chain strategy of the company is engrossed in leveraging worldwide sourcing, lean manufacturing, automation of procedures, and e-commerce to maximize the operations of the company (Attaran, 2020). Global sourcing enables IKEA to access a wide range of goods at lower rates, while automation of processes assists to decrease costs and enhance efficiency. Lean manufacturing is used to decrease wastage and enhance production, whereas e-commerce allows the corporation to reach a wider base of customers. All these strategies act as prerequisites for the successful retail market operations of IKEA.
The global sourcing approach of IKEA is a major part of its supply chain strategy. It involves sourcing goods from a broad array of nations, including Asia, the US and Europe. It enables IKEA to have access to a wide array of products at lower costs that aid it in remaining competitive in the retail market. The corporation also has a strict ethical code that makes sure that all the goods are obtained in a responsible way and with respect to the environment (Ye, 2021). It has helped IKEA in establishing strong goodwill for sustainability and quality. Over 1800 suppliers in over 50 nations sell the raw materials to IKEA. It makes use of 42 trading facility offices across the globe to manage relations with traders. It signs long-term agreements with the most trustful traders and thereby gets materials at the lowermost possible prices.
Firms having complicated supply chains often have issues tracking the sustainability efforts of each supplier. To meet this issue, IKEA introduced IWAY. This benchmark specifies the needs for the corporation's position on suppliers and outlines what they can assume in return (Jiang et al., 2020). Moreover, it lay emphasis on guidelines designed to decrease waste and aid in ensuring that products are sustainably obtained. To further improve the supply chain sustainability, IKEA established a proprietary tool known as e-wheel that aids in assessing the ecological effect of their items at 5 key phases of the supply chain, namely raw materials, production, distribution, customer use and end-of-life. More precisely, IKEA has been functioning towards the globular supply chain from 2018 which indicates that each item is manufactured and designed with the next purpose in mind. Relying on the items could denote using just recycled materials in the manufacturing or offering a warranty on spare parts.
In order to evade inefficiencies and wastage caused by wholesale ordering of products that do not sell as projected, IKEA uses ‘minimum settings’ the lowermost number of items that have to be accessible before any new order can be cited and ‘maximum settings’, the greatest number of items that can be ordered at once. To further increase the efficiency of inventory management, the 'Do It Yourself' model of IKEA has also aided in setting the supply chain separately. By wrapping their items efficiently, consumers can simply take their procurements straight from the storeroom to their households to accumulate themselves (Pascucci, 2021). This enables IKEA to upkeep a larger inventory, thereby reducing the shipping costs of the company. The DIY approach also enables the corporation to practice the storage planetary in an economical manner and thereby save IKEA funds on inventory management. At last, a large number of products are dispatched directly from dealers to stores, a tactic that also substantially decreases storage and warehousing costs.
To modernize the flow of products in and out of the outlets, IKEA works with an exclusive and rare attribute – in-store logistics employees. This staff monitor the deliveries, records all the inventory arriving at the provisions, assorts goods and makes sure that they are being positioned in the adequate sections. By handling logistics in-store, each IKEA location can thoroughly supervise and regulate all procedures, assisting in assuring higher store-level accuracy of inventory (Esrar et al., 2022). Not just this aid IKEA in reducing costs, but also in enhancing consumer loyalty, making a simple-to-navigate spending experience that allows buyers to procure furniture and housewares they require, when and where they require it.
IKEA values its consumers over and above all and attempts to deliver the finest facilities possible. Continuous monitoring of consumer gratification is an essential part of the business approach of IKEA (Gupta and Ramachandram, 2021). They study the number of grievances, returned goods, demand for specific items and consumer suggestions. Corporate representatives even call the households of their consumers to acquire responses and perspectives on items that consumers may be looking for. The gathered thoughts are then applied as the initial point of the new design procedure. Finally, the IKEA provisions offer the visitors with supplementary conveniences, like a play area for children, food courts and mini-workshops with conventional Swedish food items. This inspires consumers to visit physical outlets even in periods of online and e-commerce shopping.
With the IKEA inventory chasing system, the personnel can set up both the lowest number of items obtainable before ordering and the extreme number of a particular item to order at a single time. These situations aid the corporation in nailing down the adequate reorganisation point and avoiding understocking and excessive stocking problems. It maintains logistics management conscious of what is being sold, and what quantity of inventory arrives at the store via direct distribution and from delivery centres (Pourejazy, 2022). They make use of this data to project sales for a subsequent couple of days and order items to fulfil the projected demand. In case, the sales statistics do not match the assumed quantity of items that must have been traded that day, the logistics management does the manual stock take. In addition, the supply chain strategy of the company uses lean manufacturing. It involves the usage of techniques to decrease waste and enhance production. It consists of techniques like Just in Time production that make sure that components and materials are delivered just in time to be used in manufacturing. This aids in reducing costs, enhancing efficiency, and decreasing the amount of waste being generated.
However, the process administration of handling the consumers can be enhanced to acquire operative distinction by addressing specific issues. IKEA offers goods at lower rates, which has led to the creation of problems in upholding the quality to fulfil international benchmarks (Vadakkepatt et al., 2021). The lesser rates of goods have not just impacted the quality but also the facilities offered by IKEA. This issue can be resolved by offering the employees adequate worldwide training so that they can enhance the quality of goods.
IKEA is facing industry-wide supply chain challenges that have also impacted its value chain and various factors contributed to the condition that it is experiencing, including the availability of raw materials, sourcing of components and transport capacities. The global supply chain continues to encounter massive challenges due to the COVID-19 outbreak. These are sector-wide challenges that have also impacted the IKEA supply chain that has resulted in delays and shortages of items (Ponnana & Uppalapati, 2022). The availability situation looks extremely distinct between distinct markets and even between distinct outlets within similar nations. In addition, IKEA is struggling with delivery issues in the Netherlands, causing several products to remain unavailable to obtain. As a consequence, the retailer has decided to temporarily remove a few items from its range. Also, the problems in UK and Ireland majorly arise from Brexit and driver shortage, the problems in the supply chain are the outcome of a surge in demand and disturbance in the global container shipping industry. The inflation and issues in the supply chain have adversely impacted the sales of the financial year 2022 and are directing to rising costs and greater prices.
IKEA, as the major transport purchaser depends on transport service workers and their drivers to transport the IKEA things to the stores and warehouses and the shortage of drivers act as the major concern to secure the constant flow of goods in the future (Han, 2023). It aims to partner of choice for its service providers and determine the significance of making working conditions that attract and retain robust talents.
Customer service is regarded as the piece of offering support to both prevailing and potential consumers. Effective customer service act as the revenue producer. It offers buyers a comprehensive and unified experience that brings them into line with the purpose of the organization (Enyinda et al., 2021). A thorough understanding of the fact that consumer service is the keystone of the customer experience aids in leveraging it as the prospect to please consumers and involve them in new and exhilarating ways.
There are 4 major elements of effective customer service which are as follows –
Effective client service always begins with the humanoid touch. Tailored interactions significantly enhance consumer service and allow consumers to know that the corporation cares about them and their issues (Lopes & Casais, 2022). Rather than thinking of service as a charge, account for it as the prospect to earn the consumer's business all over again.
Customers have recognized capability as the competence that undertakes the greatest role in the effective consumer experience. To remain competent, the customer care representative should have a stronger knowledge of the corporation and its goods, as well as the authority to fix the problem faced by customers.
Consumers desire to be capable to get in trace with the customer service expert via any channel. Provide support through the channels of communication that the company’s buyers rely on and make it simple for buyers to figure out in what way to communicate with the company (Diebner et al., 2020).
Customers desire corporations to remain proactive in reaching out to them. In case, one of the items is back ordered or the company's website is experiencing interruption, proactively grasp out to buyers and discuss the issue. They might not be contented regarding the condition, but they will appreciate that company kept them in the circle.
Customer services marketing is the method wherein the team lay emphasis on connections with consumers instead of transactions. The most substantial thing to keep in mind is that the consumers have feelings and sharp brains. When any company goes out of its way to make people happy, the efforts of the company are remembered. All this inspires them to do sales activities with the corporation again (Dwivedi et al., 2023).
Customer service is the most crucial factor of marketing. It builds customer relationships by offering them support, information and assistance. Customer service can aid in building brand loyalty, direct to repeat customers and raise customer satisfaction. Also, it helps in reducing customer churn and raises word-of-mouth marketing.
Identically, several customer service components and their relationship with respect to IKEA's marketing mix can be studied in the following ways –
IKEA offers superior quality goods and services that keep the consumers loyal towards the brand. It helps in generating higher revenue which in turn, aids in maintaining steady manufacturing of products. In addition, the products are designed with functionality and aesthetics in mind, leading them visually appealing and user-friendly (Rodrigues & Brandao, 2021). It constantly updates and extends its product range to fulfil the changing consumer requirements and market trends. The corporation invests heavily in research and development to make innovative solutions that appeal to its target audience. Flat-pack furniture of IKEA is designed for self-assembly which decreases shipping charges and storage space needs. This saves a lot of amount for the company and enables consumers to transport and assemble their buys simply.
The consumers at IKEA admire the consumer services they offer. The quality of such services is good and thus, the consumers are ready to pay a higher amount of price as they are aware of the quality of the product that they would be procuring. Thus, the procedure of deciding the prices is made quite simpler. IKEA constantly supervise the pricing strategy of its competitors and adjust its price accordingly (Sin et al., 2021). The corporation aims at maintaining a competitive advantage by providing better value for money as compared to its competitors. The pricing strategy of the company lay emphasis on delivering value to the customers. It ensures that its products remain affordable but also of higher quality, functional, and well-designed, leading them as an attractive option for numerous consumer segments.
Identifying the rising significance of online shopping, IKEA has made an investment in the e-commerce platform to reach consumers that prefer to shop online. The website of the company and mobile application enable consumers to browse items, plan their buying and place orders online for home delivery or in-store pickup. The efficient and cost-effective supply chain of IKEA is crucial to its place strategy (Vega et al., 2023). IKEA carefully chooses store locations to make sure about maximum visibility, accessibility and convenience for consumers. It typically chooses locations near main highways or transportation links, leading it simply for consumers to visit the stores and transport their purchases. The corporation sources raw materials from numerous suppliers across the world produces its products in several nations and transports finished items to distribution stores. This global approach allows IKEA to optimize costs, upkeep quality benchmarks and assure a steady supply of items.
IKEA uses a blend of traditional and digital advertising platforms to reach the target audience. These cove print ads, television commercials, online ads, billboards, and social media campaigns. Its advertisements often emphasize its product range, design philosophy, and affordable prices, making a different brand image. IKEA is making a large investment in digital marketing with respect to the mounting importance of online channels. The corporation uses social media platforms, content marketing, email marketing and SEO to reach the target audience and create buzz across its offerings (Stallkamp et al., 2023). IKEA makes use of public relations strategies to upkeep a positive brand and manage its goodwill. The corporation involves with the media, organizes events and participates in trade exhibitions and shows to share its story, make announcements about new products and detail sustainability initiatives.
The primary objective of IKEA is to provide high-quality goods at lower prices. The corporation accomplishes this by executing cost-saving actions throughout its supply chain, like bulk buying of raw materials, competent production procedures, flat-pack shipping and self-assembly. IKEA makes use of various strategies for ensuring a better customer experience and along with that it also ensures that consumers relish themselves during their visit to the outlet. The corporation employs specific consumer service approaches to offer the best facilities to its consumers (Dal Colle, 2022). At every IKEA store, consumer relations co-workers are assigned, who are well aware of IKEA's products, and offer advice and information to consumers during their visit. Also, the company offer a play area for children, so that the parents can adore their shopping without worrying about their kids. Many of IKEA's goods are designed to be customizable and modular, enabling consumers to make personalized solutions for their homes (Barata et al., 2023). Such flexibility allows consumers to adapt their living spaces as per their needs and preferences. In addition, it intends to constantly update and expand its range of products to meet the changing needs of customers and market trends. The corporation makes investments in research and development to make innovative solutions that appeal to the target audience.
IKEA offers good check-out services to customers by instructing them regarding the product particulars and the service offered by IKEA. Also, the corporation offers distinct payment options to the customers, which makes sure about a positive influence on consumers regarding the IKEA store. Customer service acts as a power for the marketing success of IKEA. IKEA runs a loyalty program known as the IKEA family that aims at building long-term customer relationships (Camara Rodrigo, 2023). Members of the program acquire exclusive discounts, access to events and special deals that encourage consumer loyalty and repeat purchases. The IKEA stores are designed to promote the products in an effective manner. The corporation makes use of room settings, displays and signage to showcase its items and motivate customers. In addition, IKEA occasionally provides in-store promotions like discounts, special deals or events, in order to derive sales and increase consumer engagement.
IKEA has a solid reputation for its sustainability initiatives and has made huge investments in digitizing its marketing and supply chain operations.
IKEA has placed a lot of effort into digitizing its supply chain and marketing operations. The firm has made substantial technological investments, specifically in making its digital platforms such as the IKEA place application that allows users to virtually place furniture in their homes with the help of augmented reality (Ozturkcan, 2021). IKEA has also made investments in automated delivery vans and warehouses among other logistics technology. A cloud is a core tool in the digital transformation of IKEA. The company has altered its present technological infrastructure, altered its shut shops into order processing centres and triggered contactless click-and-collect facilities – all while enhancing the volume to manage substantial volumes of web traffic and online orders. With the aid of cloud technology, it has established data models to aid peers by making highly effective selection procedures, that have improved its consumer experience. Where there is no doubt that such initiatives have raised operational efficiency, there are worries regarding how digitization might impact the employment situation. There is a chance that employment could disappear as the supply chain of IKEA becomes immensely automated, specifically for the lower-skilled workforce (Cherry, 2019). IKEA must ensure that the benefits of digitization are equally distributed across the staff.
IKEA is highly committed to making use of ethical business methods that are outlined in its robust code of conduct. The firm has publicly committed to a few things like sourcing all of the wood from environmentally friendly sources and paying decent wages to employees (Al-Zghool, 2020). IKEA is committed towards respective human civil rights and children's rights by operationalizing the UN guiding values on business. Along with that, it ensures that it follows moral business practices, including battling corruption, securing moral data handling and digital technology, duly conforming with both the letter and spirit of the law when it arrives to corporate tax guidelines and being transparent regarding taxes paid. Additionally, it secures a stronger approach in regard to health, climate, social justice and political crises of time, to secure the livelihoods, safety and resilience of co-workers and associates wide across its value chain (Van Buren et al., 2021). However, the labour policies of IKEA have been criticized in past. The corporation was penalized for using forced labour in Germany as part of its supply chain. After that, IKEA has taken action to address such problems, including improving its supplier oversight processes and placing in the position zero-tolerance policy for child labour.
The efforts and measures taken by IKEA to promote sustainability have acquired higher praise and recognition. The corporation has drafted some public commitments like a promise to phase out single-use plastics and to become climate positive in upcoming years. IKEA has committed to acquiring all of its energy from renewable sources of energy and has made substantial investments in this area (Dindial et al., 2020). To become climate positive, the major priority is to decrease the absolute greenhouse gas discharges in line with the target of 1.5 degrees Celsius. IKEA is making efforts to achieve this by making use of more materials and food constituents with a lower climate footmark, striving towards electrification, 100% renewable sources of energy and constantly enhancing competence and promoting justifiable choices and renovating into a circular business. Nevertheless, questions remain regarding the viability of the business strategy of IKEA. Customers are inspired to buy new products instead of repairing or recycling their old ones as the products of the company are made to be disposable and inexpensive. There is a chance that the business model of IKEA is primarily in conflict with the notions of sustainability, in spite of the efforts of the company to raise the robustness and repairability of items (Ertz et al., 2019).
Overall, it can be claimed that IKEA has worked extremely hard to automate its supply chain and marketing procedures and has a robust commitment towards sustainability and ethics. The firm can still make improvements in various areas, though. IKEA is required to address the issues concerned with the sustainability of its business model and ensure that the benefits of digitization are dispersed fairly among the entire workforce. However, the measures taken by IKEA to advance sustainability and moral conduct of business are praiseworthy and the corporation has offered a model for others in the retail industry to match.
It can be concluded that IKEA upkeeps close relationships with the suppliers and performs to maximize its supply chain, minimize costs and ensure on-time delivery of items. This competency enables it to maintain its competitive pricing. IKEA stores are designed to facilitate a self-service shopping experience, with consumers navigating via showrooms, choosing products from warehouse-like areas, and sorting the products at home. Such an approach decreases staffing costs and encourages customer engagement and satisfaction. IKEA is committed towards sustainability and reducing its impact on the environment. The corporation invests in renewable sources of energy, lay emphasis on making use of sustainable materials in its items and aims at becoming a circular business. IKEA is also involved in several social initiatives and partnerships, like working with UNICEF and Save the Children to enhance the lives of needy children.
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