IKEA Product Analysis PDF

IKEA: OQ= essential product quality (baseline standard of quality, handle normal wear and tear) -​ competitive pricing, -​ reasonable availability and convenience (stores and pickup/delivery options have to be reachable) -​ Broad assortment of essential home furnishings (covering majo...

IKEA: OQ= essential product quality (baseline standard of quality, handle normal wear and tear) -​ competitive pricing, -​ reasonable availability and convenience (stores and pickup/delivery options have to be reachable) -​ Broad assortment of essential home furnishings (covering major categories) OW= -​ unique design, (modern scandinavian design, aesthetics) -​ Affordability (DIY assembly reduces cost which makes it attractive) -​ integrated shopping experience (showrooms, pick-up style, restaurant) IKEA provides something between service intensive products and pure products where the main focus still is the product but the service plays an important role in being order winners (extra ideas?) 1.​ Customers are responsible for measuring the spaces 2.​ Customers are browsing the showrooms & making the selection of choosing which furniture they want 3.​ Customers are responsible for picking up the items from the self-serve warehouse and have to load it in their car 4.​ Customers are responsible for assembling the furniture correct 5.​ Customers are responsible for asking additional information, and doing their own research and talking to employees. IKEA primarily follows a make-to-stock strategy, where they mass-produce furniture components in large quantities based on forecasted demand, ship these items to stores and hold them in inventory until customers purchase them off the shelf. Different components: -​ Mass production of standardized components -​ Pre-packaged inventory in self-service warehouse -​ Forecast driven inventory and supply chain -​ End-user assembly (in ATO the final assembly would occur in store so this is not possible) Pros: -​ Economies of scale -​ Low production costs -​ Cost efficiency in RM sourcing -​ Simplified supply chain and forecasting -​ Predictable demand (fewer product variations) -​ Streamlined global logistics (efficient shipping because of standardized packaging dimensions and pallet configurations -​ Consistent quality and brand experience -​ Uniform brand image (standard design and store layouts, to give customers familiar experiences) -​ Clear product expectations -​ Reduced complexity for customers -​ Faster decision-making (customers are not overwhelmed by endless varieties of products)  -​ Recreate looks in different parts of the world -​ Clear assembly instructions (standardizations of parts, tools, wording and images) -​ Higher stock availability Cons: -​ Limited customization and personalization -​ Generic ‘one-size-fits-all’ approach (IKEA has relative uniform production lines) -​ Potential mismatch with niche needs (special needs products or measurements/unusual design features not available at IKEA) -​ Risk of inflexibility (rapid market shifts can catch standardized product lines off guard) -​ Competition from specialized retailers -​ MTO competitors etc. could offer more tailored solutions -​ Lower emotional value (lack uniqueness -​ Overlook of local preferences -​ Disregarding culture-specific needs -​ Assembly and maintenance on the customer -​ The do-it-yourself burden can cost customers that switch to high end furniture Conclusion: a high degree of standardization helps control costs, simplify operations, and deliver consistent, predictable products worldwide. However, it constrains customization, can result in mismatches with local or niche demands , and may drive some consumers to more specialized or personalized alternatives. The store layout follows a plan that nudges customers through a series of fixed areas. 1.​ Entrance and showroom/café a.​ Fully decorated mock rooms b.​ Usually on the upper level 2.​ The market hall or market place a.​ Invites impulse buys b.​ Smaller buys 3.​ Self-serve warehouse a.​ Large racking systems store flat-packed furniture  4.​ Checkout and returns 5.​ Restaurant and Café -​ Forced path creates higher engagement -​ Operational efficiency because of self-service, low staffing -​ Encouragement of browsing and strolling (making it a day trip sometimes) -​ Allows shortcuts for ‘power shoppers’ The stores are usually located in large, suburbs, sites with ample parking and integrated warehouse space. Primarily because of land cost and traffic access. Via geo-location technology it helps IKEA entice shoppers to make the long trip. IKEA’s strong in-store sales are due to immersive experiences and physical product testing. The customer also enjoys the physical interaction with the products, to see, feel, test and measure them. The self-service convenience also plays an important role as it allows the customer to take the product home straight away instead of waiting 4 weeks. Lastly the instore amenities and brand traditions and habits to ‘browse creativity and get ideas’ makes in-store shopping a real experience for the customer. With the new buy-back option they could extend this and optimize and develop better online. IKEA could increase its online sales by enhancing digital visualization & inspiration with the use of AR and VR. IKEA is doing more and more collaborations for interior design items. They could start selling more of them online in limited editions (lamps, rugs, mirrors, vases…) IKEA could improve their delivery opinions and experience  This initiative shows the spirit of IKEA always trying their best to be as sustainable as possible and to contribute to the circular economy and prolonging the products lifecycle. Feedback from returned items can inform product design improvements that facilitate refurbishment and recycling in future product iterations. IKEA's primary material is wood and in order to recycle this you will always face a decline in quality of the material, furthermore they do not accept children items, sofas etc. So it is a nice initiative that will contribute but probably will the effects on the environment be neglectable. The effects on the supply chain mainly lies in the reverse flow of logistics and collection points. A buy-back program introduces reverse logistics and IKEA must be able to handle transport from the store or collection point to a refurbishment/recycling facility. The store layout might also be adjusted for the return & buy-back. They could also make a buy-back showroom. The increased transportation and logistic complexity will be one of the main challenges that IKEA could face. Another supply chain hick-up will be the inspection, sorting and refurbishment process that IKEA will face. These employees will need to be trained, lead times and inventory holding and management will also face potential challenges/delays etc. Lastly will IKEA need to create separate inventory channels to prevent possible forward-backwards supply chain interference. Challenges will also arise with inventory management and tracking -​ Accuracy and forecasting -​ Overlapping production lines ​ Challenges for partnership and supplier relationships This initiative strives away from the core values, order winners and customer experience that IKEA was able to create with its other stores. The store is too small, there is no warehouse so the experience of visiting and going home with items is non-existent. This way IKEA starts competing with different brands that differentiate themselves from IKEA by providing better quality, more unique designs and more exclusive items. Situating itself in an expensive neighborhood is not IKEA like and does not live up to the expectations of customers. Quality control is important, as shown in the video a lot of the testing is standardized and will give a correct safety baseline of the product but may not fully account for unique or extreme use cases (weight, humidity, different surfaces). A uniform global approach might not fully align with local climate or cultural usage patterns. Furthermore does the safety of the product rely a lot on the customer assembly. If the customer assembled the product poorly or incorrect the safety drops dramatically which is not accounted for in the current safety check. The durability tests are all automated and does not accurately measure the organic movements of really people interaction and using a specific product.