It's Ikea's World. We Just Live In It
J Thoendell stashed this in Business
It took some time to figure out just the right shopping complex, off just the right highway interchange and just the right distance from Seoul, that could accommodate a 624,000-square-foot store—that is to say, one more than three times the size of the average Wal-Mart Supercenter. It took more time to solve certain mysteries, like how big to make the store’s children’s section in a country where kids are often given ample space in the family living quarters. It took more time to figure out how to showcase kitchens that incorporate kimchi refrigerators, a uniquely Korean appliance—and even more time to untangle nuances of the market, like the South Korean’s preference for metal chopsticks.
In all, it took about six years for Ikea to unveil its inaugural store in South Korea, in Gwangmyeong, starting from the first scouting trip. Ikea celebrated the opening in December with a tree planting rather than ribbon cutting. (Chalk that up to Ikea tradition rather than to South Korean custom.)
The lag was quintessentially Ikean. “They are ferocious about not expanding too rapidly,” says David Marcotte of consulting firm Kantar Retail. But six years? “The more global, the more complex it gets,” replies Mikael Palmquist, the regional manager of retail for Asia Pacific. “We need to get these things right or we will never be taken seriously.”
The Ikea model is based on volume—producing a lot of the same stuff over and over, which helps it secure a low price from suppliers and in turn charge a low price to customers. One Billy bookcase, an Ikea classic, is sold every 10 seconds. More stores mean more volume and the chance to drop prices even more, which Ikea did by an average of 1% last year.
For the company, this isn’t just a business model, apparently. It’s a mission: helping “the many people” and those with “thin wallets,” which is a mantra spoken by company employees everywhere from Croatia to Qatar. “We’re guided by a vision to create a better everyday life for the many people. That is what steers us, motivates us—that is our role,” says Ikea Group CEO Peter Agnefjäll, a 20-year company veteran, who took the helm in 2013. “We feel almost obliged to grow.”
It's hard for me to think of IKEA in places like Korea and Qatar.
But the mission to make a better everyday life for people is a great one.