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How IKEA adapted its strategies to expand and become profitable in China

This case study analyses how ikea adapted its strategies to become profitable in china. it also assesses some lessons the company learnt in china that might be useful in india, where it plans to open its first store by 2014 and 25 stores in 10 to 15 years..

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Case Study | IKEA “Glocal” Marketing Strategy In China

Case Study | IKEA “Glocal” Marketing Strategy In China 5 min read

It is well known that for the past few decades, companies have been trying to design an effective marketing strategy for the global market while also catering to local needs and demands. This sort of strategy is called “ Globally local ” or “ Glocal ”.  Thus companies take into consideration of local cultural, social, economic and linguistic factors while marketing their products and services. 

IKEA, a multinational group of Swedish companies headquartered in Delft, Netherlands, designs and sells ready-to-assemble furniture, kitchen appliances and home accessories. IKEA’s mission of “ delivering low prices and high-quality furnishing solutions to the many ” made it a significant player in US and European markets. In order to provide customers with the greatest value for money, IKEA’s furniture is designed to be self-assembled by end-users. This solution allows IKEA to reduce both manufacturing and transportation costs and give customers the lowest possible price.

IKEA turned its attention to China in the late 90s when the Chinese market was booming with growing middle-class. Although it represented a huge opportunity for IKEA, it also came with a difficulty as in the Chinese market shows significant cultural and demographic differences embedded in its strong millennial cultural heritage.  IKEA entered China in 1998 with its first store in Shanghai and soon after another store in Beijing in 1999. Cities like Guangzhou, Shanghai, and Beijing were traditionally considered to be the top target markets in China for high-end products because of their heavy concentration of middle-class consumers. The growth of the furniture market in China was expected to continue over the next years.

The IKEA concept has evolved over more than 40 years as a result of a growth process based on continuous innovation and a strong and well defined corporate culture. It always remained faithful to its mission. IKEA founder Kamprad’s view was clear: “We shall always be one IKEA, one business idea and one culture”. Gradually it became a strong and tested brand and it adopted some minor local adjustment in its marketing strategy”

IKEA entered the Chinese market with a similar strategy with some minor adjustments in the store’s location. In fact, as most Chinese consumers do not have access to cars, IKEA stores in China are located closer to city centers.

The main challenge IKEA faced in the Chinese market was implementing an effective pricing strategy.

• Low prices are the cornerstone of IKEA’s vision and its business concept. However, IKEA’s prices were not considered low by the middle-class Chinese customers.
• The upper class was more inclined to buy foreign products as a symbol of status and not for their functionality.
• As a Chinese saying goes “high-quality goods are not cheap, and the cheap goods are not high quality” suggesting that Chinese consumers’ view, low prices are often associated with low quality.
• The cultural aspect caused resistance to IKEA products mainly among older generations
• Also, local producers were selling furniture of similar quality at much cheaper prices: almost half and import tariffs on IKEA made it difficult to lower prices.

Reducing prices was seen as the only possible solution for IKEA but on deeper introspection; IKEA’s poor performance was due to its lack of understanding of Chinese customers buying patterns and preferences .

• IKEA considered the overall middle class a homogenous segment, without paying attention to different sub-groups, in particular in terms of age and it prevented IKEA from identifying customers’ specific needs and implementing effective marketing strategies. 
• IKEA had an unfocused position in the market and thus IKEA needed to determine the target group and overall position in the market. 
• IKEA was perceived more as an aspirational brand, symbol of innovation, and western lifestyles. Younger customers were appealed by IKEA but could not make a purchase

At this stage, it was clear that IKEA needed urgently to change its positioning strategy and revise its pricing accordingly if it were to become profitable in China.

Options available to IKEA

• Maintaining the position of best quality provider, trying to reduce price and became affordable to all.
• Maintaining a position of higher quality and higher pricing product targeting the higher class

The first step taken by IKEA in implementing its reviewed strategy was reducing prices for its target group. Since 2000, IKEA has cut its prices by more than 60 %. One example is the price of its “Lack” table that has dropped to 39 Yuan from 120 Yuan when IKEA first came to the Chinese Market. 

• IKEA decided not to give up its traditional concept of simplicity, functionality and low prices. It targeted the youngest members of the middle-class who were considered impulsive, easy to influence, very social, and committed to leading foreign consumer brands”
• IKEA China marketing promoted its home decoration values, including ‘make good use of your space’, ‘simple is beautiful’, and ‘save money by doing it yourself’ in an attempt to re-educate the youngest consumers to IKEA concept.
• IKEA’s main target group is middle-class people aged 25–35. IKEA’s customers are generally better educated, earn higher incomes, travel more than the average. Women represented 65% of the customers.
• IKEA increasingly used social media sites to spread the company’s value. IKEA decorated inside of elevators in 20 lower-income apartment buildings in Beijing to show residents how IKEA can make their small apartments modern and pleasant without spending much money.
• The company encouraged people to come and visit their store for IKEA experience.

After years of struggling in China, IKEA was finally able to generate a profit for the first time in 2012. It was due to their glocal strategy that IKEA was able to achieve this feat.

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Market Entry in China pp 73–93 Cite as

IKEA in China: A “Glocal” Marketing Strategy

• Veronica Giunta 2  
• First Online: 15 May 2016

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Part of the book series: Management for Professionals ((MANAGPROF))

The present case study examines a strategic issue encountered by IKEA, the giant Swedish furnish company, while expanding into the Chinese market. After years from its entrance in the Asian country, IKEA was still struggling to achieve positive finiancial results. A lack of understanding of the local peculiarities of the market prevented the company from implementing an adequate targeting strategy and occupying a strong competitive position in the market. As a consequence, the global marketing strategy adopted proved to be a failure in the Chinese market. IKEA was thus forced to reconsider not only its marketing strategy but also the universality of its business proposition.

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Wei, L., & Zou, X. (2007). IKEA in China: Facing dilemmas in an emerging economy. Asian Case Research Journal, 11 (01), 1–21.

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Giunta, V. (2016). IKEA in China: A “Glocal” Marketing Strategy. In: Prange, C. (eds) Market Entry in China. Management for Professionals. Springer, Cham. https://doi.org/10.1007/978-3-319-29139-0_8

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How is IKEA’s glocalisation strategy in China reflected through its ads?

• Post date October 6, 2022
• By Sofia Sayers
• In Creative Works

Key takeaways:

• IKEA recently launched a series of four short video advertisements connecting common hobbies and lifestyles in China to IKEA furniture.
• For the Chinese market, the Swedish furniture giant’s marketing strategy is especially focused on “glocalisation”.

The message in the playful ads is clear: everyone can customise the appearance of their home according to their personalities and interests.

Swedish furniture giant IKEA recently launched a series of four short video advertisements connecting common hobbies and lifestyles in China to IKEA furniture – from a laundry basket that can satisfy the thrill of shooting a basketball to a rug that reproduces the light and shadow from a bicycle ride to a pillow as comfortable as a street vendor’s dough and colourful storage cubes that resemble a child’s Rubik’s cube.

Sound also plays a crucial role in these video clips. In the background of each advertisement plays the iconic sax solo from “Careless Whisper”, a song that has taken on meme status as a stereotype of ’80s ballads and makes it an easy joke for the audience to recognise . Then, at the moment where the scene is brought back to reality, an amusing “plink” sound is added for humour effect.

Turning furniture into a fun

While the link between the scenes and the furniture may not be obvious at first glance, the connection is definitely there. Basketball has been a famous sport in China for years, and cycling has risen in popularity thanks to the pandemic. Meanwhile, street vendors have a long history in Chinese culture , and the Rubik’s cube community in China has also exploded in recent years.

The message in the playful ads is clear: everyone can customise the appearance of their home according to their personalities and interests . In the Rubik’s cube clip, for instance, IKEA emphasises the modular nature of its furniture for people who like having options. By providing customers with more choices and solutions, therefore, the furniture giant can retain customers in the long run.

IKEA adapts to digitalisation with Tmall store

In terms of advertisements, IKEA typically aims for inspirational videos which are high quality yet brief enough to capture its audiences’ attention within the first few seconds. Its pace is also suited to its younger audience. In today’s fast-paced world, this is especially important, as research shows that our attention span has been shrinking over the years.

IKEA takes into consideration the local cultural, social, economic and linguistic factors while marketing products and services.

Could IKEA have delved deeper with its cultural references in the advertisement, or made the connection between hobby and furniture more apparent? Perhaps. But then it would take away from portraying day-to-day in an imaginative way. Besides, advertisements a bit “outside the box” are right up IKEA’s alley.

IKEA’s “glocalisation” strategy in China

When it comes to marketing, IKEA’s strategy is constantly evolving. For the Chinese market, the Swedish furniture giant is especially focused on “glocalisation” . In other words, the company takes into consideration the local cultural, social, economic and linguistic factors while marketing products and services. In fact, the very name of IKEA has been changed to speak to its target audience in China: “宜家 (yi jia)” literally means “suitable and nice for your home”.

In accordance with this glocalisation strategy, IKEA has also made many changes to adapt to the burgeoning Chinese market. For instance, instead of the huge suburban stores seen in other countries, the furnishing store opened stores in more central areas near public transport routes, with mini stores located within larger shopping centres.

IKEA remains bullish in China, injects additional 5.3 billion RMB

In addition, IKEA China has cut prices in order to better cater to the young middle-class population , who earn higher incomes and possess more awareness of western styles. In the mid-2010s, the Swedish brand even went far as changing store policies to allow customers to sleep in showroom store beds, turning controversial customer behaviour into business opportunities.

IKEA retains the aspects of foreign culture that Chinese consumers enjoy but also caters to certain local tastes and preferences. 

As for its audience, IKEA’s main target group is middle-class people aged 25–35. According to Daxue Consulting , IKEA’s customers are generally better educated, earn higher incomes, and travel more than the average. In terms of gender, women represent 65% of its Chinese consumers.

At present, IKEA in China has its sights set on China’s growing furniture market. In August, the furniture brand announced a new investment of 5.3 billion RMB ($768 million) in China, which will go toward its digitalisation programs, enhancing operational efficiency, and new openings of stores and shopping centres .

This additional capital came after the “biggest-ever” 10 billion RMB ($1.45 billion) investment that has been allocated to the mainland market over the past three years as part of the company’s efforts to accelerate the transition to online retail following the pandemic and subsequent changes in consumer behaviour.

Overall, IKEA’s video advertisements offer innovative ideas and visual aesthetics which entice customers to consider IKEA for their future home improvement projects. Moreover, IKEA retains the aspects of foreign culture that Chinese consumers enjoy but also caters to certain local tastes and preferences. 

• Tags Fashion & Retail Society & Culture Marketing & Branding

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• Post date September 22, 2022
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Ikea in China: An Arduous Journey

By: Li-Qun Wei

IKEA, the world's largest furniture retailer, entered the Chinese market in 1998; however, it did not turn a profit in the first 10 years. Although anticipating lower profits, IKEA did not anticipate…

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IKEA, the world's largest furniture retailer, entered the Chinese market in 1998; however, it did not turn a profit in the first 10 years. Although anticipating lower profits, IKEA did not anticipate that Chinese customers would be confused about IKEA's value proposition. After 2007, IKEA adopted several strategies to adjust for the Chinese market and achieve a better performance. These adjustments made IKEA more profitable in the Chinese market. IKEA accelerated its expansion in China with a plan to open three stores every year for a total of 40 stores before 2020. Still, in 2017, the Chinese market presented IKEA with challenges, such as cheap imitations from competitors and increasing interest in e-commerce by consumers. Could the strategies IKEA used to improve its performance in the past sustain the company in the years ahead?

Li-Qun Wei is affiliated with Hong Kong Baptist University.

Learning Objectives

This case was designed for senior undergraduate, graduate, and post-graduate classes to discuss business adjustment and adaptation or in international management and market positioning classes to discuss cross-cultural management and market expansion. After completion of this case, students will be able to discuss international business expansion in the Chinese furniture market; assess the strategic process for international firms in China; and evaluate how firms need to respond in a fast developing, emerging market.

Aug 13, 2018

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How IKEA Evolved Its Strategy While Keeping Its Culture Constant

If you’re leading your team through big changes, this episode is for you.

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The Swedish furniture maker IKEA found huge success producing quality furniture at affordable prices. But in 2017, the company was at a crossroads. Its beloved founder had died, and the exponential rise of online shopping posed a new challenge.

In this episode, Harvard Business School professors Juan Alcacer and Cynthia Montgomery break down how IKEA developed, selected, and embraced new strategic initiatives, while fortifying its internal culture. They studied how IKEA made big changes for the future and wrote a business case about it.

They explain how the company reworked its franchise agreements to ensure consistency among its global stores. They also discuss how IKEA balanced global growth with localization, developing all-new supply chains.

Key episode topics include: strategy, growth strategy, disruptive innovation, emerging markets, leadership transition, competitive strategy, company culture, succession.

HBR On Strategy curates the best case studies and conversations with the world’s top business and management experts, to help you unlock new ways of doing business. New episodes every week.

• Listen to the original HBR Cold Call episode: IKEA Navigates the Future While Staying True to Its Culture (2021)
• Find more episodes of Cold Call
• Discover 100 years of Harvard Business Review articles, case studies, podcasts, and more at HBR.org .

HANNAH BATES: Welcome to HBR On Strategy , case studies and conversations with the world’s top business and management experts, hand-selected to help you unlock new ways of doing business. The Swedish furniture maker IKEA found huge success producing quality furniture at affordable prices. But in 2017, they were at a crossroads. Their beloved founder had died, and the exponential rise of online shopping posed a new challenge. Today, we bring you a conversation about how to develop, select, and embrace a new strategic initiative – with Harvard Business School professors Juan Alcacer and Cynthia Montgomery. They studied how IKEA made big changes for the future while fortifying its internal culture and its external identity. In this episode, you’ll learn how the company reworked its franchise agreements to create a more managerial and modern culture, and ensure consistency among its global stores. You’ll also learn how they balanced global growth with localization – including new supply chains. This episode originally aired on Cold Call in June 2021. Here it is.

BRIAN KENNY: For some of the world’s most celebrated founders, the entrepreneurial drive kicks off at an early age. Mark Zuckerberg developed Facebook in his Harvard dorm room at the age of 18. Michael Dell made $200,000 upgrading computers in his first year of business, he was 19. Before Jack Dorsey founded Twitter, he created a dispatch routing platform for taxis in his hometown of St. Louis, while he was in middle school. But then there’s Ingvar Kamprad who began selling matches at the age of five to neighbors in his rural Swedish homestead. By the age of seven, he was buying matches in bulk in Stockholm and selling them at a profit back home. Ingvar learned early on that you can sell things at a low price and still make a good profit. A philosophy that fueled the success of his next business venture, IKEA. Today on Cold Call , we welcome professors, Juan Alcacer, and Cynthia Montgomery to discuss their case entitled, “What IKEA Do We Want?” I’m your host, Brian Kenny, and you’re listening to Cold Call on the HBR Presents network. Juan Alcacer’s research focuses on the international strategies of firms in the telecommunications industry and Cynthia Montgomery studies the unique roles leaders play in developing and implementing strategy. They are both members of the Strategy unit at Harvard Business School. And thank you both for joining me today. It’s great to have you on the show.

CYNTHIA MONTGOMERY: Thanks Brian.

JUAN ALCACER: Thank you for having us.

BRIAN KENNY: You’re both here for the first time, so we’ll try and make it painless so we can get you to come back on. I think people are going to love hearing about IKEA and getting an inside view. Most of us have had that experience of being like mice in a maze. When you go into an IKEA store, you are compelled to walk through the whole place. It’s really brilliant, so many of the touches and things that they’ve done. And this case helps to shine a light, I think, on some of those decisions and how they were made. I had no idea how old the company was. So just starting with its history, it’s going to be good to hear about that. Juan, I want you to start, if you could, by telling us what would your cold call be to start this case in the classroom?

JUAN ALCACER: I like to start the case, bringing in the emotions of the students and their relationship with IKEA. So most of our students have had some experience with IKEA. So I’d just start asking how many of you have been in IKEA, and then I’d start asking why? Why did you go to IKEA? And this time telling you all the things that you just mentioned, for instance, walking through the maze, going to eat the meatballs. So they started bringing all these small, decisions that were made through the years, that made IKEA, IKEA.

BRIAN KENNY: Who doesn’t love the meatballs? Cynthia, let me ask you, you’re both in the Strategy unit at Harvard Business School, there’s a lot of strategy underlying this whole case. I’m curious as to what made you decide to look at IKEA and sort of, how does it relate to your scholarship and the things that you think about; the questions you try to answer?

CYNTHIA MONTGOMERY: I’m really interested in the choices firms make about who they will be and why they will matter? The core questions at the identity of a company. In 1976 Kamprad laid out very, very carefully. What IKEA would do, who it would be. He identified its product range. The customers it would serve, the company’s pricing policy, all in a document called, The Testament of a Furniture Dealer. And he described it as, “the essence of our work.” And 45 years later, it was still required reading for all of the IKEA’s employees. It’s probably the most compelling statement of corporate purpose I’ve ever seen.

BRIAN KENNY: Remarkable in a company that’s based on furniture. It was a very, sort of powerful thing. There’s an exhibit in the case that shows the whole Testament. Maybe we can dig a little bit into the history here. I alluded to the fact that it’s been around for a long time. Cynthia, just tell us a little bit about how the company came to be and how it evolved over time.

CYNTHIA MONTGOMERY: IKEA started actually as a mail-order business in Sweden and in the late 1940s Kamprad noticed that despite a lot of demand for furniture, agreements between the furniture manufacturers and retailers were keeping furniture prices real high. He was interested in a different set of customers. And he decided that to attract farmers and working class customers, he needed to be able to offer quality furniture at lower prices.

BRIAN KENNY: What were some of the early challenges that they faced. I’m also curious a little bit about the Swedish culture and how that sort of factors in here. Because there was definitely undertones of that factoring into the way they set this up.

CYNTHIA MONTGOMERY: It’s a virtue to be frugal and to be very careful about how you spend your money. And that made a huge impression, particularly given his background, growing up on a farm for Kamprad, he decided he really wanted to lower the prices of furniture and began to do so. And it turned out that there was a very, very strong response from other furniture manufacturers who basically said that they were going to boycott him. They wouldn’t allow him into their furniture fairs, him personally, as well as his company. And so in turn, what happened was that they also pressured local suppliers not to sell to a IKEA anymore, basically trying to force him out of the market. And what happened was that that actually drove Kamprad to Poland as a source of supply because local firms wouldn’t supply him anymore. And in the process, he discovered that Polish manufacturers could actually make furniture at far, far lower costs than Swedish manufacturers. And that essentially gave IKEA a cost structure that was more like a difference in kind, than a difference in degree. And that proved enormously important to building almost insurmountable competitive advantage for IKEA.

BRIAN KENNY: He was also really keen with innovations early on that things like the restaurant area and the childcare space, what were some of the insights that drove him to make those kinds of decisions?

CYNTHIA MONTGOMERY: One of the things that he decided quite early on is that he wanted to have the stores located out of town. And the reason is because land there was much, much cheaper. So he built these ,as you described earlier, Brian, these gigantic stores on the outskirts of town and they had lots and lots of square footage and lots and lots of merchandise, but you know, it took time to get there. It took time to shop there and what he wanted to do was make it worth it for the customers to make the trip, worth it for them to spend a lot of time in the stores. So he decided to add restaurants and the now famous meatballs, which come in several flavors, actually around the world, and to add childcare centers that would care for young children while the parents shopped. On the low cost front, he was innovative in other ways, he actually borrowed the idea of flat pack from another innovator, but he’s the one that actually brought it to life in such a big way. Then he discovered that if you let the clients go in and pick off the furniture packs themselves, they could even save more money and lower the costs in the store.

BRIAN KENNY: So they have a pretty complicated org structure, when we start to dig into some of the nuance of the case. Juan, could you describe for us, how they’re set up from an org structure standpoint?

JUAN ALCACER: You have to realize that coming from Sweden, which is one of the countries with the highest taxation for corporations in the world. So early on, they decided to find some organization structure and legal structure that would allow them to lower taxes. And that created basically an ownership based on foundations, based in the Netherlands. And they decided, early on, to separate the company into pieces. One is the franchise store, which is basically running the brand and running the management image of the brand. And then the operational part of the company, which is a franchisee. And for many years, those two things were separated. The franchisee was also in charge of manufacturing and so forth. So it was a very strange structure, that was put in place in part by the charisma and the leadership style of Ingvar Kamprad. If I can go back to your question about the Swedish culture. One of the things that, at least for me, is very striking is that when you look at multinationals, there’s a thing called the liability of being a foreigner, which means that when you go to another country, you have some disadvantages. And you try to mitigate that liability of being a foreigner, by pretending to be of that particular country. IKEA went with a totally different approach, they’re totally Swedish. Names of their products are impossible to pronounce. The fact that they have meatballs, they have their Swedish flags all over the place. They embrace the Swedish spirit as a part of the brand. You don’t see many multinationals with that. That makes IKEA what it is today.

BRIAN KENNY: I definitely think that’s part of the appeal here in the US, for sure, is people being exposed to the Swedish culture in a way they never had before. What is the culture of the company like, what’s it like to work there?

JUAN ALCACER: We went to both the Netherlands and to Sweden and we had a great time. It’s a very egalitarian culture. All the VP’s, high-level managers, none of them have an assistant. Only the CEO has an assistant. They don’t have offices, so everybody shares an open space. The whole place is decorated with IKEA furniture, everybody talks to each other by their first name. It’s very collegial, very friendly.

CYNTHIA MONTGOMERY: I would add to that. I think IKEA was incredibly generous to us, in the sense that they shared all kinds of confidential, internal documents and were really willing to talk in a very open and forthright way, about both their strengths and their challenges, which was incredibly refreshing. And as Juan said, that it was very egalitarian, and not surprisingly IKEA was one of the first companies to embrace democratic design. And that spirit was everywhere in the company.

BRIAN KENNY: Cynthia, what would you say are some of the keys to their success over the years?

CYNTHIA MONTGOMERY: I’d say that IKEA basically picked a lane and stuck with it. They had clarified, as I said at the top of the show, very, very carefully about what they wanted to do, who they wanted to be. And what they said is, look, this is what we’re going to be about. We’re going to offer an extensive range of practical, well-designed furnishings at low prices. And we’re going to serve the many, not the few. And the many are those with limited financial resources. When you have such clarity about what you want to do, then you can set out and try to maximize how you approach that. Essentially IKEA built a system, to do exactly that, extremely well and their distinctiveness made them truly an iconic firm. And it’s great when you talk with students about, what’s the purpose of your business?, What are you doing? What’s interesting is that oftentimes they can describe much more carefully what IKEA is doing, than what their own businesses doing. The last thing I would add, is that as Juan one said, they’re really synonymous with Sweden and they put that right out there. It’s almost like the way that Coca-Cola is synonymous with the US. And that has been a big part of their advantage.

BRIAN KENNY: Okay. So we’ve painted a very rosy picture for IKEA, but it’s an HBS case. So there’s tension, inevitably. So let’s dig in a little bit to where the case brings us. I’m going to mispronounce his name. I hope I don’t, but Torbjörn Lööf is that close?

CYNTHIA MONTGOMERY: Yeah.

BRIAN KENNY: He is the protagonist in the case. And he is stepping into a leadership role here really after an iconic leader has stepped back and that’s a challenge. Any time that happens, and a leader has to step in. And as he starts to sort of peek underneath the hood a little bit, he starts to see some of the challenges that IKEA is facing in this now seventh decade, I guess, of their existence. So Juan, maybe you can set that up for us a little bit.

JUAN ALCACER: It’s not only that he is stepping in the shadow of a leader that created the company. It’s that the company is still controlled by the family. So this is not a public firm, this is a private firm. So, he had to basically walk a very, very thin line, trying to take IKEA towards the future, but still preserving the past. And he had basically two main tasks, one is short term, that organization restructure that we were talking about, that was very complicated was created products. As I said before, the franchisee, which is basically the one that was running all the operations, was also the manufacturer. But there were other franchises. So for instance, the operations in Middle East are run by another company. So they wanted to create a system of transparency, that all the franchises are run the same way. When you have a franchisee that has basically represented 80% of your sales, and the ones that are representing 2% or 3%, there is an imbalance of power. So they tried to create a structure that is more managerial, that is more modern, that will allow to create incentives for new franchisees to come into the system. So that transaction was basically transferring production and transferring the functions that were in the franchisee back to the franchisor. There were 25,000 people that have to move from one place to another.

BRIAN KENNY: Wow.

JUAN ALCACER: They didn’t move physically, but in terms of the legal status they shift around. And the second is to bring IKEA to the world. What they observed is that there were some changes in demographics, they were targeting the low-income, what they call the thin wallets of the world, but it turned out that people that would go to IKEA are not thin wallets anymore. These people have already moved towards the middle-class and they also have this whole, to increase the number of consumers to three billion, and that meant that they have to basically grow globally, at a rate that they have never done, before they had two or three markets, like China and India. They also have the issue of eCommerce, to pick up and every retailer in the world is dealing with that. So, it’s two steps. One, getting the house in order, and second one, creating a path for the future for IKEA to become an icon for the next 75 years.

BRIAN KENNY: Yeah. And I also think at some level it’s hard to sustain that original mission that they set out with, when you’re trying to expand so rapidly and bring in a much larger audience. Cynthia, I don’t know if you have other observations about these changes they were facing.

CYNTHIA MONTGOMERY: Absolutely. Because one thing is that you can look at the challenges that came from expanding into new geographies. But the other thing that they found in a large study that they did, is that there were challenges in their core business as well, that the countries they’d been in for a number of years, and what I’ll call the big blue box stores, mostly in developed countries. What they found is that increasingly many of their customers in those markets wanted new conveniences. They wanted stores that were located closer to city centers because a number of people say in their late twenties, early thirties are not driving and don’t have cars. And they found that there was an increasing demand for delivery and assembly services for shopping online. These trends are worrying to a huge number of retailers, but particularly a challenge to IKEA because low price, low, low price, so low that that people can recognize the difference. That being at the heart of their strategy. And customers’ willingness to spend time getting to the store, hauling furniture about, ultimately assembling it. Those are at the very, very heart of their low-cost strategy and their very distinctive value proposition. It was a big challenge within the developed markets as well.

BRIAN KENNY: And depending on where they went in the world, a different set of challenges pops up almost everywhere. Juan, you mentioned earlier that they pushed back against localization, but is that a sustainable strategy? When you’re trying to go into entirely new markets like China and India.

JUAN ALCACER: The beauty of IKEA is that they found a segment across different cultures that was very similar. College students the United States, that needed to have furniture for a few years only, it could be young couples that are opening a new house, in some places it’s immigrants that are moving from one country to another country that need to buy furniture, but they don’t have the money to do so. So there was this very common segment across the world that they were able to then define, that allows them to have basically 80% of their line, of their range, is common across countries. And they have around 10% to 20% that varies by country. Now, when they go to China, and they go to India, they find that the changes have to be of a higher scale for three reasons. One, the tastes are different, also the materials, when you are going to India and you are going to houses that are in a high humidity environment, the type of wood that you can use is different. Now you start, not only changing the look of the product but you also have to change how you made it. And the third big challenge is when you look at what is defined as thin wallet, in these markets, is really thin. It’s not thin wallet in Sweden, it’s not thin wallet in the United States. So, you have to go to prices that are really, really low. And that means that you are already a low cost producer but you have to go even lower. That means that you have to change your supplier, so it starts changing the fundamental parts of the business model that they created through the years.

BRIAN KENNY: And it could probably, pretty easily, get away from you. So this does call for a strategy. Cynthia, can you describe for us what the three roads forward are? This was sort of underpinned their strategy going forward and how they were going to deal with some of these challenges.

CYNTHIA MONTGOMERY: Basically, the three roads, the first was affordability, as Juan said, this isn’t affordability in the way that they, at the level at which they’ve traditionally thought about it. This is affordability for wallets that are either very thin or actually where the willingness to pay just isn’t as high, because they’re accustomed to having goods that are at very low prices. So they wanted to attack affordability for people who could not afford IKEA today. They cared a lot about accessibility. They’ve got to reach and interact with people where they are. And the last is sustainability, and they felt really, really strongly about this. And I think much in line with what you see with a number of other countries in Europe, that they cared a lot about the sustainability of the products and wanted to make a positive impact for people, society and the planet. And they’re taking on all three of these aspirations at once.

BRIAN KENNY: You have written many cases, I’m sure that parallel this, what are some other firms that have faced similar challenges and maybe figured out a way to deal with the same sets of challenges?

JUAN ALCACER: The challenge of going overseas, we didn’t write cases about multinationals for many years. They always have this tension between coordination in headquarters and adaptability in each one of the subsidiaries. So IKEA was very good at playing that game for many, many years. In a way they were going to countries that were somehow similar to Sweden. Now that they are venturing to countries that are farther away in many dimensions, not only physically, but also in terms of economic distribution, in terms of taste. They are seeing this tension to be amplified. We have seen that in many companies, Procter and Gamble has been doing that for years and years, Unilever has been doing that for years and years. IKEA has done it for 75 years. They went overseas very early on. But now the challenge is a little bit higher. The other challenge is that Cynthia also mentioned, which is basically adapting to new technologies and new demographics. Every retailer is facing that. Any supermarket, any chain that has been selling in brick and mortar is facing those challenges. So, what is interesting about IKEA is that they are facing these all at the same time and they’re facing this during the process of transition from the leader that created the company to a new set of managers that are more professional and are not part of the family.

BRIAN KENNY: You mentioned technology. I’m just curious, the role that the internet plays in this, because now everybody can see, you know, through YouTube and other things, what the experience is like from one place to the other, and how important is consistency across all those geographies, versus a little bit of localization to make it feel a little bit more like this is the China version of IKEA versus the European version of IKEA. Cynthia, do you have thoughts on that?

CYNTHIA MONTGOMERY: That’s the real challenge here in the sense that, how do you take this whole model that has been developed over so many years? And it’s very, very hard to imitate, which has given them a lot of strength over the years, but when the environment changes, instead of responding in a piecemeal way to all kinds of external stimuli, it’s how do you take this whole model and evolve it in some coherent way that stays true to the iconic sense of who IKEA is? I really see it fundamentally, as an existential question for IKEA.

BRIAN KENNY: Such a great point. Look, I want to thank both of you. This has been a really interesting discussion about a brand that we all know and have experienced many times firsthand. I have one more question for each of you before we part ways. And that would be if there’s one thing you want people to take away from this case, what would it be? Juan, let’s start with you.

JUAN ALCACER: What I would like listeners to take from this, is we have this mentality of growth, growth, growth, and expanding and doing different things, and when you look at IKEA, you have to wonder, is it better that IKEA stays doing what they do well, or do they have to keep growing and entering all these markets and adapt to overseas. We have this basic assumption that growth at any cost should be the goal. I would like the listeners, when they look at the case and think about the cases, to question that very basic assumption.

BRIAN KENNY: Cynthia?

CYNTHIA MONTGOMERY: One of the things about IKEA that I think it’s really, really important to know is that they really brought something different to the world and they did it in a very compelling way. So at the heart, to do something that’s distinctive, that adds value. It comes through really strong in the IKEA story. At the same time, when the environment changes, how do you evolve, is really challenging. And so the fact that they’re being so open in how they’re confronting this, I think there’s a lot to learn there. It’s a challenge. I think it’s really important to remember what’s at the heart of this company, is that they’re really bringing something that’s very unique and they need to continue to do that.

BRIAN KENNY: Juan Alcacer, Cynthia Montgomery, thank you so much for joining me. The case is called, “What IKEA do we want?” Thanks again.

JUAN ALCACER: Thank you.

HANNAH BATES: You just heard Harvard Business School professors Juan Alcacer and Cynthia Montgomery in conversation with Brian Kenny on Cold Call .  We’ll be back next Wednesday with another hand-picked conversation about business strategy from the Harvard Business Review. If you found this episode helpful, share it with your friends and colleagues, and follow our show on Apple Podcasts, Spotify, or wherever you get your podcasts. While you’re there, be sure to leave us a review. We’re a production of the Harvard Business Review. If you want more podcasts, articles, case studies, books, and videos like this, find it all at HBR dot org. This episode was produced by Anne Saini, and me, Hannah Bates. Ian Fox is our editor. Special thanks to Maureen Hoch, Adi Ignatius, Karen Player, Ramsey Khabbaz, Nicole Smith, Anne Bartholomew, and you – our listener. See you next week.

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IKEA’s Localization Strategy: A Masterclass in Global Expansion

• January 12, 2024

Table of Contents

The ikea localization strategy, ikea’s localization strategy: a delicate balance of standardization and adaptation, ikea’s localization strategy in china: adapting to local preferences, ikea’s localization strategy in india: embracing local customs and tastes, ikea’s localization strategy in japan: the importance of understanding local preferences, key takeaways from ikea’s localization strategy, accelingo: your partners in localization success.

In a world where companies are increasingly competing globally, the ability to tailor products and services to local markets is crucial for success . Thanks to their localization strategy, IKEA, the Swedish furniture giant, has mastered this art, becoming a household name in over 50 countries and amassing a staggering $42 billion in annual revenue.

IKEA’s international expansion success can be attributed to its unique localization strategy, which strikes a delicate balance between standardization and adaptation. The company maintains a core set of principles and values that resonate across cultures , but it also makes strategic adjustments to cater to local preferences and market conditions.

This localization approach has allowed IKEA to successfully navigate the diverse and ever-changing landscape of international business. From adapting its product designs to fit smaller Asian homes to partnering with local assembly services in China, IKEA has consistently demonstrated its ability to connect with consumers on a global scale .

In the realm of international business, localization is the art of adapting products, services, and marketing strategies to suit the specific needs and preferences of a target market. This involves a delicate balance between standardization, which ensures consistency and brand recognition, and adaptation, which enables a deeper connection with local consumers . IKEA, the Swedish furniture giant, has masterfully navigated this balance, becoming a global success story with over 450 stores in 52 countries, according to Statista .

Standardization versus Adaptation: Striking the Right Chord

Standardization, often associated with economies of scale, involves creating a consistent product or service offering across all markets. This approach can streamline operations, reduce costs, and enhance brand recognition. However, a purely standardized approach can fail to resonate with local preferences and cultural nuances , leading to missed opportunities and potential brand alienation.

Adaptation, on the other hand, involves tailoring products, services, and marketing messages to specific market contexts. This approach can foster deeper connections with local consumers, address cultural sensitivities, and enhance brand relevance. However, over-adaptation can lead to brand dilution , fragmentation of the global brand identity , and increased costs from localized production and marketing efforts.

IKEA’s Middle Ground: A Strategic Approach to Localization

IKEA has successfully navigated this standardization-adaptation dichotomy, adopting a hybrid approach that strikes a delicate balance between the two strategies. The company maintains a core set of design principles and values that underpin its global identity, such as its commitment to affordable, stylish furniture that can be assembled by consumers . However, IKEA also makes strategic adaptations to cater to local preferences and market conditions.

Examples of IKEA’s Localized Approach

IKEA’s localization efforts are evident in its product designs, store locations, and marketing strategies across different markets. In China, where many consumers prefer to have furniture assembled professionally, IKEA partnered with local assembly services to enhance customer convenience. In India, IKEA adapted its product range to include items more suited to local tastes and dietary habits , such as smaller furniture pieces and vegetarian dishes in the company’s restaurants. And in Japan, where smaller living spaces are common, IKEA introduced smaller-sized furniture designs that better fit the constraints of Japanese homes.

The Importance of Cultural Understanding

IKEA’s success in localization is deeply rooted in its commitment to understanding local cultures and customs. The company conducts extensive market research and cultural sensitivity training for its employees to ensure that its products, services, and marketing efforts align with local expectations. This deep cultural understanding has enabled IKEA to forge meaningful connections with consumers across the globe.

The Value of Localization for Businesses

IKEA’s localization strategy serves as a valuable case study for businesses seeking to expand internationally . By striking an effective balance between standardization and adaptation, companies can enhance their brand relevance, increase customer satisfaction, and gain a competitive edge in global markets .

IKEA’s entry into the Chinese market in 1998 marked a significant milestone in the company’s global expansion journey. However, the company’s initial attempts to replicate its successful Swedish model in China met with challenges due to cultural differences and consumer preferences .

Cultural Barriers to Overcome

One of the primary challenges IKEA faced in China was the cultural norm of having furniture professionally assembled. In Swedish culture, self-assembly is seen as a badge of honor, symbolizing resourcefulness and DIY capabilities. However, in China, furniture assembly is considered a time-consuming and undesirable task , often assigned to hired professionals.

This cultural difference posed a significant obstacle to IKEA’s core business model, which relies on customers assembling their own furniture. IKEA’s initial efforts to introduce self-assembly instructions in Chinese were met with resistance, as many consumers were hesitant to tackle the task themselves .

Partnering with Local Expertise

To address this cultural barrier and enhance customer convenience, IKEA made a strategic decision to partner with local furniture assembly services in China . This move proved to be a game-changer, allowing IKEA to tap into the existing expertise of local professionals while still maintaining its commitment to affordable furniture.

The partnership with local assembly services not only addressed customer preferences but also created new employment opportunities and strengthened IKEA’s ties with the Chinese community. As a result of this adaptation, IKEA’s sales in China skyrocketed, reaching $1.6 billion in 2019 .

Other Localized Adaptations in China

IKEA’s localization efforts in China extended beyond furniture assembly. The company carefully tailored its store locations to suit Chinese shopping habits , opting for central locations near public transportation hubs to cater to busy urbanites.

IKEA also adapted its product range to meet the specific needs of Chinese consumers. The company introduced smaller-sized furniture designs to fit the limited living spaces of many Chinese households, and it also expanded its selection of home appliances to include items more suited to local cooking and dining preferences .

The Success of IKEA’s Localization Strategy in China

IKEA’s success in China is a testament to the power of localization in global business . By understanding and adapting to local preferences, the company has successfully established itself as a leading furniture retailer in China, with over 36 stores and a strong online presence, as per IKEA .

IKEA’s experience in China highlights the importance of cultural sensitivity and adaptation in international business. By making strategic changes to its products, services, and marketing strategies, IKEA has successfully connected with Chinese consumers , demonstrating that localization is not just a matter of complying with local regulations but also about forging meaningful connections with local communities.

IKEA’s expansion into India in 2018 marked a significant milestone in the company’s global journey, opening doors to one of the world’s most populous and rapidly growing markets . However, the Indian market presented its unique set of challenges, including cultural nuances, regulatory hurdles, and a diverse consumer base.

Navigating Cultural Nuances and Regulatory Hurdles

India’s complex cultural landscape presented IKEA with a unique set of challenges. The country is home to a diverse range of religions, customs, and traditions , which IKEA needed to carefully consider in its product offerings and marketing strategies.

Additionally, the Indian market was characterized by complex regulatory frameworks and logistical challenges, requiring IKEA to adapt its operations to comply with local standards and ensure efficient supply chains.

Adapting to Indian Consumer Preferences

To succeed in India, IKEA recognized the importance of tailoring its products, marketing, and customer experience to resonate with local sensibilities. The company conducted extensive market research to understand Indian consumer preferences, cultural norms, and dietary habits.

Tailoring Products and Menus to Local Tastes

One of the most notable adaptations IKEA made in India was the expansion of its product range to cater to local tastes and preferences. The company introduced smaller-sized furniture pieces to suit the compact living spaces of many Indian homes , and it also incorporated elements of Indian design and craftsmanship into its products.

In addition to product adaptations, IKEA also made significant changes to its food offerings in India. The company’s restaurants in India feature a menu that includes a wide variety of vegetarian and vegan options , reflecting the dietary preferences of a large portion of the Indian population.

Pricing Strategy for Affordable Furniture

IKEA’s commitment to affordability, a core tenet of its business model, was particularly important in India, where price sensitivity is a prevalent consumer trait . The company carefully considered pricing strategies to ensure its products remained accessible to a broad range of Indian consumers.

Localization Efforts in Marketing and Customer Experience

IKEA’s localization efforts extended beyond product design and menus; the company also adapted its marketing strategies and customer service approach to Indian sensibilities . The company employed local marketing campaigns that resonated with Indian cultural references and values, and it also trained its employees to provide culturally sensitive customer service.

The Success of IKEA’s Localization Strategy in India

IKEA’s efforts to embrace local customs and tastes have been met with remarkable success in India. The company’s stores have been warmly welcomed by Indian consumers , and its sales have grown steadily since its entry into the market. In 2020, IKEA opened its second store in India, and plans for further expansion are underway according to INGKA .

IKEA’s experience in India serves as a compelling example of the power of localization in international business. The company’s ability to adapt its products, services, and marketing strategies to align with local preferences has been instrumental in its success in this challenging yet promising market.

IKEA’s journey into the Japanese market in 1974 marked a pivotal moment in the company’s global expansion strategy. However, the company’s initial foray into Japan was met with challenges , highlighting the importance of understanding and adapting to local preferences in international business.

Initial Setback and the Over-Reliance on Standardization

IKEA’s initial attempt to replicate its successful Swedish model in Japan failed to resonate with local consumers. The company’s standardized product designs, often characterized by larger sizes, were incompatible with the compact living spaces of many Japanese homes . Additionally, IKEA’s marketing campaigns, which emphasized self-assembly, conflicted with Japanese cultural norms of craftsmanship and professional convenience.

As a result of these missteps, IKEA’s sales in Japan were initially sluggish , and the company was forced to withdraw from the market in 1986 .

Learning from Failures and Embracing Local Preferences

After withdrawing from Japan, IKEA took a step back to reassess its approach and make necessary adjustments. The company conducted extensive market research to understand Japanese consumer preferences , cultural nuances, and design sensibilities.

Strategic Comeback with Localized Adaptations

In 2006, IKEA made a strategic comeback to Japan, this time with a localized approach that emphasized adaptation to local preferences. The company introduced smaller-sized furniture designs, tailored to the limited living spaces of Japanese households . Additionally, IKEA partnered with local assembly services to offer convenient and professional furniture assembly services, aligning with Japanese preferences.

Localized Marketing Campaigns and Cultural Sensitivity

IKEA’s marketing campaigns in Japan also underwent a transformation, incorporating local cultural references and values. The company used traditional Japanese art and design elements in its store décor and marketing materials , creating a more immersive and culturally appropriate experience for Japanese consumers.

Continuous Research and Adaptation

IKEA’s experience in Japan highlights the importance of continuous research and adaptation in the face of cultural and market shifts. The company recognized that globalization does not mean homogenization ; rather, it requires a deep understanding of local preferences and a willingness to adapt to the specific needs of each market.

The Success of Adaptation: IKEA’s Thriving Presence in Japan

IKEA’s localized approach has been instrumental in its success in Japan. The company has established a strong presence in the market, with over 10 stores and a growing customer base . IKEA’s sales in Japan have consistently increased since its comeback , demonstrating the power of localization in connecting with local consumers.

IKEA’s experience in Japan serves as a valuable lesson for businesses seeking to expand internationally. By understanding and adapting to local preferences, companies can successfully navigate the complexities of global markets and build strong relationships with consumers across borders.

IKEA’s remarkable success in expanding its global footprint can be attributed to its unwavering commitment to localization , a process of adapting products, services, and marketing strategies to suit the specific needs and preferences of a target market.

Accelingo is a leading translation and localization agency with a proven track record of helping businesses thrive in the global marketplace. With over a decade of experience and a team of highly skilled linguists and cultural experts, Accelingo provides comprehensive localization services that enable companies to seamlessly adapt their products, services, and marketing strategies to local markets.

Accelingo’s Localization Expertise

On top of our language translation services , at Accelingo we offer a wide range of localization services , including:

• Expert translation: Accelingo’s team of native speakers delivers accurate and culturally sensitive translations across a diverse range of industries and languages.
• Cultural adaptation: Accelingo goes beyond mere translation to ensure that content resonates with local audiences, considering cultural nuances, sensitivities, and market trends.
• Localization strategy development: Accelingo helps businesses develop comprehensive localization strategies that align with their overall business goals and marketing objectives.

As you embark on your global expansion journey, let IKEA’s localization playbook serve as your guide. By embracing a deep understanding of local cultures, continuous adaptation, and a balanced approach to standardization and localization, you can unlock the key to success in the ever-evolving global marketplace . At Accelingo, we’re ready to partner with you every step of the way, from market research and strategy development to expert translation and cultural adaptation . Contact us today for a free consultation and let’s transform your global ambitions into reality.

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IKEA in China: Cultivating an omnichannel home décor shopping experience

• November 8, 2023
• furniture industry in China , furniture market in China , Ikea , Ikea in China

Over the years, Chinese consumers have displayed a growing willingness to invest in home décor as a way to enhance their quality of life. Thus, IKEA in China has risen as a result of  China’s growing furniture market.

In 2022, the Swedish furniture brand announced the successful completion of the three-year strategy and fulfillment of the investment target, which included a RMB 10 billion investment in 2020. Looking ahead, the furnishing giant has ambitious plans and intends to invest over RMB 5 billion by 2023 to further develop business digitalization, construct new stores and shopping malls as well as integrate multiple distribution channels. IKEA aims to continue its mission of reimagining offline shopping and fostering an omnichannel customer experience. Notably, IKEA’s online channels garnered over 5 billion visitors in 2021 .

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A brief dive into China’s furniture market

Strong growth is expected in China’s furniture market, projecting a CAGR of 11.6% from 2022 onwards and reaching RMB 1 trillion in 2026 . Also, with an annual growth of 20% the custom-made furniture market is on the rise, expecting to reach RMB 334 billion by 2024. The demand comes from the younger generation, who tends to pursue “home-style” living.  Demand for children’s furniture is also rising due to the implementation of the three-child policy under the Chinese government’s 14th Five-Year Plan.

Furniture manufacturing trends in China

Domestic demand for furniture, in particular from continued urbanization, is the main driver of the Chinese furniture market. A unique characteristic common for Chinese consumers is the  Guochao  wave, as Chinese consumers are now increasingly  demanding domestic brands , furniture, and home décor products that reflect China’s rich cultural heritage.

Chinese consumers have also become highly conscious of both the environmental impacts and materials used in the furniture they purchase. Many consumers even consider the appearance and design of their furniture to be secondary to the above factors. In terms of materials, metal furniture and wooden furniture together account for more than 90% of the furniture manufactured in China. Noting the rolling out of national environmental policies under the 14 th  Five-Year Plan, manufacturers must adhere to “ green manufacturing ”. The advent of green manufacturing is expected to be pivotal in the future of furniture production, reevaluating materials usage and pollutant emissions factors.

China is a major anchor point for manufacturing in IKEA, with suppliers manufacturing over 22% of IKEA’s entire product range. Today, the Swedish brand performs well in its sustainability practices . It actively promotes the company’s motto “Becoming People & Planet Positive”.  However, the sheer scale of IKEA’s production makes fully implementing sustainable practices throughout the supply chain highly ambitious.

IKEA’s brick-and-mortar storefronts in China

As of October 2023, IKEA has 37 stores across China , including 34 shopping malls, one city store, and two experience shops. This is following the  the closure of a Guizhou store in April 2022 the consequent closure of the  Shanghai Yangpu store in early July 2022 , marking the historic closure of 2 stores in China within three months.

However,  IKEA remains optimistic  about the Chinese market. On the contrary, based on the latest updates by Ingka Group in 2023 Swedish furniture giant was visited by 697 million people , which is 7.5% higher than the previous year. Today, IKEA in China is confident in the dynamism and resilience of the Chinese economy, enjoying the complete supply chain–from design to retail–that the Chinese market affords. Lastly, the brand aims to optimize its customer touchpoints and distribution ecosystem for consumers and market trends, elevating an omnichannel customer experience.

New, innovative storefronts

IKEA revealed plans for  renewed storefronts  in the 2022 kick-off meeting as part of its business development strategy for the Chinese market. IKEA believes that Chinese consumers are developing more diverse, sophisticated needs, and need ways to express their emotions and values through home décor.

To fulfill customers’ needs in the era of “new-retail”, IKEA Xuhui Shanghai will become IKEA’s first “Home Experience of Tomorrow” store. The concept store was opened in late 2021 and uses innovative visual design, interactive experiences, and social co-creation as its cornerstones.

A key paradigm shift within IKEA’s new store strategy in China is the abandoning of the typical guided path of IKEA stores. Instead, the Swedish brand aims to utilize an open layout providing customers freedom on where they would like to shop.

Another key aspect of the store experience is its “inspiration spaces”, focusing on creating curated home décor spaces that provide customers with inspiration for their own interior design needs. In addition, the new store aims to create a community hub within its walls by allocating physical spaces for workshops, knowledge-sharing, and entertainment in regard to home life.

Ultimately, IKEA in China aims to accommodate Chinese consumers’ desire for a richer, more authentic home life by offering design inspiration and social interaction, instead of only being a furniture retail store.

IKEA’s strategy in the Chinese market

In China, IKEA uses digital channels, such as  Chinese social media  and micro-blogging, for its marketing campaigns to gain market attractiveness and brand recognition. IKEA also adjusted its store location strategy for Chinese consumers. Chinese consumers increasingly value convenience, so IKEA has also shifted from the classic ‘blue box’ store to more convenient storefronts closer to urban centers within cities, as well as further investing in facilitating  e-commerce purchases . Overall, IKEA continuously adapts its strategies to the rapidly changing environment in China.

Standardization of vision and mission

“To create a better everyday life for many people” is  IKEA’s overarching vision , with the business objective being to “offer 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.”

To execute this business objective, the Swedish furniture brand applies the same business model (including the store interiors, range of products and services,  management style , etc.) in all of its stores globally. Furthermore, the consistently  minimalist  design language in all of IKEA’s products is highly popular among younger Chinese consumers, a key customer group for IKEA.

Renovative sales channels and e-commerce

With  e-commerce  as a key driver of the Chinese economy, IKEA kept pace by updating its sales channels. IKEA launched an online shopping service for Shanghai in 2016 and two years later, the service expanded to 149 cities in China. IKEA’s focus on e-commerce and delivery allows it to minimize costs and delivery fees to maintain and expand its customer base.  

In 2020, IKEA also opened its first mini-store in China,  an “IKEA City” located in Shanghai’s bustling Jing’an district . The mall has 3,500 items on display, but customers can also access an additional 6,000 items through a digital platform. As a retailer that once only operated “big-box” malls on the outskirts of cities, IKEA in China plans to increase convenience, accessibility, and flexibility for consumers living fast-paced lives in highly urbanized Chinese cities.  

Now, IKEA’s  omnichannel shopping experience  in China is composed of brick-and-mortar stores, a mini-WeChat program, mobile applications, IKEA’s website, and a flagship online store on Tmall. These channels work in unison to provide avenues for shopping as well as ongoing customer support.

IKEA pop-up stores in China

Posting about shopping experiences on social media platforms is key consumer behavior in China that the Swedish furniture brand successfully grasped. In 2019, IKEA launched its  pop-up store  in Beijing focusing on contemporary attitudes and aesthetics. It was a major hit on Chinese social media, with many young consumers visiting the store and posting about their experiences. By the end of  September 2019 , IKEA also opened two concept stores selling modern, innovative items, aiming to utilize word-of-mouth marketing through social media.

Pop-up stores play a key role in IKEA’s strategy in China. In 2021, one opened in  Kunming with a “delivery parcel” theme.  In 2022, the Swedish furniture brand also opened a pop-up store in Hong Kong focusing on environmentally friendly and sustainability-produced items as well as the use of recycled and recyclable materials.

Service and product localization

Apart from the signature Swedish dishes, IKEA cafeterias in China serve  localized dishes  in order to fit local tastes. For example, there is dim sum in Guangdong, customers can enjoy Sichuanese hotpot in Sichuan, and spicy crayfish are the common dishes in Shandong. More recently, IKEA launched traditional Chinese New Year puddings as well as the famed “Buddha jumps over the wall” dish in 2021 for the holiday.

This strategy helps enrich customers’ experience and retain them in IKEA stores, while also the Swedish brand ensures to add to the novelty by keeping localized dishes as limited-time offerings. However, to keep an authentic brand atmosphere and distinguish their creations from traditional Chinese cuisines, IKEA incorporates a Nordic spin to their dishes .

Turning controversial customer behavior into business opportunities

In the mid-2010s, the Swedish brand was confronted with a troubling phenomenon: customers in China would sleep and relax on displayed furniture in IKEA’s stores. IKEA came under pressure to respond to these customers’ behavior, especially as IKEA prohibits this behavior in stores outside of the PRC.  

However, IKEA  announced  that they had no intention of prohibiting customers in China from sleeping on their furniture. The rationale was that the more consumers were able to experience using IKEA’s furniture, the more they are likely to purchase. The Swedish furniture brand even established  pop-up displays  for customers to rest on. Although IKEA generally standardizes the store policy, they were willing to adjust it for the Chinese customer base.

IKEA’s path to be the furnishing giant in China

• Guochao and green manufacturing are key trends in the Chinese furniture industry that IKEA utilizes to capture the Chinese market.
• IKEA identified that physical storefronts must become more engaging and immersive to truly differentiate offline from online shopping.  
• IKEA in China focuses on an omnichannel shopping experience that makes purchasing as easy as possible for customers.
• For the Swedish furniture brand, social media marketing and word-of-mouth are key strategies for building brand equity and recognition.
• Localization and integration as a strategic benefit: IKEA retains beloved foreign cultural aspects while also catering to local tastes and preferences.

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Case analysis Ikea in China

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