ikea in japan case study

Any company considering entry into Japan, whether in the retail sector or otherwise, should undertake a detailed market research and analysis program that takes cultural and social factors seriously. IKEA has succeeded in this regard, and other companies should focus on truly understanding Japan first, and then building meaningful connections with people and communities. Through IKEA's leading example of "healthy, sustainable, affordable living for everyone," the sky is the limit for new businesses to find success in Japan.

• Discover more: Global companies entering the Japanese market

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Director, US-Asia Technology Management Center Stanford University

President / CEO & CSO IKEA Japan K.K

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President and Representative Director Sanofi K.K.

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Too big in Japan

The first attempt

In the early 1970s, IKEA decided to take on the Japanese market. Expansion outside of Sweden was going well in Northern Europe, and for many Japan felt like the natural, logical next step. They could see similarities between the Scandinavian design tradition, and Japan’s simplicity and wooden furniture.

Karl Kerker was employed at IKEA in 1973 as the export manager. “Ingvar Kamprad wanted to get IKEA out into the world,” says Karl, now 88. He went right in at the deep end, and began by reviewing contacts with Japan. These had begun back in 1971, when IKEA was attracted by the country’s impressive economic progress and rapid urbanisation. A country where millions of well-off consumers were curious about modern home furnishing and trends from abroad.

Along with Lennart Ekmark, design manager at the time, Karl Kerker went to Tokyo to meet the Japanese franchise holder, a large furniture company. They advised against building IKEA stores in Japan like the ones in Scandinavia and Northern Europe. Japanese people were said to prefer more of a cosy, intimate shopping experience in a smaller space, so the idea was to open ‘IKEA Corners’ at 30 or so large stores.

Size matters

The franchise holder opened the first small IKEA Corners in large department stores in 1974. They were promoted extensively with ads in the daily papers, subway posters, and the world’s first IKEA catalogue in Japanese. But it was soon clear that size mattered in many more ways other than just the size of the selling space.

“The design suited Japan well, but people often found the furniture to be too bulky. They liked the shape of Gillis Lundgren’s KON-TIKI easy chair, but it was far too big,” says Karl Kerker. The traditionally compact lifestyle in Japan required small, flexible furniture that often served more than one purpose. “People lived in small apartments, and rolled mattresses out on their tatami mats when it was time to sleep,” Karl explains.

Strong interest in Sweden

From the very beginning, the Swedish home furnishing campaign attracted a lot of media interest in Japan. The head of information at the time, Leif Sjöö, has written with nostalgia about the time Japanese journalists came to Älmhult in the 1970s, and did “at-home-with features for print and television … took a deep dive into closets, pulled out all the drawers, counted the silver, and photographed the piles of socks and underpants.” The reporters wanted to “show people back in Tokyo and Nagasaki about the everyday lives of people from Småland, Sweden, Scandinavia and Europe,” Lars wrote.

Karl Kerker was one of the people who helped Leif Sjöö organise the press visits from Japan. “We made arrangements for them to go to people’s homes, and even a Midsummer celebration in Dalarna province. It was good publicity.”

Finally a store

Eventually, the Japanese franchise holder did suggest opening a small IKEA store in Tokyo. Karl Kerker says that the first place they looked for suitable premises was in one of the many closed-down tenpin bowling centres in Tokyo – bowling fever had previously come to Japan from the US, and 124,000 lanes had been built in just a few years. But trends can pass quickly in Japan, and in the mid-1970s people suddenly lost interest. Bowling centres stood empty, and many were converted into everything from department stores to golf practice complexes. However, IKEA and the local business partner finally decided to open the IKEA store in an area known for its amusement parks in Funabashi, in east Tokyo.

Six weeks before the grand opening in 1977, assistant export manager Hasse Salomonsson went to Tokyo to help with the preparations. With him was decorator Carl-Johan Ahnström, who would help out in the final stages by putting an IKEA stamp on the store. But when the Swedes arrived in Japan, the building project was barely half finished. “It was just a huge, empty warehouse 2,700 square metres in area, with a few storage shelves put up. We had no idea how they could possibly finish in time,” says Hasse, now 81. “But our partner just told us not to worry, they’d get it done. So Carl-Johan and I simply had to go with the flow.”

On opening day, there were massive queues long before the doors opened. Hasse Salomonsson says the crowds were interested in the 3,000 free T-shirts with a small blue and yellow Viking for the first people in the queue. Inside the large store, Hasse and Carl-Johan were nervous. “Builders were still scurrying across the overhead beams when we opened and the customers came rushing in.”

The new IKEA store boasted a state-of-the-art checkout system that used scanning pens to read the price tags. Unfortunately, no one had learnt how to use them. “The franchise holder had employed people who knew furniture, but not checkout systems. But by some mysterious means, they got them to work anyway,” says Hasse.

Size creates problems

The problem of the size of IKEA furniture remained. It was often too bulky for Japanese homes, and just getting it home was a challenge. Karl Kerker mentions that most city dwellers did not have a car in those days, and had to rely on public transport. So hiring transport for home delivery was costly and complicated. Also, the very foundation of the IKEA concept at the time – do it yourself – clashed with the Japanese view of service.

In Japan, the customer was traditionally treated as an honoured guest according to the principle of omotenashi – hospitality. From the moment a customer stepped inside a shop, they were well taken care of by bowing staff, who did whatever they could to make the experience as pleasant and convenient as possible. Many Japanese people could never imagine having to carry their products around themselves – first from the shelf or self serve area to the checkouts, and then onto the bus or train and up a too-narrow stairwell. And finally, incredibly, having to put the furniture together themselves once they got home! The tried-and-tested IKEA argument – that doing things this way helped keep prices low – failed to convince the Japanese.

Gradual adaptations

The fact that the products caused problems should not have come as a surprise to IKEA. After all, the franchise holder had said early on that some adaptation to Japanese living conditions might be needed. But IKEA flatly refused, based on their previously successful strategy of faithfully replicating their concept, and keeping the range exactly the same. “Our contract had the same conditions as on other foreign markets, i.e. that only IKEA products could be sold under the brand,” says former export manager Karl Kerker.

The course began with a video greeting from Ingvar Kamprad on VHS

When a new, bigger store opened in Tokyo in 1981, the co-workers had to attend classes every evening after work for the first two weeks. They were taught about the history of Småland, and inspired to create a better everyday life for the many people, based on the principles in The Testament of a Furniture Dealer . The course began with a video greeting from Ingvar Kamprad on VHS, and included modules such as ‘Selling the IKEA way’, ‘Functionalism. What? Why?’ and ‘IKEA Revolution!’. In the daytime, co-workers were encouraged to put their newfound knowledge into practice in the store, and to write down any questions asked by customers so they could be discussed in the evening.

Despite everyone’s best efforts, the first Japanese adventure came to an end in 1986, and all the various retail sites closed. In fact the franchise agreement had ended even before this, as it emerged that completely different products had been labelled IKEA and sold in the Japanese stores. In 1983, IKEA dealt with business in Japan itself.

Karl Kerker believes that a lack of capital was a major part of the problem in Japan. He points out that IKEA set up business there during the 1970s oil crisis, which affected the entire global economy. “Ingvar was quite simply not ready to invest the capital that was needed to become big in Japan. But we learnt a lot from our mistakes and developed our franchise model accordingly, which meant we had far better success in other places, such as Hong Kong and Australia.”

It would be more than 20 years before IKEA was ready to go back to Japan, but that’s another story.

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Ikea's failure and success on the Japanese market BAMMC-THESIS BY: ALEXANDRA STOLBA Table of Contents

Related Papers

Hanaa Elsayad

A review about IKEA in China

The paper is a case study for the different types of risks faced by IKEA as the company started its operations in China. How the risks were mitigated, avoided or accepted has been discussed.

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Purpose – The purpose of this paper is to analyse the marketing strategy in China of the furnishing retailer IKEA in the context of standardisation and adaptation of marketing activities. IKEA's strategy in China is compared to its corporate strategy throughout the rest of the world. Design/methodology/approach – The four P classifications are used as a framework to compare the central marketing strategies of IKEA with marketing strategies used in China. The paper builds on both primary and secondary data. Interviews with senior managers at IKEA are conducted and studies on business and retailing in China are used. Findings – The marketing strategies used by IKEA in China are found to be different from the standardised strategies it uses throughout the rest of the world. Several of the changed strategies are central to the business concept of IKEA. Research limitations/implications – The present paper shows the challenges for a standardised marketing concept and its implications. Originality/value – The paper provides, in the context of the standardisation and adaptation of marketing activities, a more nuanced and up-to-date picture of the strategies used by IKEA compared to previous studies.

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Research Repository

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Organisational learning and consumer learning in foreign markets: A case study of IKEA in Japan

Nguyen, thy; cai, yingdan; evans, adrian.

Catherine Cai [email protected] Senior Lecturer in Strategy and International Management

Adrian Evans [email protected] Senior Lecturer in International Management

Purpose The aim of this research is to explore the mutual relationship between organisational learning and consumer learning in internationalisation. We would like to build a model on dyadic knowledge management in foreign markets and apply the framework to a case study. Design We develop a theoretical framework to examine the combined learning process of organisational learning and consumer learning at different stages of internationalisation. The research employs a single case study of IKEA in Japan. A qualitative approach has been conducted with three interviewees who have experiences in shopping in IKEA. Findings We find out that the combined learning is related to a positive effect in international markets. Moreover, organisations learn to adapt to customer’s needs and markets in the host country but the mutual adaption of organisational learning and consumer learning only happens when consumers are willing to learn to adapt to the company’s business model. Research limitations/implications This paper contributes to the literature on organisational learning in foreign markets. We argue for a dyadic approach and stress the importance of mutual learning between the organisation and consumers. Practical implications The paper has managerial implications regarding knowledge management in international markets and provides a better framework for service companies targeting culturally and institutionally diverse countries.

Nguyen, T., Cai, Y., & Evans, A. (2018, September). Organisational learning and consumer learning in foreign markets: A case study of IKEA in Japan. Paper presented at The British Academy of Management 2018 Conference, UWE Bristol, UK

Organisational learning and consumer learning in foreign markets_2018.pdf (745 Kb) PDF

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Btrax Design Company > Freshtrax > How Did IKEA an...

Business in Japan

How Did IKEA and Starbucks Successfully Localize in Japan?

Takahiro Kawaguchi

Associate Account Manager

At btrax, we typically talk to two types of people when discussing Japanese market opportunities.

• Those who believe that a global strategy will work in Japan
• Those who understand the landscape of the Japanese market and need to create a strategy specific to Japan.

Depending on your goals, resources, and budget, both types of people can succeed in Japan. However, from btrax’s 16 years of experience helping US companies expand to Japan, it can be an expensive lesson if you don’t take the time to understand the landscape.

Today, we will not go into the specifics of the Japanese market. Instead, we will look at a few examples where companies tailored their market entry strategy through localization. To learn about the basics of Japan, you can check out these articles:

• Learning Japanese Business Etiquette
• Japan by the Numbers 67 Insightful Japan Facts

Here are two examples of success stories of foreign companies entering Japan by understanding the importance of localization.

Example 1: IKEA

As a well-known Swedish home-furniture company with 445 stores in more than 30 countries , IKEA seems like a pro at international expansion. However, even IKEA once failed at entering the Japanese market.

When IKEA first entered the Japanese market in 1974, they were unaware of the differences in culture and consumer behaviors. The furniture was too big and didn’t go with the Japanese living style. After 12 years, IKEA decided to leave the market.

Learning from their first failure, IKEA redeemed themselves with ample consumer behavior research. They conducted observational research of the Japanese consumer lifestyle from those living in single-family houses to studios. In 2006, IKEA opened a megastore in Tokyo offering smaller furniture with simple designs, specifically designed to match the Japanese lifestyle.

They also learned that Japanese consumers prioritize convenience and safety more than paying less. With that in mind, IKEA offered a delivery option with furniture assembly, helping win Japanese customers’ hearts.

IKEA is now a well-known and respected brand in Japan like it is in other countries. Recently, IKEA opened its 11th store in the location that used to be the flagship store of Forever 21.

IKEA Shibuya Store

Example 2: Starbucks

Starbucks is known for its superior brand and business expansion strategy. Founded in 1971, the coffee brand now owns about 30,600 stores in over 76 countries all over the world.

Starbucks opened its first store in Japan in 1996. More than two decades later, it operates 1640 stores in Japan nationwide, as of May 2021 . Japan is the 4th biggest market for Starbucks. How did they achieve this massive success?

Here are some key points of their localization strategy.

1. Starbucks first operated Starbucks Japan K.K. with a well-established Japanese retail company called Sazaby League through a 50-50 partnership. This partnership provided Starbucks with an advantage in overcoming cultural differences.

2. Starbucks conducted market/user research in 1995 before actually entering the market. The market research provided interesting insights that led to targeting “women around the age of 30”, who were trendy and didn’t smoke.

• Back then, Japan had a very high rate of smoking with around 60% of males smoking. This made the idea of a non-smoking cafe quite risky from the standpoint of revenue since they were potentially excluding male consumers. Starbucks initially installed a non-smoking area in its 1st store but soon all of the stores became non-smoking. This strategy succeeded in attracting their main target. They did a great job in successfully reaching loyal customers from the start.

3. Starbucks adapted its product lines to Japanese consumer tastes.

4. Serving sizes in Japan are different from the ones in the US. The biggest cup size in Japan is Venti, not Trenta. There is an additional smaller size than Tall, called Short in Japan. (Technically Starbucks US sells shorts, but only for espresso and hot chocolate.

5. All products are less sweet since Japanese consumers tend to like less sugary drinks than consumers in the US.

6. Starbucks curated its menus for the Japanese consumer. Starbucks Japan offered tea-based items such as Matcha tea latte and Houji tea latte, which became some of their best-selling products.

Matcha at Starbucks

Furthermore, Starbucks strategized its adaptive retail architecture and media/PR (including social media). For example, it utilizes the traditional 2-floor house that was built over 100 years ago in Kyoto as its retail store. The store is blended into the local street very well.

Traditional 2 floor machiya house in Kyoto

In Japan, Twitter and Instagram are more commonly used. Starbucks has posted lots of localized content on both social media. Now it has 5M followers on Twitter and 2.9M followers on Instagram.

Seasonal Item in Japan

All these strategies came from understanding the importance of localization. When it comes to international markets, the differences are more pronounced and mistakes can be very costly.

Understanding the importance of localization goes hand in hand with understanding the importance of user research. Brand localization is key to user research as it provides the foundation for a successful market entry.

If you are serious about entering the Japanese market, let’s discuss how btrax can support you. Please contact us here .

References: 

• Statista – Number of IKEA’s stores
• Successful Foreign Companies in Japan – Shiodome.com
• Strategy for Market Entry and Expansion – UK Essays
• IKEA Stores – IKEA Official Website
• Starbuck Stores – Starbucks Official Website
• How many Starbucks stores Are There Worldwide? – Seattle Business
• Starbuck Japan Localization Case Study – medium
• The secret of Starbucks Japan success – Watopi
• Amazon’s share – pull-net 
• Comparison of Growth Strategy Amazon vs Rakuten – Keio University Repository
• Amazon’s Business Strategy in Japanese Market – >SMBC Consulting

Our new E-Book is ready to download!

We’re thrilled to announce the release of our newest e-book: “A Guide to the Promotional Seasons in Japan.”

Featuring insights and examples of successful marketing campaigns that leverage Japan’s distinct seasons to market their products to thrive in the Japanese market!

Download our new e-book today!

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