IKEA is the largest retailer of furniture and appliances in the world. It has faced stiff competition in recent years, but its customer service and unique designs have kept customers coming back. ..
IKEA operates with a huge volume of customers, but the products are cheaper compared to other retailers in the industry. There are many reasons as to why this is so, including the fact that IKEA does not require a large amount of space to store its products, and that it sells products at a lower price because it does not have to pay high prices for inventory.
How does IKEA offer affordable products?
IKEA has been able to survive in the industry by making cheap-priced products. They have been able to do this by creating a unique shopping experience that separates them from their competitors. ..
Materials Used
According to IKEA, the furniture is made of wooden sheets that are layered over a honeycomb core. This construction material will save IKEA money.
Bulk Manufacturing
Ikea is known for making furniture parts in bulk order, which means they receive their materials at a discounted rate. ..
Flat Packaging
IKEA’s flat packaging concept is a way of reducing the amount of materials used and space used when packaging products. This saves money and reduces wastage.
Manufacturing Materials
The IKEA products are made with a honeycomb-like structure that is relatively cheap.
No delivery services
IKEA does not provide delivery services for their customers, and only pickup at the store options are available. It cuts delivery costs and saves a lot of money for transits. Unlike many other retailers who offer delivery options and charge additionally for the same, IKEA sells at a much lesser price.
Limited Staff
IKEA’s policy of giving complete product information on tags helps keep labor costs down, which allows the company to price its products cheaper. ..
Assembly costs
In 2017, IKEA collaborated with Task Rabbit for helping customers with furniture assembling. This has reduced the huge cost of collaboration with third-party vendors.
Store Capacity Planning
IKEA stores are designed in a way that they can be used effectively and no wastage of space is done.
In-House Operation
Ikea has a centralized control over their manufacturing and distribution processes, which saves them money in the long run. This is especially evident in their warehouse, where they handle all operations without the help of third-party vendors. ..
Power Saving
IKEA has set around 900,000 solar panels across its warehouses and outlets and inhabits and utilizes 441 wind turbines all in the quest of coming to be energy independent by 2020. This is necessarily respectable considering that there are 424 IKEA stores across the world that require a huge quantity of fuel and energy to operate.
Affordable Meals
IKEA’s food hall offers affordable meals that are just as good as their competitors. Almost 30% of customers shop at IKEA for their affordable meals, which is more than any other store. The idea of having meals at greater prices after shopping under the same roof is a popular choice for shoppers.
Store Locations
IKEA stores are located in a way that they attract students, tenants, and young families who want to makeovers for their homes. This is done by having the stores located near universities and other places where people can study.
Minimalist Designs
IKEA products are designed to be minimalistic in design. They can be redesigned to meet other needs, which is one of the many appealing factors.
Conclusion
The Ikea story is about how the company makes strategic business moves by reducing costs, and how these savings are put into products that are sold at a low price. IKEA also tries to produce high revenues to maintain its affordability.
IKEA believes that by selling furniture and other household products at a cheaper price, they can provide better accessibility to a standard of living for as many people as possible. This allows for people of all incomes to have access to the same quality of life necessities, such as furniture and appliances. ..
The competition in the home improvement industry is fierce.
IKEA is a furniture store that offers modern furniture at affordable prices.
