Did you know that IKEA, the furniture brand, is extremely popular for its food as well?
That’s right! Every IKEA store features a cafeteria or a restaurant that caters to its customers who are tired after a long walk through its stores. These serve a wide variety of interesting dishes along with a particular dish that has become a global sensation called IKEA’s Swedish Meatballs, which is a must-try for all its visitors worldwide. Introduced as a way of representing Sweden’s cultural tradition, it has become so popular that IKEA even sells a frozen version of the dish for its customers to take home.
IKEA is a Swedish multinational furniture retailer with over 400 stores being operated in 50 different countries around the globe. Currently headquartered in the Netherlands, IKEA is known for its affordable, functional, and stylish furniture.
In this article, we’ll look at how IKEA employed interesting business strategies, strong brand strategy, widely recognizable visual identity, and innovative marketing practices to grow from a simple sales business into a world-famous brand that strives to represent the Swedish culture and heritage at a global level.
Let’s dive straight away into IKEA’s Branding Case Study and try to answer the question - "How Did IKEA Become an Iconic Brand?".
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A Brief History of IKEA
Before we move into the specifics of IKEA’s branding, let’s just quickly go through some of the key moments in the history of IKEA:
1943
In 1943, Ingvar Kamprad, a Swedish entrepreneur, founded IKEA at the age of 17. Back then, IKEA was a simple mail-order sales business that sold items like pens and wallets.
1948
In 1948, IKEA transitioned from a mail-order business to a furniture retailer as it started selling chairs and tables, to begin with.
1958
A decade later, in 1958, the first official IKEA store was opened in Älmhult, Sweden. This enabled customers to interact with the furniture before they bought it, and this move was a major success for the business.
1960s
In the 1960s, IKEA started opening stores outside of Sweden, in various parts of Europe.
1970s
In the 1970s, IKEA went through a phase called “The Great Expansion” where more and more stores were being set up in parts of Asia, Australia, and North America.
Over the next few years, as a result of its expansion into other countries around the globe, its commitment to sustainability, and its consistent focus on innovation, IKEA rightfully achieved the status of being the world’s largest furniture retailer.
IKEA's Brand Strategy
Before we delve into the branding specifics, let’s have a quick overview of IKEA’s business strategies and revenue model.
In my opinion, 3 business strategies of IKEA particularly stand out as extremely interesting and innovative:
Flat-Pack Form: The IKEA furniture is sold in a disassembled ‘flat-pack’ concept which significantly reduces the shipping and storage costs.
In-House Design: IKEA has a dedicated team that designs and manufactures many of its products, which gives the brand total control over the quality, design, and cost of its products.
DIY Model: The self-service or ‘Do-It-Yourself’ way of setting up your own furniture, saves the company a lot of money on additional labor costs.
While the majority of the company’s revenue comes from the sales of its furniture and other home furnishing products, from both its physical stores as well as its e-commerce platform, IKEA also earns a small chunk of revenue from the IKEA restaurants and from a few store services like delivery and assembly.
What makes these business strategies work is an even stronger brand strategy which forms the heart and soul of the brand.
IKEA’s vision is "to create a better everyday life for the many people". This statement represents the brand's commitment to making well-designed, functional, and affordable home furnishing products accessible to a wide range of customers.
A strong IKEA business is heavily dependent on its strong internal culture that’s reflected in IKEA’s brand values, which are:
Togetherness: IKEA believes in creating stronger relationships with each other.
Affordability: IKEA aims to offer quality products at prices that are within everyone’s reach.
Sustainability: IKEA uses responsibly sourced materials and aims at reducing environmental impact.
Functionality: IKEA ensures that its products are not only visually pleasing but also practical.
Innovation: IKEA constantly seeks innovative solutions to improve customers’ quality of life.
Simplicity: IKEA believes in making things simple and easy for its customers.
Experimentation: IKEA likes to think in unconventional ways, experiment, and dare to make mistakes.
Business Structure of IKEA
Zooming out a bit, IKEA has a Monolithic or Branded House architecture, which means that all of its products and services are sold under the IKEA brand name.
While there’s absolutely no doubt about the brand architecture, it’s quite interesting to know about the overall Business Structure of the IKEA Group of companies:
The Overview
To begin with, IKEA is a franchise business at the core of it. This can be divided into two parts - the IKEA Brand and the IKEA franchisees. While there are a number of unique franchisees in different markets, let’s primarily focus on the IKEA brand.
1. Inter IKEA Foundation
The Inter IKEA Foundation is the biggest of all. It’s a self-owned company whose purpose is to ensure the longevity of the IKEA Concept and govern the Inter IKEA Group.
2. Inter IKEA Holding B.V.
Next in line is the Inter IKEA Holding B.V., which is the holding company of the Inter IKEA Group.
3. Inter IKEA Group
Then comes the Inter IKEA Group whose main purpose is to provide the best possible conditions for implementing and operating the IKEA Concept. The Inter IKEA Group is further divided into multiple subsidiary brands with each of them catering to specific essential tasks:
Inter IKEA Systems - the developer of the IKEA Concept, the Intellectual Property owner of the IKEA Brand, and the worldwide franchisor.
IKEA of Sweden - the designer and developer of the IKEA product range.
IKEA Marketing & Communication - the designer and developer of the communication content.
IKEA Supply - the distributor of the IKEA product range.
IKEA Industry - the strategic IKEA manufacturer.
Coming to the Target Audience of IKEA, while the brand tries to cater to a diverse and inclusive range of demographics, it traditionally appeals to young adults furnishing their first homes, families looking for top-quality home furnishing products, and budget-conscious students looking for affordable furniture.
The primary competitors of IKEA, especially within the United States, are furniture retail brands like Target, HomeGoods, and Ashley Furniture. In addition to these, e-commerce brands like Amazon and Wayfair are strong competitors to IKEA as they have a wide range of home furnishing products that are sold online on their own websites and apps.
IKEA's Brand Identity
The iconic brand image of IKEA always manages to stay fresh in people’s minds primarily because of its extremely consistent and recognizable brand identity, which is a direct representation of its Swedish heritage.
The brand name IKEA is actually an acronym that is a combination of the founder's name ( Ingvar Kamprad ), his farm's name ( Elmtaryd ), and his home village ( Agunnaryd ).
Related article: What Are The 9 Types of Brand Names?
Fun fact! IKEA is quite popularly known for naming its products with unique and peculiar names. Such product names are in fact derived from Swedish words or from names of places or people in Sweden. Some of IKEA's most popular product names include Billy (bookcase), Kallax (shelving unit), and Malm (bed frame).
The IKEA logo is a timeless, minimalistic design that features a bold IKEA wordmark written using ‘IKEA Sans’, a Sans-serif typeface that ensures clear readability and a contemporary feel. The brand logo truly reflects the brand’s Scandinavian design ethos.
Just like the IKEA business, the logo has also been constantly evolving while simultaneously preserving its origins, right from 1943 to the year 2018, when the latest changes were made.
The brand color palette featured throughout IKEA’s visual identity is a direct representation of its Swedish heritage because the visually striking blue and yellow combination is similar to that of Sweden’s national flag. The blue color represents the attributes of dependability, trust, and calmness. And, the yellow color signifies optimism, energy, and creativity.
The retail branding of IKEA is extremely interesting! On the outside, the retail stores are completely covered in the brand’s visually striking color palette, making IKEA one of the most recognizable stores even from a faraway distance. When it comes to the interiors, IKEA stores often feature room settings that showcase their furniture in realistic living spaces, making it easy for the customers to imagine the products being used in their lives.
Related article: What Are The 9 Types of Branding You Should Know About?
Did you know that the IKEA stores are deliberately designed to have a complicated layout?
IKEA’s store layout is intentionally designed like a maze. Unlike the dedicated aisle layout which is extremely common in retail stores, IKEA’s maze-like layout is designed to encourage exploration. The winding paths are meant to guide customers through the entire store, exposing them to a wide range of products, which might probably lead to the customers making some impulse buying decisions.
IKEA's Marketing
IKEA has a fairly long history of memorable and effective marketing practices like product catalogs, advertising campaigns, and loyalty programs that have helped solidify its brand positioning in the market.
IKEA Product Catalog
The IKEA Catalog was a print design asset that had been a very powerful marketing and branding tool for IKEA. Though discontinued in 2021 after 70 successful years, the catalog featured aspirational product photography in real-life settings. These were a valuable tool for customers who are planning their IKEA shopping trips and a great source of inspiration for home furnishing ideas.
Interestingly, during its peak in 2016, the IKEA catalog was printed in over 30 languages and distributed to over 200 million people around the world, making it the world's most widely distributed book after the Bible.
In its marketing communication, IKEA typically uses a lighthearted tone of voice along with a touch of humor. This resonates well with customers, making IKEA a relatable and approachable brand.
Out of the many creative advertisements by IKEA, there are two that particularly stand out to me:
1. The IKEA 'BookBook' Ad
This advertisement was a playful and effective way to promote IKEA's catalog as a parody of Apple's product launches. In this humorous video, IKEA spoofed Apple device commercials to highlight the advantages of IKEA's printed catalog (the BookBook) over digital devices (like the Macbook).
2. ‘The Wonderful Everyday’ Campaign
This long-running campaign has been using a variety of creative approaches in its TV commercials to communicate the central message that simple, everyday moments can be made wonderful using IKEA products. It features various IKEA products in everyday scenarios like the home or workplace, as well as unconventional scenarios like a nightclub.
As a way to foster customer loyalty, similar to many popular consumer brands, IKEA also runs a loyalty program called ‘IKEA Family’. As a part of this program, the customers are given a card that can be used to obtain discounts on certain products found in-store.
In order to cater to the regular customers and the loyal fans of the brand, IKEA has this online initiative called the ‘IKEA Icons Quiz’. This page on their website features about 30 iconic IKEA products and a few interesting questions about these products to test your knowledge about them.
IKEA Museum
The brand also owns and operates the world’s only IKEA Museum which appeals to anyone who’s interested in the story of IKEA and its rise to the top. Interestingly, the IKEA Museum is the same building where the first IKEA store opened in 1958, in Älmhult, Sweden. Apart from the exhibits about IKEA’s history, iconic products, and the complete design process, the museum also regularly organizes guided tours and workshops for their visitors.
Conclusion
A combination of a strong value foundation, heritage-driven visual identity, innovative marketing practices, and most importantly the commitment to quality and design, has resulted in IKEA becoming such an iconic brand, and that too in the furniture industry which is traditionally a localized market.
One of IKEA’s core business strategies has been so effective and iconic that it has secured itself a place in human psychology studies as well.
The self-service or DIY (Do-It-Yourself) model of IKEA encourages its customers to assemble the furniture on their own. This style of business has been extremely successful particularly because of an interesting psychological phenomenon called ‘The IKEA Effect’.
This effect is based on the psychological observation that people tend to place a higher value on products they partially create. And, the DIY model of IKEA does exactly that by giving customers a sense of accomplishment and pride after they’ve successfully assembled the product on their own.
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