In this marketing tutorial I will discuss the furniture retail brand Ikea Swot Analysis strengths, weaknesses, opportunities and threats.
IKEA is known for its simple yet effective approach to retail the Do It Yourself concept products. This assures that costs are kept lowest by the company and the value is transferred to the customers. IKEA products are flat packed and ready to use which means that they can be easily assembled by customers themselves. The company also holds an effective online presence and its key strategic driver is it’s no nonsense approach towards retailing along with paying huge dividends to the shareholders of the company.
Swot Analysis Strengths of Ikea
Strong financial position. IKEA reported revenue of €38.8 billion ($44.6 billion). This can be attributed to the concepts that translate into an array of products that is assembled by the customers themselves and which eventually led to huge reductions in cost. IKEA has focused towards maintaining cost leadership which in turn imposes a positive impact over its revenue.
Affordability. The true strength of the brand is its inexpensiveness. Maintaining this level of cost-effectiveness is the main reason why customers keep on coming back. The company has many ways through which it drives down cost and that too without impacting its products and customer expectations.
Brand reputation and market presence. Interbrand refers IKEA to be the most valuable furniture retailer brand and is valued at $US 17.4 billion in 2018. Under the Ikea franchise system, today there 423 stores in 52 markets and countries. This global presence and strong brand reputation ensure that customers will select IKEA over its competitors. Ikea is well known and recognized furniture brand. This recognized brand offering 12000 products, generated 2.5 billion web sites visitors and 957 million store visit in the last year.
Ikea Products. One of the key strengths of Ikea is its products range functionality design, quality and price at the same time. Ready to assemble product approach attracts its customers when it comes to decision making process. “There is something for everyone”. Over the years Ikea has developed cost efficient and innovative strategies to target as many as customers possible.
Swot Analysis Weaknesses of Ikea
Negative media attention. Ikea is operating is 52 different market worldwide and has faced severe criticism many times for different issues. Many employees complained about poor treatment, questionable promotional activities is another area affect Ikea brand negatively. Negative publicity can damage customer loyalty and brand reputation of Ikea.
Ikea Standardized products. Ikea main focus is to provide standardized quality products and services at low prices to cater its customer. But it is not possible for standardized products to meet everyone need in the marketplace.
Low quality products. It is always a difficult task to minimize the cost while maintaining the same product quality. The cost reduction obsession of the company has reduced its product quality which has negatively affected Ikea brand image. Raw material cost is increasing and it not possible to maintain the good quality and low cost.
Swot Analysis Opportunities of Ikea
IKEA’s green business model. The green business model holds immense opportunity for Ikea to attracting customers for buying products. Rise of the ethical consumer or the buying procedure known as “Ethical Chic’. This means that consumers prefer those products which are eco friendly
Global expansion. Expansion of the company within emerging markets and in the developing countries where there is an untapped customer base and which can be leveraged for effective profitability. IKEA is making plans to enter and expand larger markets like India, China and South America with its cost leadership strategy and has high hopes to yield benefits for the company.
According to Ikea Facts and Figures, They are strengthening their position in the existing markets UK, North America, Middle East and Asia. At the same time Ikea management is looking forward to open 15 retail locations in the year 2019. South American markets i.e. Chile, Peru and Colombia etc. are the key opportunity for Ikea to exploit in the coming years.
Expansion in grocery market. Nowadays everyone likes healthier food which has tremendously increased the demand for grocery products in many developed countries. This is a huge opportunity for Ikea to expand its grocery business and introduce grocery stores where the demand exists. Ikea can successfully align this growth strategy with its currently managing restaurants and food outlets.
Swot Analysis Threats of Ikea
Stiff Competition. ikea is operating in 52 countries and having stiff competition with local and international brands. One of the world’s leading brand Walmart is a good example. In India local competitors like Pepperfry, which is an online furniture retail store, is giving tough time to Ikea.
Law suits of IKEA. IKEA underwent several lawsuits and litigation matters due to its previous issues of employee discrimination along with poor quality of products being offered. The company was subjected to lawsuits from its customers who were injured by its products.
Consumer income. As growing income can serve as an opportunity, it can also be a threat for Ikea. When consumer income will increase, they have more purchase power; they are less likely to buy high quality and cheap products. As a matter of fact, on the basis of the IKEA brand and since they are compromising over low quality, consumers are in constant search of those who want high quality products even if it costs more.
Law suits of IKEA. IKEA underwent several lawsuits and litigation matters due to its previous issues of employee discrimination along with poor quality of products being offered. The company was subjected to lawsuits from its customers who were injured by its products. Consumer income. As growing income can serve as an opportunity, it can also be a threat for Ikea. When consumer income will increase, they have more purchase power; they are less likely to buy high quality and cheap products. As a matter of fact, on the basis of the IKEA brand and since they are compromising over low quality, consumers are in constant search of those who want high quality products even if it costs more.