Localisation challenges and successes of going global.
IKEA seems to have cracked the code to global marketing. With 313 stores spanning 38 countries and €34.2 billion in sales in 2016, IKEA has become the world’s furniture giant. But the process has not been easy. IKEA has struggled to localise its brand and product offerings, continually correcting mistakes and missteps along the way. For any company aiming to expand globally, a look at IKEA’s story is instructive.
Selling IKEA in Europe
Essentially since the company’s inception, the marketing of IKEA’s low-cost, DIY product line has relied heavily on its annual catalogue, with the first edition released in 1951. The catalogue has historically featured bold images with short, simple and often witty copy, and has consistently consumed the majority of IKEA’s marketing budget (approximately 70%). In recent decades, the catalogue has promoted IKEA in Europe as a socially-conscious, eco-friendly company. They feature groups not traditionally privileged in advertising: single mothers, gay couples, and raucous teenagers are often centre stage. It also publicises IKEA’s sourcing of sustainable materials and its use of renewable energy in stores, and discusses its participation in global poverty-reduction initiatives, issues that consumers in the region increasingly value.
Selling IKEA in the USA
When it expanded to the United States in 1985, IKEA replicated its marketing model. The US catalogue and media advertising campaigns promoted IKEA as socially progressive and ecologically aware, which, in the US was culturally well-received. Also well-received was the concept of self-assembled, affordable furniture, as it filled a void in the US market. The challenge for IKEA in the United States was not in marketing or in its central brand premise, but rather in specific product offerings. IKEA had to make significant changes to certain items to meet US demand. Among other things, the company began to manufacture larger beds and wardrobes, and to source bigger glasses to accommodate the American custom of drinking beverages with ice. To mimic the American shopping mall experience, IKEA made its restaurant a central feature in many US locations, with the restaurant in the middle and the wings of the store around it in a clover formation. While these adaptations took time and resources to perfect, they required minimal investment when compared to IKEA’s later expansions.
Selling IKEA in China
IKEA took its operation to China in the 1990s, opening its first store as a joint venture in 1998. Based on the lessons it had learned from the US and other foreign markets, IKEA consulted local experts for the construction of the first stores. The company modelled its facilities using smaller apartment sizes and incorporated balconies into showrooms, features typical of housing in the region. It manufactured firmer, smaller mattresses and sourced rice cookers, chopsticks, teacups and other local products. IKEA quickly found out, however, that simple modifications would not be enough to succeed in China. Instead, a complete overhaul of its marketing strategies and brand identity would be required.
IKEA’s messaging simply did not work in the Chinese market. The concept of low-cost furniture enabled by a DIY model made no numerical sense and had no cultural resonance – IKEA’s prices are not low when compared to local producers, and those who could afford the higher prices had no desire to assemble the pieces themselves. Recognising this challenge, IKEA expanded its assembly and delivery services and significantly lowered prices by sourcing more materials locally (it claims to have lowered prices in China by 60% since 2000). Still, the brand found its messaging was inconsistent with the demands of its new market. Chinese consumers perceive the brand as high-status and aspirational, and the products as innovative rather than traditional. Somewhat reluctantly, IKEA has had begin to market itself in China as an avant-garde, exotic brand for white-collar young adults.
In addition to foregoing its central company premise, IKEA has also had to alter other aspects of its marketing to remain competitive in China. It has abandoned its emphasis on sustainability, as its local sourcing companies do not have the capacity to produce in accordance with green standards. It does not charge extra for plastic bags in China, as consumers reacted unfavourably to paying more at the end of their purchase and to having to bring their own bags. Additionally, it has ceased to distribute its iconic catalogue in the region, because it made it easy for competitors to copy its designs. IKEA now relies heavily on social media and blogging for publicity in China.
Selling IKEA in India and Beyond
IKEA is slated to open its first store in India at the end of 2017. It is planning to use lessons learned in China to successfully cater to the world’s other top emerging market. And, while the process will likely go smoother, it is undeniable that IKEA will come up against new, unique transcreation challenges. For those of us in the industry, it will be informative to keep an eye on IKEA and how it continues to evolve to fit into the Indian context and other diverse international markets.