|
|
1. How is the IKEA operations design different from that of most furniture retail operations? IKEA's mission is to offer a wide range of home furnishing items of good design and function, excellent quality and durability, at prices so low that the majority of people can afford to buy them (IKEA 1994). Founder Ingvar Kamprad's innovative strategy was to design functional furniture that was easy and inexpensive to build, receive it disassembled at stores, and display it on the showroom floor with detailed explanation tickets, making sales person assistance unnecessary. IKEA customers typically spend more time in the store - as compared to the time they usually spend in rival furniture retailers. IKEA distinguishes itself from the rest of the competitors with the way it organizes its stores. Shopping in IKEA is an experience. IKEA stores double as warehouses. They are built for browsing - the furniture was laid out and showcased in the stores as it would be in a home setting. Shoppers are used to seeing everything under one roof - from the kitchen sink to the soup bowl. The genius of the Swedish furniture retailer's business model is sandwiched in its flat-packed, assemble-at-home bookcases, beds and cabinets, which slash the cost of its products by passing the full responsibility of shopping to customers. In that way, IKEA shoppers become Pro-sumers - half producers, and half consumers - because most products have to self-assembled. Employees were available for questions but the customers could choose, order, pick up, transport and assemble their own selections. Although all furniture retailer operations may be similar in that they all transform input resources into output products and services, they do differ in four important respects - namely the volume of their outputs, the variety of the outputs, the variation in demand for their output, as well as the degree of visibility or customer contact that they have. We shall now examine these four areas and illustrate what made IKEA the furniture retailer with a difference. THE VOLUME DIMENSION As IKEA is operating just like a warehouse, it produces a high volume of furniture and products that could be self-assembled. The fact that IKEA can also be found in other countries allow for economies of scale and hence, IKEA is able to bring costs down with its high-volume production. The downside of this would be, as one customer puts it: "I have something which everyone else in the world has. This product is not unique." Despite having a high-volume business, IKEA has a lean buffering capacity, with only a limited amount of stock bought to ensure that the possibility of unwanted stock is reduced. THE VARIETY DIMENSION IKEA's furniture is 'value for money' with a wide range of choice. It is designed to be stored and sold as a 'flat pack' but is capable of easy assembly by the customer. The 'Swedish' design emphasizes bold colors, styles and functionality. The company promotes products to be modular, allowing different variations of the same basic product to be customised to produce greater variety.
|
