IKEA: “Affordable solutions for better living.”

IKEA:“Affordable solutions for better living.” CAT 302 Customer Service Model Group Project August 20, 2008 Kimberly Barnes, Melissa Buck, Sean Beard

Table of Contents • Part I-Ikea: The Company • Part II-Ikea: The Service Model • Part III-Ikea: Developing the Brand

IKEA The Company

IKEA Quick Facts • Founded by Ingvar Kamprad • 1943: beginning of operations (primarily a mail-order business) • 1958: 1st store opened in Sweden • 1985: 1st store opened in U.S. • North American Headquarters located in Conshohocken, PA • Currently operates close to 300 stores in 35 countries around the world; 29 stores in U.S. • 118,000: total # of co-workers in all IKEA stores for y/e 2007; 16,450 in U.S. (14%) • 19.8 billion euros: total sales for all IKEA stores y/e 2007; U.S. accounted for 10% of those sales

“A simple H.R. idea.” “…to give down-to-earth, straightforward people the opportunity to grow, both as individuals and in their professional roles, so that together we are strongly committed to creating a better everyday life for ourselves and our customers.”

H.R. cont. “As you will have noticed, those who work at IKEA are referred to as “co-workers” and not “employees”. This may seem a little odd to begin with, but as most people quickly come to understand, our terminology is symbolic of a special mindset - one which says we all have a contribution to make to the success of the company, and that every single role is important in its own way.”

What we expect vs. what we offer “Ikea co-workers enjoy many advantages and opportunities from working in such a free and open environment. But all freedoms are counter-balanced with expectations.”

Expectations… • Ambition • Do your best based on abilities & experiences • Service-oriented • Open to improvements with a will to continually develop • Challenge established patterns and make suggestions • Not status-minded; open & straightforward in approach to others • Cost-conscious • Open & willing to try a new & challenging job

In return… • Chance to work in a growing company with a viable business idea • Opportunity to further develop your professional skills in your daily work • We make it possible to choose between many different jobs within the company • Enable you to work in an environment where people & team spirit are central values • We offer you a job with fair and reasonable conditions • We give you the chance to take a great responsibility following recognized good results, regardless of age.

A corporate culture based on shared values. “At IKEA, we don’t just want to fill jobs; we want to partner with people. We want to recruit unique individuals who share our values. Co-workers are not restricted at IKEA; we listen and support each individual to identify his or her needs, ambitions and capabilities.”

Shared values cont. Here are a few examples of our shared values: • TOGETHERNESS • COST-CONSCIOUSNESS • RESPECT • SIMPLICITY

IKEA Contact Information Human Resources Privacy Officer IKEA North America Services, LLC 420 Alan Wood Rd. Conshohocken, PA 19428 USA eRecruitment.USA@memo.ikea.com

IKEA The Customer Service Model

Mission Statement • 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). The company targets the customer who is looking for value and is willing to do a little bit of work serving themselves, transporting the items home and assembling the furniture for a better price. The typical Ikea customer is young low to middle income family.

Goals IKEA’s business philosophy and how business is done at a very successful organization is best described through the 4 goals of an IKEA Store. They give even greater insight to why customer service is so good at these stores. • To act as a highly efficient, and staffed sales mechanism • To show home furnishings solutions full of home furnishing ideas • To serve as a well qualified home furnishing specialist • To provide a day out for the whole family

Operations • Effective marketing through catalogues usually attracts the customer at first, what keeps customers coming back is good service. • Ikea believes that a strong in-stock position in which the most popular style and design trends are correctly anticipated is crucial to keep satisfied customers. For that, Ikea depends on leading-edge technology. • According to Ikea's logistics manager, "there are a lot of Just-In-Time concepts built into how we're trying to do business". Ikea has developed its own global distribution network.

Operations Cont. • By utilizing control points in the distribution cycle, the firm is able to insure timely deliver of products to retail stores all over the world. Internationally, these stores range in size from 20,000 to 30,000 square feet in Hong Kong and in Singapore to 500,000 square feet in Stockholm, Sweden. Ikea has over 1,800 suppliers located in over 50 different nations.

Global Strategy • In order to maintain cost leadership in the market, internal production efficiencies must be greater than that of competitors. • Under Ikea's global strategy, suppliers are usually located in low-cost nations, with close proximity to raw-materials and reliable access to distribution channels. These suppliers produce highly standardized products intended for the global market, which size provides the firm with the opportunity take the advantage of economies of scale factors. • Ikea's role is not only to globally integrate operations and centrally design products, but also to find an effective combination of low cost, standardization, technology, and quality.

IKEA Building a brand driven experience for customers

Ikea’s mission • Ikea seeks to deliver affordable home furnishing to its customer. • There are several unique aspects of Ikea’s service model. • Self-service is a large part of the service model. • Assembly is almost exclusively done by consumer. • Controlled layout of store allows for maximum efficiency in delivering customer experience. • Branded experience is ultimate goal: customers will be loyal to the brand.

Developing the branded experience • Customer experience will consist of pleasure and pain points. • Branded experience is not always the result of having a pleasurable experience at all service points. • A branded experience is formed by using the resources available to balance between pleasure and pain. • It is important to not only listen to the voice of the costumer but also to focus on the areas that are important to the brand.

Important-performance quadrants: balancing important attributes of customer value and brand value to create a desirable in-store experience1 Fig 1-Listen to areas of importance to customer Fig 2-Focus on areas that are important to customer and brand 1. Lee, S. (2007). IKEA: A branded experience is more important than customer-centricity. Retrieved July 21, 2008, from http://www.customerthink.com/article/ikea_branded_experience_important

Focus on customer value through the brand • Customers value quality furniture at low price • Focus on quality of furniture but also the value furniture brings to everyday use for the customer • Brand is tested by the ability to bring individual customer solutions • Customer loyalty will be ensured by bringing a consistent package of quality, function, and end point satisfaction

Continuing development of the brand • Ikea will need to continue to refine its service model to sustain success in the future • Drivers such as technological innovation and service innovation will provide an even deeper brand • Global expansion will bring new opportunities to expose brand to new markets • Customers will continue to be partners in maintaining and developing brand through self service and creation

References • Behn, J. (2001). Super model. Retrieved July 22, 2008, from http://multichannelmerchant.com/opsandfulfillment/warehouse/fulfillment_super_model/ • Edvardson, B., Gustafsson, A., & Enquist, B. (2005). Challanges in new service development and value creation through service. Paper presented at the ISD'2005 Conference, Karlstad University Sweden. Retrieved from http://www.cs.kau.se/isd2005/Bo%20Edvardsson.pdf • Ikea USA. (2008). Ikea USA: Customer service. Retrieved July 22, 2008, from http://www.ikea.com/ms/en_US/cu stomer_s R> • Lee, S. (2006). Ikea represents a new wave in china, a branded experience. Retrieved July 21, 2008, from http://www.customerthink.com/article/ikea_china_branded_experience • Lee, S. (2007). IKEA: A branded experience is more important than customer-centricity. Retrieved July 21, 2008, from http://www.customerthink.com/article/ikea_branded_experience_important • Edvardsson, B., & Enquist, B. (2002, October). 'The IKEA Saga': How Service Culture Drives Service Strategy. Service Industries Journal, 22(4), 153-186. Retrieved July 21, 2008, from Business Source Premier database.

IKEA: “Affordable solutions for better living.”