ON THE'JOB: FACING BUSINESS CHALLENGES AT IKEA

Opening the Door to Sales on Two Coasts

What's yellow and blue, as large as seven football fields, and filled from floor to ceiling with furniture? The an­swer, as millions of shoppers from Budapest to Burbank have learned, is an Ikea store. Based in Denmark, Ikea operates more than 139 warehouse-sized furniture stores in 28 countries. The retailer opens between five and ten out­lets every year, and no two grand-opening advertising campaigns are exactly alike, because no two audiences are exactly alike. For instance, when Ikea opened stores in Elizabeth, New Jersey; Burbank; California; and Manhattan, New York; Ikea president Anders Moberg knew that the markets for each of these stores were as different as Coney Island hot dogs and avocado salad.

Ikea's international success has been anything but an overnight phenomenon. Founder Ingvar Kamprad came up with the company name in 1943 by combining his own initials with the first letter of his farm, Elmtaryd,  and the first letter of his native parish, Agunnaryd (similar to a county in the United States). His first furniture showroom was in southern Sweden and featured bargain prices for simple but stylishly functional designs. How­ever, it wasn't until he opened his Stockholm store, in 1965, that Kamprad put into practice the marketing con­cepts that now distinguish Ikea from its competitors: moderate prices, quality products, and a pleasant shop­ping environment.  .

Going to an Ikea store is "like entering a home­furnishings paradise. Customers are invited to wander through each model room and measure, touch, even sit or lie down on any of the hundreds of furniture samples inside each 200,000-square-foot outlet. What's more, hungry shoppers can snack at the in-store cafe, and har­ried parents can leave their children at the in-store play area while shopping. Prices are low because customers se­lect their own items and carry them home in flat-pack cartons, where they assemble the pieces using simple tools included with every purchase.

To enter these separate markets, Moberg knew that each store would need completely different ad cam­paigns. Plus, with real estate prices sky-high in Man­hattan, Ikea would have to scale down the traditional su­perstore format to a more affordable size. If you were in Moberg's shoes, how would you use promotion to in­troduce Ikea to the target audiences in these separate markets? What advertising strategies would you use to develop ads to attract customers? How would you af­fordably merchandise 12,000 items at a pricey Manhat­tan location?

On the Job: Meeting Business Challenges at Ikea

Introducing Ikea to entirely different markets-some 3,000 miles apart-was the promotional challenge facing Anders Moberg. Despite the success of the chain's first four V.S. out­lets, Moberg knew that the grand openings in Elizabeth, New Jersey, and Burbank, California, were important stepping-stones to the heavily populated New York and Los Angeles metropol­itan areas. The advertising had to build awareness of the store name and the retailing concept as well as attract store traffic. The Ikea president also realized that these grand-opening cam­paigns could not be clones; each had to be carefully tailored to its local audience.

The first store opening, in Elizabeth, was scheduled for May 23, 1990. To reach a target audience of young adults and families, the retailer launched an integrated marketing communications campaign of print, television, billboard, transit, and direct-mail advertising before the store opened. For in­stance, billboards on the New Jersey Turnpike teased mo­torists with cryptic messages. One billboard read, "On May 23, find a place to crash on the Jersey Turnpike." Print ads used lots of copy to explain the headline, "Why thousands will sper1d their Memorial Day vacation on the Jersey Turnpike." Topping off the ad blitz, Ikea mailed more than 1 million copies of its 200-page catalog to households within 40 miles of the new store.

While the preopening hoopla was going on, Ikea also kicked off a television campaign to support the chain's overall image. The commercials poked fun at the irritations of shop­ping at traditional furniture stores, such as high prices and de­livery hassles. However, the campaign didn't take itself too seri­ously; its tag line was "It's a big country. Someone's got to furnish it." The two campaigns started people talking about Ikea, and they helped bring people-by the thousands-to the store on opening day. During the first hour the Elizabeth store was open, 3,000 people surged through the doors; by the end of the first day, 25,000 had visited the store.

Once the Elizabeth store was open, Moberg concentrated on the Burbank store opening. Sticking with a tongue-in-cheek creative approach, the retailer adjusted the media to the local market by relying more heavily on outdoor media, because southern California is car country. So for 6 weeks before the store opening, slightly irreverent teaser ads appeared on 1,600 billboards, buses, and transit shelters around Los Angeles. These intriguing outdoor ads were designed to start people talking about the campaign. Passersby might look at one poster, for ex­ample, and wonder what could possibly have "more mass ap­peal" than the Pope.

The suspense ended two weeks before the Burbank store opened, when Ikea added its store name and opening date to the posters. In addition to mailing catalogs to homes within an hour's drive, the retailer also used radio, television, newspaper, and magazine advertising to give more details about the outlet's products, services, and location. Once again a brief but intense preopening campaign brought results: Burbank's first day was another blockbuster.

But the challenge Moberg faced in Manhattan years later was by and large his biggest. In order to successfully convert the big box concept to a much smaller 7,500-square-foot urban footprint, Ikea adopted a unique promotional format--a marketing outpost. The Manhattan store was designed as a stage­--with a grid system that suspended lights and wooden panels that were easy to reconfigure. Like a theatrical production, every 6 to 12 weeks the store closes for about one week while the theme changes; product mix, walls, displays, figures, signage, video dis­plays, lighting, and just about every other element is reconfig­ured. When the overhaul is complete, a "new" store emerges like Ikea Entertains, or Ikea Plays, or Ikea Dines, or Ikea Sleeps--to name a few.

And by all indicators, the new marketing concept has been a smashing success. Still, Moberg isn't about to take the U.S. market for granted. He plans to boost advertising spend­ing to fight competition from Ethan Alien and Pier 1. And Ikea is launching a new line of children's furniture--something few competitors specialize in. After all, it's a big country. Somebody's got to furnish it, and Anders Moberg is determined to see that Ikea gets the job.