Comparing IKEA to Other Retailers Term Paper

This paper compares and contrasts your company IKEA to Walmart and Target. All three of these companies sell furniture at low prices and are considered mega-stores. IKEA has been in existence longer than Walmart (since 1926) and specializes solely in furniture (whereas Walmart is a super-store that sells virtually everything). Target is the oldest company, getting its start in 1902—but like Walmart it sells much more than just furniture. All three stores are giant retailers and each offers something special to the public. This paper will show how IKEA’s best appeal to the public is when it comes to purchasing furniture for smalls spaces, such as rooms or offices, while Target and Walmart both have their own appeal to the public—namely, quality offerings and cheap prices respectively. This paper will also show how IKEA differentiates itself from its competitors and why this is important.

By distinguishing itself from its competitors by way of its approach to personnel and its ability to make and market furniture, IKEA has been able to carve out a substantial portion of the market for itself. However, its retail competitors have their own appeal to consumers and provide them with one-stop shopping outlets, cheap prices, and considerable options.

Personnel

When it comes to personnel—the public face of the company (the people who work the cash registers and stock the shelves and greet the customers—IKEA is in a stronger position that its two retail competitors, simply by the fact that it pays its workers at the register more than either Walmart or Target do (Glass Door, 2017). This is one of the factors that sets IKEA apart from its competitors: it incentivizes its workers, provides them benefits that create a culture of good will within the workplace, and establish a rapport that is then passed on to the consumer. At the other two retail giants, the worker is considered less highly and that same attitude is then reflected in the manner in which the consumer is viewed. IKEA’s personnel are committed because IKEA is clearly committed to them and that commitment starts with high wages.

Shopping

Walmart is located in 15 countries around the world and serves more than 200 million consumers per day on average. It offers many different types of products (not just furniture) and has an excellent return policy that allows shoppers up to 3 months after purchase to return an item; plus Walmart has a no receipt return policy that allows consumers to essentially shop worry free (Karbastera, 2016). However, because it does not specialize in furniture products, IKEA has a leg up on the competition: it does specialize in furniture products—so for consumers who want only to go out and purchase furniture, IKEA is the company that comes to mind. IKEA’s prices are also very competitive because the products it sells require installation—i.e., the consumer must put the furniture together. Yet, knowing consumer needs is what IKEA does best and for this reason, the company also offers a “wide area of delivery of their products” so that shopping can be easier (Karbastera, 2016). IKEA’s return policy is also as good as Walmart’s in that it allows up to 3 months from the day of purchase for returns. IKEA also has far more scale than Walmart, as it operates in 41 different countries around the world (Loeb, 2012). In short, its footprint is enormous. Target by contrasts operates only in the U.S. and is not a global corporation, though it did attempt to expand its franchise across Canada—though it did not do well in that initiative because it did not bother to study and understand the Canadian character and culture before “charging in” (Pearson, 2015). So when compared to Target and Walmart, IKEA’s scale of operation is much larger: it is truly a global company with stores in many several countries.

Penetration

As Pearson (2015) points out, IKEA’s success across the world has come primarily because it has taken the time to understand and appeal to its consumers. For instance, when IKEA first entered into the American market in 1985, it stocked bed frames that were too small for what American consumers were used to. The company had failed to do its homework. The frames did not sell, and IKEA needed to understand why. In examining the American character and culture and asking questions about what Americans wanted and how they lived their lives, IKEA could better develop a sense of its consumer base, re-orient its products to appeal to that base, and begin selling more effectively and efficiently. In other words, the company learned from its early mistakes and incorporated into…