Ikea? Digital? Hm – it’s not like Zipper didn’t pay attention in school. What can a print provider learn from Ikea? Leave out the screws to encourage folks to come back? It’s more a case of how you successfully grow a market from out of its niche. A fascinating topic.
Robert Keane once told me that he really rates Uber (a private taxi service), because Uber is disrupting an outdated business model that is no longer serves market needs and it is therefore developing a new market. At that same moment Ikea sprang to my mind. When what is now the world’s largest furniture store started out in the 1960s, nobody seriously imagined that customers would assemble their own furniture just to save money. Here it makes sense to draw comparisons with online print – online print too is disrupting a previously successful yet outdated business model. The particularly fascinating thing here is that Ikea fundamentally focused on a new philosophy of its own and pre-invested in products right from the start. No Ikea product is simply launched on the market because a supplier has acquired a new saw ?
And whether you believe it or not, Ikea’s basic philosophy is also the reason why it is successful and ultimately boils down to a simple formula: “We keep asking ourselves, how can we do things even better? This way we remain innovative and our offering is unique. Our objective is always improving people’s everyday lives. And in a way that is affordable for the majority, not just for a tiny minority. That is the basic thinking behind what we do, the Ikea concept. It exists in all parts of our business – from design procurement, packaging and sales to the business model.” So much for the direct corporate quote. Yes, and I can hear the moaners again: “Hey Zipper, not everything is wonderful at Ikea – they always purchased their Billy shelving in the GDR…” Obviously there’s no rose without a thorn – but this in no way dilutes its formula for business success.
“If your aim is to develop a market or turn it on its head, doing that always requires a real dose of courage.” – Bernd Zipper
But what can now be learned from Ikea? Well now, there are 1001 furniture store chains around the world but only Ikea generates sales of 32.7 billion Euros. That puts Ikea out in front and enables it to impact the lives of billions of people in terms of product quantity. That is pretty impressive. And nevertheless there are even more furniture stores and furniture manufacturers out there. Hm. That kind of reminds me of my blog post from last week and is a superb example of how a market is never “fully occupied”. There is always an opportunity to change, influence or even disrupt “occupied” markets.
And that’s exactly what Ikea has done. While other furniture stores focused on quality, sales and assembly services and an extensive product range back then – Ikea wanted to be different. It focused on innovation right from the start. That doesn’t mean that Ikea invented shelving, no, Ikea simply enhanced it. That doesn’t mean that Ikea “invented” the concept of service in the furniture industry – no, Ikea simply gave customers the feeling that they could obtain better prices if they rolled their sleeves up. Even the reserved snobbery of furniture salesmen was got rid of – at Ikea everyone, even the boss and warehouse staff, are on first-name terms. And Ikea has been very smart to focus its marketing on print (catalogs) and on the web. Right from the start the catalog was the key “call to action” tool as far as customers are concerned – and I still remember how I devoured the new Ikea catalog every year towards the end of August. Just to get a few ideas about what I might improve in my own home – because, according to the Ikea message, I can afford it (even if my former bank and overdraft said otherwise).
At the same time, Ikea has established and developed an eco-system to complement all that “You are our favorite customers – we reach out to where you are” marketing jazz. And it is indeed a gigantic network consisting of sales outlets (furniture stores and online), production facilities (proprietary manufacturing and subcontractors), product development and business intelligence, as well as asset management. In order to establish distribution outlets and start operating locally as fast as possible, Ikea has also tied in a large number of furniture stores via a franchise system. Ikea even produces the food it serves in its restaurants – although you don’t necessarily have to like Köttbullar (Swedish meatballs). But at some stage even we got used to the weird sauce and mince meatballs served with cranberries. And the fact it is successful somehow proves Ikea has done and is doing the right thing.
A large number of lessons can be learned by print providers or budding online print providers from an analysis of Ikea’s business model…
a) Think carefully before you launch a product – because if you launch a product, make sure it is simply better, cheaper or cooler than that of your competitor(s). That applies even if the product already exists
b) Make the supply chain your own, develop your own eco-system
c) From the beginning make sure you have proper structures in place that are scalable and “take the strain”
d) Keep on working on your brand, even if it is only small to start with
e) Make your customer an accessory – let them design things, let them be creative and give them the full information they need to be creative
f) Wrap your customer up in a proper, customer-focused marketing philosophy that they can understand and that they can put into practice – they have to be “fans” of yours
g) Regard every action as part of your strategy – irrespective of whether seemingly unimportant issues like staff (team spirit), catering (customer/employee) or how people treat each other (first-name mentality) are involved
h) Always be receptive to new developments and trends and force yourself to innovate by doing your own research
… this list can still be added to ad infinitum.
My take: What does Zipper want to achieve with this blog post, the reader might well ask. It’s as clear as daylight that a product that everybody needs is likely to be successful. Yes, that’s true. But is print any different? Doesn’t every fellow human somehow need print products? Shouldn’t we start trying to understand successful business models from other industries better and adapt (no, not copy) these to enable our own industry to progress? At any rate I am excited by the number of analogies with several successful businesses that I keep on uncovering when I compare them with the print industry. But I also realize that if your aim is to develop a market or turn it on its head, doing that always requires a real dose of courage. You can even learn this from Ikea – products or services that don’t sell well, have been modified when they feature in the latest catalog. Reminds me somehow of the “fail fast” strategy adopted by several players in the online print sector.
And there is one last thing that you can learn from Ikea: no product and I really mean no product that Ikea launches on the market is dependent on a new saw or a new drill. Think about it…