IKEA, the Zara of the home furnishings

Source: IC Labs

Some time ago, IKEA made a wave of half-price Fridays, and the staple food was discounted in half, a Swedish meat ball for nine yuan nine, a spaghetti bolognese sauce for 13 yuan 5, and a cheese and herb cod steak for 13 yuan and nine cents.

I talked to my friend about it and was very emotional. In the past, when we shared a house in Beijing, we often went to IKEA on weekends to improve our food.

Seriously, don't look at it as a home furnishing brand, but the best level is actually its restaurant.

And its circulation design is very interesting, and it can lead directly to the restaurant when you enter the door, which is just right for us who are rushing to dry rice. Eat and drink to your heart's content, just walk down the crowd, buy some cups and other small items, and finally at the exit, one person will have another dollar ice cream, and you can eat it while walking on the way home.

So this time IKEA cut the price, the two of us recalled the lunch we had at IKEA in the past, and we were heartbroken: I didn't catch up with the good time.

However, many self-media are embarrassingly boasting about IKEA's wave of crazy Thursday and crushing the poor ghost package, I think it's very unsound.

In fact, IKEA's discounts on meals are essentially to promote discounts on other products, in fact, in the past six months, IKEA's home furnishing products have been discounted, with a scale of about 300 products. The discount is about six or seven folds, the original price of 999 sideboard dropped to 799, the original price of 899 TV cabinet dropped to 699.

But it's not enough to reduce the price, you have to publicize it.

IKEA's marketing department is still smart, since everyone is so fond of IKEA food, then the restaurant is 5% off.

Catering is high-frequency consumption, and there are topics and traffic, and if you discount it, consumers will easily know it.

What's more, IKEA only has a few stores, and the location is not so convenient, and the 5% discount on food and beverage is not very powerful, or even how much additional cost there is.

IKEA is actually advertising in a very clever way to give restaurants discounts, so that other products will be stained and some traffic will be rubbed.

This kind of marketing technique of selling dog meat on the head of a sheep, IKEA has played very well for many years.

01

Think about it, what is the most iconic area of the IKEA store?

Many people may think of its model room.

When I was in my early 20s, the IKEA showroom represented all my fantasies about a better life.

I even made a flag with my roommate, and when I made money, I bought a house in Beijing and renovated it into an IKEA model room.

Unexpectedly, ten years later, I have neither made any money, nor have I bought a house, nor am I even in Beijing.

The biggest lesson for me from this incident is that you can't put up a flag, you never know how many times it can hit you in the face.

Why is the IKEA model room who looks confused, it's very simple, people have a breath of life.

The so-called breath of life, that is, the traces of people's lives, details are very important. The bookshelf should not be empty, there should be books, the wall should not be too clean, there should be stickers, posters, and the kitchen hanger should be full of kitchen utensils and tableware. The most important thing is that every corner should not be arranged too neatly, too neatly to be inhabited by a living person.

This is very powerful, ordinary furniture brands put a bed for you in the exhibition hall, put a wardrobe, and turn on a milder light, and dare to say that you are a bedroom model room. But IKEA can't, IKEA has a special model room department, there are interior designers to decorate, a small space of a few square meters, can give you 50 or 60 SKUs to stuff in, this does not include purely decorative non-commodity elements.

More importantly, most of the ordinary home furnishing shopping malls attract investment on a brand-based basis, and the merchants rent independent shops to operate. The shop area is limited, and one or two model rooms will be arranged for you with care, and the merchants who don't care will directly make a showroom, so that the sales will follow you and ask you what you need.

But IKEA is big, and it will give you seven or eight dozen model rooms in one go, which is large and full, and covers all scenes at home, creating a sense of home atmosphere in an all-round way. With the breath of life, consumers are easy to think about. At the beginning, consumers imagined that the hand in charge of the wallet would be loosened, and business would be easy to do.

02

But if IKEA is just a master of dream making in a model room, it is not worthy of today's status.

A real business empire must achieve one-stop service of dream-making + dream-fulfillment. In the vernacular of the Internet, it is to plant grass and pull weeds to form a closed-loop link.

This link, in IKEA, is its moving line design. The classic IKEA store flow is like this: customers take the escalator directly to the top floor and then follow the signage all the way down. It will be easier to walk this way. The first stop is the model room we talked about earlier, which is responsible for creating fantasies and allowing you to plant grass. And the model room will also be arranged in strict accordance with the order of the living room, foyer balcony, dining room, kitchen, and bedroom, trying to give you a sense of reality.

After visiting this model room, it is the place to display the large pieces of furniture. At this point, the planting is over, and consumers really start to get into the rhythm of shopping.

After shopping in the furniture area in the first half, you will come to the household goods area in the second half, starting with kitchen supplies, then bedroom bedding, bathroom supplies, storage supplies, and home decoration products that are not just needed.

This is the bulk of IKEA's revenue, and it is also the essence of the circulation design.

In retail, there's a simple and crude principle: the more products a consumer sees, the more they're likely to buy. Sounds like nonsense, but it works. Why does Taobao want to engage in thousands of people and thousands of faces, and design goods into information flow? Why does Douyin add more and more live broadcast rooms with goods to short videos, this is the reason.

IKEA also takes advantage of this psychology, when customers follow the flow line designed by IKEA and go around the sea of goods, the "purchase switch" in their minds will slowly turn on, and they will unconsciously enter the state of buying, buying, buying.

Putting household products in the back of the finale is to let consumers enter the state, just out of the furniture area and into the household goods area. The unit price of furniture is high, and it is not easy to consume impulsively. The price of things such as dishes, chopsticks, bed sheets, pillows, and knick-knacks is relatively cheap, and customers may take them home after looking at them.

Moreover, putting the products with a low unit price in the back will give customers the illusion that the more they shop, the cheaper they are, and it can also trigger the desire to consume.

03

Speaking of a return line design.

At the end of the IKEA shopping line, which is close to the exit, is the large warehouse that Internet celebrities once loved to sit in the shopping cart to take photos and check in, the AKA furniture pickup area.

In fact, although there are model houses and home display areas in front, the vast majority of IKEA's furniture consumption is not in the front, but in the last piece. And because it is self-pickup, it is generally stored and sold in large quantities, the weight is not too heavy, and the price is not too high. For example, a small coffee table, a small bookshelf and the like.

In fact, these affordable furniture are the real amount of home furnishings in IKEA, and the big sofas, tables and chairs upstairs are just a disguise.

IKEA has released a data that in all product composition, only 20% of goods above 1,000 yuan are composed, and 40% are as high as 40% under 100 yuan. And in China, the average customer value of IKEA is only 140.

Therefore, the bulk of IKEA's revenue is actually supported by these small three-digit or even double-digit "small goods".

By the way, IKEA is also the sixth largest restaurant brand in the world, and 5% of global revenue is brought by restaurants. In China, the proportion is as high as 10% of revenue.

IKEA is actually a grocery store dressed as a furniture store, and I also work part-time in a large canteen as a side hustle.

04

As I said earlier, IKEA is very good at selling dog meat on sheep's heads.

What IKEA really sells is never the big furniture in the showroom, but the scattered small furniture and household items.

Many people say that IKEA has been abandoned by the middle class, but I think it is a misunderstanding, because the people we serve have never been the middle class. To be precise, IKEA's biggest problem in China is actually the misalignment of demand.

Anyone who has bought IKEA furniture knows that the characteristics of IKEA are that the design is good-looking, but the quality is average and the cost performance is not high. But this price depends on who you compare with.

For the real middle class who spent millions to buy a house and renovate hundreds of thousands, IKEA is not expensive at all, on the contrary, most products do not meet their requirements. They want solid wood furniture that can last for decades, or even heirlooms.

Therefore, IKEA's pink bubbles are actually sold to renters and young people.

The same is true for IKEA's positioning abroad. We all know that renting a house abroad is often a rough house, there is no furniture, at this time the most suitable choice is IKEA, the price is not expensive, the design is simple, the quality is generally not a problem, anyway, it will take three or five years.

So although IKEA seems to be positioned as the middle class in China, it has little to do with the middle class. On the contrary, it is most suitable for those who spend thousands of dollars to rent in first- and second-tier cities, which can improve the rental experience at a relatively small cost.

From this point of view, IKEA's real opponent is actually Freedom. The path is the same, compared with the general rental of some more premium, this part of the premium is reflected in the decoration. These decorations look clean and tidy, and they look very good-looking, but after living for a long time, you will still know the difference between fine decoration and private houses.

For IKEA, the best strategy is, of course, to reach the jump in the consumption level by influencing this group of young people, and then gradually upgrading to the coffee level.

For example, a young person who has just arrived in a big city to work hard and bought IKEA furniture, this consumer potential stock will eventually become a high-performance stock after five years, buy a house in a big city, settle down, and may continue to consume IKEA.

However, the reality is that IKEA has not made this leap, and prices cannot go up.

05

In other words, IKEA is the Zara of the furniture industry, and the main thing is that when you don't know what to buy, or the budget is not enough, buying this brand is a good choice.

Therefore, the problems they encounter are similar. There are now more choices in this basic consumer group.

IKEA's model house may be a killer for young people ten years ago, but today's young people open Xiaohongshu, what good-looking houses are not, open Douyin, what style of decoration has not been seen. Moreover, IKEA's main Nordic style, which was at the top ten years ago, has become slightly outdated by the 2020s.

In the field of groceries, MINISO, Taobao Pinduoduo, and all kinds of heroes are eyeing each other, and none of them are easy to mess with.

Therefore, IKEA's high-profile price reduction is not sinking, nor is it because it is abandoned by the middle class, but it is returning to cost performance and continuing to consolidate its advantages. As long as its price is low enough, with the brand effect and design concept accumulated over the years, it will still be favored by the original consumers.