IKEA: The Japanese Misadventure and Successful Re-entry

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Case Details:

Case Code : BSTR289
Case Length : 18 Pages
Period : 2002-2008
Pub Date : 2008
Teaching Note :Not Available
Organization : IKEA
Industry : Furniture Retail
Countries : Japan

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"The Japanese market and consumers were not ready for IKEA, and IKEA was definitely not ready for Japan at the time [in the 1970s and 1980s]… Now we have done the major markets in the world why shouldn't we be in the second-biggest retail market in the world?"1

- Tommy Kullberg, CEO, IKEA, Japan, in 2006.

"Multinational companies entering Japan often don't spend enough time to understand the nature of the competition here, which is usually fairly fierce, and the so-called unique needs of Japanese consumers. The key challenge for IKEA will be to translate their very globally successful concept, the type of design they offer and their retail format, into an acceptable Japanese way."2

- David Marra, Principal, AT Kearney3 in Tokyo, in 2006.

"You would think that Japan would be the absolutely perfect market for IKEA. If they can crack the whole service concept... so that there is less work for Japanese shoppers, then I think they have a better chance to succeed this time."4

- Elen Lewis5, Business Journalist, in 2006.

IKEA Gives Japan another Try

During the second week of April 2008, the monorail commuters on the Kobe Portliner Monorail, Japan were in for a surprise. When the monorail chugged in that morning, instead of the usual grey and steel colors, the monorail's exteriors were painted in bright colors with different motifs like flowers, checks, etc.

More surprises were in store as they entered and found bright and stylish upholstery and curtains inside. The revamp, they later learnt, was a part of the promotional campaign by Swedish furniture retailer, IKEA Group6 (IKEA) to publicize the opening of its third outlet in Port Island, Japan on April 14, 2008.

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1] Sachi Izumi, "IKEA Assembled for another Go at Japan,"www.thestandard.com.hk, April 8, 2006.
2] "Size Matters as IKEA Returns to Japan,"www.thelocal.se, April 16, 2006.
3] A T Kearney Inc. is a US-based management consulting firm.
4] "IKEA Tries to Furnish Japan, Again,"www.uk.ibtimes.com, April 24, 2006.
5] Elen Lewis is the author of the book Great IKEA! A Brand for All the People.
6] Inter IKEA Systems B.V. located in the Netherlands is the owner and franchisor of IKEA concept. The IKEA concept focuses on the company's commitment to product design, consumer values and solutions. According to the company: "IKEA concept: At the IKEA store you pick up what you want, take it home and put it together yourself. You do a little work so you don't have to pay someone else to do it for you. And we design our products so they can be made at a low price and then constantly work to push this price even lower."

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