Flatpack products
Following IKEA’s record-breaking global sales of €47.6 billion ($51.4bn) in its latest fiscal year, the furniture giant is spreading the joy a little, with IKEA employees in the US set to divvy up a bonus pot of $54m.
The bonuses come with the Swedish company in full expansion mode, announcing plans to slash prices, open 8 new stores, and set up 900 new pick-up locations over the next 3 years, as it looks to win over price-conscious American consumers.
Fat-stack profits
Like many retailers, IKEA’s business model works best at scale. Enormous, meticulously styled showrooms, packed with as many products as possible, help entice customers to spend an afternoon filling shopping carts with everything they need for their homes, and — often — many things they don’t. Indeed, if you’ve ever found yourself wandering aimlessly around IKEA, you’re not alone. IKEA’s store planners have mastered what’s known as the Gruen effect — leading you, both mentally and physically, through a dazzling and immersive store to tempt you into making impulse purchases.
That understanding of consumer psychology has worked wonders for IKEA — so much so that just looking at the chart of its sales for the last 22 years, you would be hard-pressed to pick up on the global recession of 2008/09 or the pandemic in 2020/21, as the IKEA juggernaut powered on. The Swedish company has also cracked the digital world, with 23% of its sales, or nearly ~$12bn, coming through online channels.
