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What retail is hired to do: Apple vs. IKEA

“Within five years after discount retailing pioneer Korvette’s opened its first store in 1957, over a dozen copycat discounters had emerged. In contrast, the giant discount furniture retailer IKEA has never been copied. The company has been slowly rolling its stores out across the world for [close to 50] years; and yet nobody has copied IKEA.

Why would this be? It’s not trade secrets or patents. Any competitor can walk through its stores, reverse engineer its products and copy its catalog. It can’t be that there is no money to be made: its owner Ingvar Kamprad is the third richest person in the world. And yet nobody has copied IKEA.

Our sense is that the other furniture retailers have followed the positioning paradigm and defined their business in terms of product and customer categories, which are readily copied. Levitz Furniture, for example, sells low-cost furniture to low income people. Ethan Allen sells colonial furniture to wealthy people.

IKEA, in contrast, has organized its business around a job to be done: “I need to furnish my apartment (or this room) today.”  When this realization occurs to people anywhere in the developed world, the word IKEA pops into their minds. IKEA is organized and integrated in a completely different way than any other furniture retailer in order to do this job as well as possible.”

Integrating Around the Job to Be Done (Clayton Christensen, Harvard Business School; Scott Anthony, Innosight LLC, Scott Cook, Intuit; Taddy Hall, Advertising Research Council).

IKEA is the world’s leading furnishing retailer and an amazing success story. As Christensen points out the success is all the more perplexing because it seems perfectly defensible. Nobody has tried to duplicate or undermine IKEA.

Positioned around a clear job-to-be-done it integrated design, manufacturing and distribution (including warehousing) as well as “big box” retailing as an experience.

This may sound familiar.

Apple’s entry into retail depended on a clear job-to-be-done, design, carefully selected merchandise and retailing as an experience. Similar to IKEA, Apple also became a dominant player in its segment and even achieved seventeen times better performance than the average US retailer in terms of sales per square foot.

At first glance they seem to be similar businesses in terms of strategy or “architecture” but how do the actual businesses stack up? Can we find data to support any claim of similarity.

Let’s first have a look at the geographic focus of both companies. The graphic below shows that Apple’s retail operations are focused on North America with 74% of its 365 stores in the USA and Canada. By contrast, and maybe as much based on its origin, 73% of IKEA’s 325 stores are located in Europe[2]. Unlike Apple however, IKEA has grown much more slowly. IKEA’s first store was opened in 1958 and had 6,700 sqm (72,110 sqf). The first two Apple stores opened in May 2001. Since then the number of Apple stores grew significantly faster (CAGR: 46%) and surpassed the number of IKEA stores in 2010.

The other difference is in sales growth. In 1954 IKEA’s revenue amounted to approximately $1 million but has grown steadily (note in chart below that first five bars represent decades). In contrast, Apple has grown more rapidly and is also more profitable in terms of margin.

Part of the difference in growth is that Apple was able to subsidize its entry: Apple’s retail operations were loss making for the first three years while IKEA had to rely on financing from its own cash flows.

Eventually, Apple retail became self sufficient and is now more profitable than IKEA. The following charts provides an overview of the economics of Apple’s retail operations and IKEA side-by-side:

While Apple’s revenue per store is still growing, IKEA’s business seems more mature and stable. This makes sense because furniture prices are stable and the number of products (SKUs) depends on available area per store which cannot grow. Apple on the other hand is limited only by traffic issues. Its products take little space and can even be stored off-site.

Speaking of traffic, with 655 million visitors in 2011, IKEA had more than twice as many visitors in its stores compared to Apple. However, each visitor spent about $27, while Apple’s store visitors purchased for almost twice as much.

The same story applies in employee productivity. IKEA has three times the number of retail employees, but Apple’s revenue per employee are 1.5x bigger than IKEA’s.

The largest difference is in the efficiency of real estate. In terms of total sales area IKEA’s operations have more than 30 times the sales floor of Apple.

As much as these numbers tell a story, they don’t help us understand the cause of success. The two companies have completely different operations and their metrics seem at odds to one another. What works for one could never be applied to the other.

The fact is that there is no magic economic formula for disruptive retail. For example, by measure of sales per square foot, IKEA would not even make the top 20 list of US retailers.

However, there is one major thing they have in common: a clear formula for positioning your retail operations. Both operations are positioned around a job-to-be-done that has a high priority in people’s life. As mentioned in the opening quote, In IKEA’s case it is “I need to furnish my apartment (or this room) today” and in Apple’s case Tim Cook said it best:

“Our retail stores provide the best buying experience and the best customer service anywhere. And while that’s important for a buyer of a Macintosh, in some ways it’s even more important for a buyer of an iPad or an iPhone or another post-PC device because these devices are new to many people. There needs to be a place to discover them, to learn about them before they are purchased, and learn how to get the most out of them after they’re purchased.” Tim Cook, March 2012

Apple offers a place where people can discover and get answers about technology without the pressure of making a purchase. The job is to simplify that which is complex for a price premium.

IKEA offers a place where people can get exactly what they need exactly when they need it. The only downside is that “some assembly is required”. In a way, their job is to introduce some complexity in exchange for convenience and a discount.

In the end, they both get the job done and are amply rewarded for it.

Notes:

  1. Including 13 in Russia.
  2. The acquisition of UK-based furniture retailer Habitat in 1992 is the only exception.
  • Tulse

    As always, the analysis is spot on, but I have to complain vigorously about the horizontal scale on the first two charts.  It is simply misleading to the point of absurdity to have the intervals change from decades to years.  This choice is especially puzzling to me since a consistent scale would have been far more effective at demonstrating the points made about differences in growth rate.  (Indeed, I’d argue that a far better comparison would be to overlay the data based on years from opening, rather than actual year, as that shows the differences in initial growth.

    • httpeter

      In this article (that I like very much) both Apple and IKEA are called ‘retailers’. I am wondering if this is the proper term to use since they both ‘control’ their own manufacturing and stores. If your regard copying an entire supply chain instead of the shop at the end of it, maybe that explains why IKEA has not been copied….

      • Tatil

        That is not unheard of in retail though. Many clothing and shoe brands design their own merchandise, order them from third party suppliers under their close supervision and sell them through stores using their own brand name. IKEA and Apple are not doing something that different. I don’t know about Levitz, but Ethan Allen, Pottery Barn and Crate & Barrel seems to be following that same model in home furnishings and furniture. Their “shop” end is where the difference between them and IKEA becomes visually obvious. I did not think about this before reading Horace’s post, but yes, it is quite interesting that there are not other chains positioning themselves against IKEA. 

      • http://twitter.com/disc1979 Dirk Schmidt

        We are talking about Apple’s retail operations and IKEA’s retail operations. Both are of course integrated, but we are only looking at the “front end”. The only difference is that Apple products are also sold through other third party channels.

    • http://twitter.com/disc1979 Dirk Schmidt

      I can see your point. Since IKEA is a private company, it was difficult to find all that information.
      We would have liked to compare there growth in early years (which you can a bit > first decade of IKEA vs. Apple).

  • http://kaizenity.blogspot.com/ FalKirk

    “…the giant discount furniture retailer IKEA has never been copied…Why would this be?

    IKEA…has organized its business around a job to be done…IKEA is organized and integrated in a completely different way than any other furniture retailer in order to do this job as well as possible.”
     I LOVE this article. There are few things more gratifying than have an “Of course!” moment. Thanks, Clayton Christensen. And thanks, Horace Dediu, for sharing, clarifying and elaborating.

    • http://www.asymco.com Horace Dediu

      We should have pointed out that the absence of a duplicate Apple store experience is rooted precisely in the same cause as the lack of duplication of the IKEA store experience. Any retail expert contemplating the question would find both approaches impossible, and continue to do so regardless of the success. A furniture retailer cannot make his own designs, products and warehouse sized stores any more than an electronics retailer can make his own devices and operating systems.

      • http://twitter.com/handleym99 Maynard Handley

        Is it not the case that they have been copied, just copied badly?

        I’m thinking, for example, of B&O. At a superficial level they do what Apple does — make their own (somewhat niche) stuff and sell some of it in their own pretty stores. But of course B&O are marginal while Apple is not. 

        The difference I think (yeah yeah, some of you think B&O are the greatest ever) is that the actual product does matter. Apple do a great job with the manufacturing and with the retailing, but it starts with having a specific product (not a “product category”) that many people actually care about and consider unique, whereas to most people what B&O is selling are strange (and IMHO ugly) looking amplifiers, speakers, TVs and CD players that cost at least 10x what the competition cost, and don’t obviously justify that extra cost.

  • http://twitter.com/macintux John Daily

    Apropos of absolutely nothing, I had never heard of IKEA until a few years ago, and I have no idea whether I’ve ever seen IKEA furniture in the wild. Clearly I’m not part of the developed world!

    • LRLee

      I wonder if you’re not near any freeways. From my experience here in LA and Southern California, IKEA loves being near freeways. And yeah, you usually don’t wonder if you’ve seen an IKEA. They’re stores are huge and blue and bright yellow with the word “IKEA” in very large letters. My guess is that being near a freeway is no accident. Buying furniture you can take away requires a car. They don’t skimp on parking lots either.

      • http://twitter.com/macintux John Daily

        Nearest stores are hours away, so I’m not surprised I’ve never seen an IKEA store, but I’m still wondering why, if IKEA is such a household name, I’d never heard of them at all.  Probably just another example of the fairly insulated existence of a midwesterner.

      • marcoselmalo

        Well, if it’s true that Ikea uses a hire-for-jobs model, clearly they want to go where the jobs are! This explains their great presence in developed and urban areas of the developed world. (It also explains why I’ve never seen an Ikea in Mexico. While there is a growing middle class, it’s not large enough to sustain an Ikea “invasion”.) If Mexico ever does see an Ikea invasion, I imagine we’d see them open in D.F. (Distrito Federal, Mexico City), Guadalajara, Monterey first, then expansion to Mexico’s industrialized cities, León, San Luis Potosí, others.

        Apple also has the option of doing store-within-a-store, or just having a retail presence in some stores. Here in Mexico I see Apple products at Office Depot and Liverpool (a department store). There is a Apple specialist retail in Queretaro, about an hour away from me (San Miguel de Allende).

        There is an opportunity here for companies like Ikea and Apple

      • marcoselmalo

        There is a retail opportunity here for companies like Ikea and Apple, but possibly they are waiting for the middle class market to mature. Already we have seen Walmart make great inroads here (not all their efforts here have been ethical or even legal!). Walmart is a solid middle class brand here in Mexico.

      • Moises

        There is actually an Ikea copycat in Mexico.

        They are called Idea Interior and they have a few stores allready.

      • marcoselmalo

        Thanks, I’ll check it out!

        Wait, I’m getting a background with nothing. Must be Flash which doesnt play on the ipad, of course. A lot of Mexican sites are in Flash, unfortunately, with a lot of bad Flash design. No, I don’t want to listen to techno dance while looking at your restaurant’s menu.

        Sorry, I rant. I’ll try to make it on topic: Flash is a good example of technology that used to have a job-to-do, but that job-to-do became give-employment-to-Flash-developers over time, rather than creating useful and engaging websites as originally envisioned.

  • Danny Mulligan

    Minor quibble – there was one other US based competitor to IKEA called STØR – see the Wikipedia article http://en.wikipedia.org/wiki/ST%C3%98R  They were relatively short lived, but were a clone of IKEA.  The Houston location is an IKEA store to this day, according to Wikipedia it is “one of only a few independently franchised IKEA locations in the world”.

    • http://twitter.com/disc1979 Dirk Schmidt

       Thanks for that contribution. I missed that during research phase.

  • Guest

    IKEA acquired a 4-store furniture chain named STOR in the Los Angeles area in 1992, doubling (I think) their US store count. IKEA sued STOR when it opened in 1987 for too closely copying its catalog and displays.
    http://articles.latimes.com/1989-06-20/business/fi-2491_1_james-d-stadtlander-ikea-storhttp://articles.latimes.com/1992-01-01/business/fi-1212_1_furniture-retailers

    I remember the STOR I visited having two floors, a serpentine layout, a cafeteria, Scandinavian-ish names for all of its products, and so on. The rebranding as IKEA seemed uneventful.

    • http://twitter.com/disc1979 Dirk Schmidt

       Thanks for that contribution. I missed that during research phase.

  • http://twitter.com/AsaInTheMiddle Åsa Stenström

    I was a little disappointed by this blogpost. I hoped to find an analyze about how they have developed their complex systems, their eco-systems, which is the real obstacle for competitors. It can’t be copied “over night”. A lot of companies tries to copy both IKEA’s furniture and Apple’s devices – but when they try to copy their eco-system their efforts are lame. 

    • capnbob67

      Give it a chance… first ever comparison. Horace can get the Girl with the Dragon Tattoo on it, quick sharp. If you want the book, you’ll have to wait… and pay ;-)

      Anyway – you sound Nordic – don’t you already have the inside skinny on IKEA? I thought it was handed out at Kindergarten?

      • Froken

        Here’s an insight: when they decide to design a chair, they don’t start with “how would the chair look like” or “in what context would you sit on it”, they start with “what is the most useful, comfy, pretty chair you can produce for a retail price of x amount of Swedish Crowns, tops”. 

    • http://twitter.com/hi_endian hi-endian

      Agreed. One of the reasons that IKEA thrives is because it spends so much energy on reducing the cost of their product, but doing so in creative ways that are hard to copy, such as making everything fit in the smallest amount of packaging possible.

  • rashomon

    I still have some shelves/bookcases bought at the Orange County, California STOR in about 1992, during its going-out-of-business sale. It was very similar to the IKEA store that initially replaced it at the same location; my initial impression was that I preferred the STOR furniture designs, but they were really very similar, as were almost all visible aspects of the two retailers.

  • http://twitter.com/bennomatic bennomatic

    I’m still amazed by Apple’s success in retail.  I remember in high school, a Gateway store opened up, and after some initial interest, that place remained empty but for one employee at any given time.  They may as well have been selling eight-track tapes, although I imagine that even those would have been collectible and would have garnered some interest.

    Then came Microsoft’s first attempt at retail, when they opened a store at the Metreon in SF.  Again, they certainly got some customers, but there was no real ongoing draw.

    On the flip side, the Sony Style store (also at the Metreon) did well for many years, and may still be doing well.  It was a nice showcase for the wide variety of consumer electronics that they offered, but it was still cluttered and the customer service was basically non-existent.  It was like walking through an electronics-focused, very well-lit and clean Walgreens.

    The Apple stores are, on the one hand, like a cross between the Sony Style store and a middle eastern bazaar: consumer electronics focus and nice lighting and display, but with an intimate, nearly one-on-one sales experience, even when there’s a crowd.  On the other hand, they’re also like the Sony store crossed with a Rolex or Tiffany dealership, where the number of products for sale is reduced to a handful of high margin items.

    Switching to the Apple/Ikea comparison, beyond the job-to-do concept for retail, they both have a job-to-do concept for their products.  In both companies’ showrooms (and for Apple, in their commercials), you not only see the products themselves, but you see them in context.  In the Apple store–last time I checked–there was a music section, a photos section, a movie section, and a kids section.  The range of devices was on display, emphasizing not the specs, but rather the jobs they could do.  There were also displays focused on the products themselves, but that was clearly only part of the purpose of the store.

    Similarly, in Ikea, you might have a bunch of beds in the middle of the showroom in the bedroom section, but then around the outside, those beds are placed in context with drapes, shelves, dressers and more.  And kids’ rooms are separate from adults’ rooms, which are separate from living room, kitchen and more.  So one product is likely to show up in multiple locations, just like at an Apple store.

    The differences are many, but I think the core idea of putting a product in context is an important one.  I guess in clothing retail, that’s what the mannequins are supposed to do, but those rarely show more than how the clothes look on a person.  In Ikea and the Apple store, you don’t need a lot of imagination to see a world of possibilities with each product, as many of those possibilities are ready-built and presented for you.

    • Joe_Winfield_IL

      Great point.  I’m not sure why this type of marketing escapes nearly every business.  I am always amazed when I see expensive commercials with excellent production quality that don’t deliver a message.  The “can you hear me now” guy was annoying, but everyone knew what Verizon stood for.  Same with the Energizer bunny.  Most technology commercials fail to simply show a practical use for a device.  Instead, they rely on:

      -FAST!  It’s really, really super amazingly fast!
      -Looks.  Check out the rounded corners on my new Lumia.  
      -Spec sheet.  Our device has all these different attributes, defined by numbers and acronyms.
      -Metaphors.  Electricity, Robots, Cheetahs, etc. are all popular recurring visual metaphors for the virtues of a device.
      -Cool. You’re more masculine and more self assured if you choose our product.

      Contrast with Apple.  Even on the newest commercials featuring celebrities, the product is on display.  When Samuel L. Jackson cancels golf and quips about “hot-zpacho,” he is showing how Siri’s scheduling and reminders can help him prepare for a date night.  In this commercial, Sam Jackson isn’t a spokesman selling the iPhone; he is just an actor.  Siri is the one doing all the selling.

      • capnbob67

        I think the intended impression is that Sam L J is NOT being an actor – that SLJ, the person, the human being, can use Siri to improve his already awesome “muthafunkin” life!

        As much as we know he’s being paid, we also know that anything we see there is utterly plausible and probably happens (except that SLJ probably has a real assistant for every night except date night).

      • Joe_Winfield_IL

        Well phrased.  That was a clearer version of what I was trying to say.

      • Hoon

        Reminds me of the recent ad I saw where a guy was filming a fashion shoot on his phone while skydiving out of an airplane.

        I remember remarking to my wife that so many of these ads are focusing on how “extraordinary” their products are sometimes by trying desperately to associate the product with something extreme or super elite.

        Apple’s ads generally try to emphasize that what will amaze you about their technology is how seamlessly it will integrate and improve the common everyday moments in your life. 

    • marcoselmalo

      The thing about the Gateway Country Store that I remember is that most of the computers were turned off and the staff actively discouraged visitors from trying their machines. Unless you had cash in your hand, it was look but don’t touch. Even then, the sales person would hover in an uncomfortable way. I never felt welcome there.

      The other thing I remember was that the GCS seemed like a repair depot. There were stacks of PCs in and around the service area, which was really more of a drop off point for some other service center or repair shop. I’m sure having piles of broken computers on the floor did nothing to help the GCS.

      My guess is that Gateway never clearly defined what they wanted to do with the stores or they didn’t define how they were going to do it. The feeling I got was that they didn’t have anyone in the company that new how to do retail. Contrast this with Apple.

      • capnbob67

        I get that tech graveyard feeling at BB Geek squad areas – it’s kinda like having the abattoir visible from the steakhouse. Puts me off the BB experience.

        Genius bar looks like a futuristic hospital at worst where everyone can be cured with a Star Trek hypo-spray…   pssshhhhttt – you’re cured.

    • marcoselmalo

      I just remembered something I came across a few years ago that ties into what you wrote. Another job-to-do that Ikea stores satisfy, with their functional themed areas, is as a movie set. Watch this soap opera, Ikea Heights, shot in the Burbank, CA store. The rumor was that someone in the production had a relative or friend in the store management that was willing to look the other way as long as the production didn’t bother or disrupt the customers.

      Here’s the link:

      • http://twitter.com/hi_endian hi-endian

        This is awesome.

    • http://twitter.com/hi_endian hi-endian

      The Sony Style store is long gone. The Metreon is a retail disaster, with a terrible layout that isn’t at all conducive to shopping.

  • http://www.facebook.com/alen.teplitsky Alen Teplitsky

    the awesome part about ikea is that almost everything is in stock. or delivery is a few days away.

    2 years ago i bought a huge ikea wall unit and looked at expensive stuff as well. the expensive stuff sold by small mom and pop stores takes weeks or months to be “ordered”. ikea delivered in a few days. 

    other things i buy at ikea i just grab from the warehouse.

    i bought a MBP last december and while waiting for it i realized that Apple stores are like the old Circuit City stores. seriously, i ordered online and went to pick it up. i had to wait like 15 minutes for it while there was a stack of products on the counter for people who walked in off the street

    • capnbob67

      That one feature is like CC (I used it too), but I don’t think there is much else comparable between Apple retail and CC? Or did I underestimate the movable CC Idiot Bar (where all the staff would congregate and shoot the breeze while I needed a question answered).

  • http://wmilliken.livejournal.com/ Walter Milliken

    I find myself wondering where the difference is from the branded-store clothing retailers in the US, which have a similar design/(contract) manufacture/distribution/retail model. Is their job to be done simply too obvious (I need a new pair of jeans/shoes/etc.), so that everyone already uses the same model? And is it that the entry costs are just so low that it’s easy to duplicate everyone else?

    • Luis Alejandro Masanti

      @openid-100958:disqus We are men and we “replace” our used clothes.
      Maybe, Apple’s places are more comparable to “women’s fashion stores”: girls buy to look nice, although they also buy because “They need a new pair of jeans/shoes/etc.” (In other words, their “needs” are fueled by other reasons.) 

    • Hoon

      It will be interesting to see how JCPenny performs. If Ron Johnson turns that ship around we may have a contrasting data point that more clearly highlights the retail store “job to be done” vs. the product “job to be done”

  • bbcbbm

    Facts:

    1) Apple stores will not do well without Apple’s great products (hw, sw, ecosystem, form factor, design, reasonable pricing)

    2) Microsoft is copying Apple stores, but Microsoft stores will not do well because they don’t have good products.  Same goes for Dell and HP if they were to try retail.

    No need to over think Apple’s retail efforts. Clearly, people need a place to try out and touch these products (touch is the new user interface right?)  before they buy, so having a retail store is good and necessary for Apple.  Without excellent products, these retail stores would be empty. BTW, Samsung tried a retail store two blocks from an Apple store a few years ago in California, Samsung closed its doors after one year.

     

    • http://www.asymco.com Horace Dediu

      But other stores sell Apple products as well. Some sell only Apple products. Why aren’t they as successful as Apple?

      • bbcbbm

         I have one data point:

        I buy from the real Apple store (retail or online), because I know they have the best return policy (vs. Best Buy for example).  If the iPad was 5% cheaper at Best Buy, I would buy from Best Buy for sure.  If I can buy the iPad from Amazon sales-tax free with free shipping, I would buy from Amazon for sure.

        We all go to the Apple store to “touch” its products and to ask Apple’s better staff questions of course (e.g. about iCloud or some other technical issues).

        Apple is doing its retail right, but I still think people should not “over think” its success.  There is no magic.   It’s the products (the entire ecosystem).

      • Kizedek

        I don’t know. There seems to be something a little “magical” about it. If you go to Regent Street or Covent Square Gardens in London (and I presume Manhattan locations, too), then you know it is packed day and night by locals and tourists alike, despite the presence of high-end name-brand boutiques and famous department stores all around. It’s like Hard Rock Café used to be. I could go to Oxford Street and Regent Street and visit ONLY the Apple Store (and maybe Hamley’s toy store since it is across the street).

        The only stores I make any effort to visit if I am in the vicinity would be Apple, Ikea (going tomorrow) and the Lego store. (funnily enough, or coincidentally, my kids feel the same way). Would we visit a Converse or Nike store, any other brand? no.

      • Hoon

        Niketown in Manhattan might sway you.

      • http://wmilliken.livejournal.com/ Walter Milliken

        I think some of it is location — at least, several of these other stores that I know of (especially Apple VARs) are small operations tucked into low-cost, out of the way locations. Low traffic, not particularly great environment, very different experience. The big-box stores are different, but they’re busy with other stuff with bigger margins (which doesn’t sell as well, see also Best Buy and Radio Shack). And I go into Best Buy only with the greatest reluctance, about the only store I dislike more is Walmart.

        Also, I’m not sure how big reseller margins are on Apple products, but from what I’ve read, it’s unusually small. They have to make money on the accessories. Apple doesn’t need to worry about this in their stores, since they get the full profit, and maybe attribute it to the point of sale in that case. The VARs and other resellers have to leave a hefty chunk of the profit margin to Apple.

      • capnbob67

        I was staggered at how low the retail margins on Apple devices is at resellers. I always (naively) assumed that it would be like groceries, clothers or CPG where there is a 30-100% markup depending on product that pays for the capital intensive stores etc. Retail net margins are single digit so I assumed that it was how all retail worked. You couldn’t have a store without wide retailer gross margins. Then you find Apple that gives a store $25 or $50 on a $600+ device and not much more on a Mac and my jaw drops. Obviously the store wants to sell Apple gear, attract people in, upsell accessories etc. but I’ve never seen an OEM with such pricing power over the retail channel. No wonder there are rarely any sales on Apple hardware.

        It also says that Apple is not heavily disadvantaged where it does not have its own stores (from a margin POV). I would still imagine that Apple in its own stores also really does want to upsell with each device (esp. Applecare which is probably their best margin product) to offset the high fixed costs of their high-traffic stores.

        As we’ve all said before, Apple retail is worthy of its own blog and scholarly articles (like this one) and even books of lessons.

      • Hoon

        It would be interesting to see how a store like Tekserve in NY does financially. They not so long ago did a major renovation and upgrade to their store. They offer repair and sell a huge number of Apple-related products as well as classes. I would imagine their actual Apple product sales aren’t that huge a part of their bottom line (course I’m guessing) but they may have been able to tap into the halo effect.

        They are also a store that pushes their personality quite a bit although I would say it’s quite different from the Apple Store.

      • http://twitter.com/handleym99 Maynard Handley

        One reason to buy from Apple stores (this is actually a real factor in my purchases and those of my friends) is a no-questions-asked two-weeks return policy. This gives one a feeling of comfort especially when buying something one is not quite certain about (in my case buying an Airport Express two years ago which I verified, sadly, still had such godawful latency issues when controlling the sound from iTunes that it was unpleasant to use). 

        Best Buy, as a counter example, has what policy exactly regarding returns? 
        As a practical matter, everything I’ve returned to them (eg counterfeit displayPort to HDMI adaptor that didn’t work; iPad 3 case that didn’t on/off the iPad because of the magnet issue) they’ve accepted graciously and without complaint, but these were clearly defective items. I don’t know if they’d accept a return whose only complaint was “this just isn’t a very good piece of technology — ship it back to the factory and tell the vendor to try again”.

      • http://twitter.com/steve_slim Steve Kim

        Most average consumers don’t feel comfortable at high-end, luxury, chic stores. Apple stores have these qualities without the alienation. Everyone feels welcome. It becomes a nice place to visit for the sake of visiting.

      • Hoon

        To me it seems like the job the Apple Stores (not the products in the stores, but the stores themselves) are hired to do is to become a community hub. 

        There is a focus not just on display of product but on creating a group. Large open spaces with easy visibility. The idea that the sales experience (including checkout) can come to you or can even be handled by the individual on their own terms (via apps and in-store pick-up). The tables are laid out such that people are constantly standing across from other people without being separated by aisles (as they would be in Best Buy for example). 

        When I’m in an Apple Store I feel a part of crowd as I would in a restaurant. As in a good, bustling restaurant there is attention paid to the individual and the sense of individuality but the importance of a lively crowd is just as important. That sense of a crowd is created even when consumers are at low tide by the sheer number of Apple employees on the floor. The stores never really feel empty.I feel that IKEA has a somewhat related position. More than the job being “furnish my house right now today”, I think it’s also about a sort of “instant home” – a shortcut to a sense of style, color, pattern, overlapping with an architect’s or interior designer’s concern with pragmatic use of space or constraint, all focused on creating an appealing sense of place and, by extension, a ready-made sense of identity. I think many traditional furniture stores don’t tackle this aspect of it, focusing on products and not the narrative. 

        Walking through a Crate and Barrel, I’m aware of individual products. Walking through an Ikea, I’m aware of small environments. You try on environments more readily and the sense of assuming an identity is augmented by the fact that you then go gather these items and make them yourself. 

    • Hoon

      Samsung makes at least some good products though as evidenced by their strong sales in electronics. I would think your example actually points to the things that the Apple Stores are doing that run in parallel with the strength of their products.

  • Luis Alejandro Masanti

    Although I have no experience neither in Apple nor IKEA stores (I live in Argentina), a “big” argument towards Apple’s success is on personnel’s attitude (and no percentage on sales approach).
    Do IKEA’s employees sale on commision?
    Are they are, as in Apple, just giving customers a good buying experience?

    • Froken

      As a former IKEA employee, the answer is to the first question is: no, no commission. But once a year all of the company’s profit made during one particular day is divided equally among all employees of the company.
      Second question: Working there you are encouraged to give customers the best buying experience possible even if it slows down your productivity. You do monitor your own productivity (sales per hour) but only as a means to evaluate yourself, you’re not graded or anything like this.
      I only worked there a few months when I was a student but very much enjoyed it because they make you feel valued as employees (at least in the warehouse where I was working, can’t speak for all of them) and they actively listen to what the workers tell them. We had many feedback meetings where we were encouraged to suggest improvements, and 80% of all changes they make in the store and in the work environment actually come directly from employee suggestions. So it’s not just about flat furnitures: it’s flat management too. I quite liked it.

      • Froken

        Also, IKEA works closely with the ILO to make sure their factory workers don’t use child labour and have decent wages and working conditions, whereas Apple is infamous for having Chinese factory workers commit suicide over horrible working conditions. Just this point makes the two companies eons apart IMHO. 

      • Jake_in_Seoul

        “Apple is infamous for having Chinese workers commit suicide over horrible working conditions.”

        Groan, magical thinking? Just keep repeating this myth a few more thousand times and maybe it will turn out to be true? If you’re even the slightest bit interested in challenging your misconceptions about Foxconn and Apple, check out the latest article on the topic floating around the: “Foxconn workers talk about jobs, work with Apple” featuring discussions with actual workers. Among the revelations: “But Foxconn, also known as Hon Hai Precision, offers among the best conditions for employees among electronics manufacturers in China, and its jobs are highly desirable” and the paranoid fear often heard in China that the controversy over Foxconn in the U.S. is part of a larger agenda to suppress China

      • Jake_in_Seoul

        Also, before rhapsodizing on the joys of working for IKEA look into the reasons why their factory workers in Danville, Virginia have been so unhappy.

      • TLonnegren

         Please, read the statistics before talking about “Chinese factory workers commit suicide over horrible working conditions.”
        The suicide rate amongst Foxconn employees is about one third of the suicide rate here in Sweden.

      • Aguest

        “Infamous” perhaps, but not actually guilty–rate of suicide at supplier facility turned out to be no higher than China overall.  Also, vaccines don’t cause autism, and President Obama really was born in the United States. 

  • http://twitter.com/Niilolainen Niilo

    I would pay for this kind of content

    • http://www.asymco.com Horace Dediu

      There’s a Donate button to the right which offers the option but not the obligation to pay.

  • Christian Lindig

    “Similar to IKEA, Apple also became a dominant player in its segment and even achieved seventeen times better performance than the average US retailer in terms of sales per square foot.”
    A little nitpick here: is sales per square foot following a normal distribution? I doubt it and therefore the average might be not such a good reference point.

  • Morgan

    Horace,

    While you alluded to it, I am still not sure what an iPhone is hired to do. A smartphone is required to do so many different things that its job description can get very long.
    What would you say is the iPhone’s job description. And how is this different from say the Galaxy SIII from Samsung.

    • Kizedek

      Hiring an Android smartphone differs from hiring an iPhone in much the same way that hiring a windows PC differs from hiring a Mac…

      Both Windows PCs and Android smartphones are hired to *be* computers,

      While Apple Macs and devices are hired to *do* computery things, without the user realizing a (traditional) computer is involved at all!

      Macs, and iOS devices, are truly the “computers for the rest of us”. They are designed to recede into the background and disappear as much as possible, not make a nuisance of themselves.

      This might sound like semantics or some irrelevant philosophical nuance, but it is very real (though hard to explain — hence the hands on Apple stores). Those who pick on price or spec lists simply miss it — and miss out.

      • Morgan

        Thanks for jumping in on this Kizedek. To a certain point i agree with you about iPhones help you do ‘computery’ things.

        I would word it as :  the iPhone enables an Apple curated digital lifestyle. 

        however with the Samsung SIII and many of the other Android devices i would say they are hired to : put the power of mobile computing in your hand (sometimes at a premium, sometimes at a discount).

        Sure most Android marketing focuses on specs, capabilities and features, but i believe the average consumer glosses over the details and asks only if they want an Android or an iPhone. And most could not tell you why Android is better or worse than and iPhone. Yet most could tell you that an iPhone is considered the best.

        So the question is…do people want to go the Louvre (Apple) to see their art, or find their art in the real world (Android).  

      • Kizedek

        Agree with everything, except your analogy…

        Because, of course, the Louvre IS the real world. The facsimile of the Louvre or the Eiffel tower in Las Vegas or Disney World is NOT the real world.

        And that is the whole issue (see my above reply to capnbob67): Apparently, “performing computing tasks in a certain prescribed manner” is the real world, and actually accomplishing the task with some measure of ease and enjoyment and sense of pride in the result is a pure fairy tale. 

      • Morgan

        Ok i am officially busted on poor wording, i would change real world to the non-curated world. And the Louvre to a curated repository of the best art with an access fee  ;) (please not art debates…i don’t even know what i like, much less what is art)

        So to beat a dead horse, the iPhone is hired as a solution to your previously frustrating technological experiences, and an access portal into Apple’s art museum (content).

        The weird thing is…this is essentially the messaging that Windows Phone is spewing (i.e. smartphone beta test, live tiles….); and no one will touch them with a ten foot pole. And yes i recognize how ‘great’ the third ecosystem is ;)

      • Kizedek

        Yeah, possibly. But I think that wouldn’t account entirely for its success (if hired merely as a solution to previous frustrating experiences). Because, on paper, it shouldn’t solve that.

        So, there has to be something a little bit “magic” or “emotive” or “compelling” about it. Something about it has to appeal to the gut.

        The fact that it IS disruptive and asymetric to the competition is why it is successful and profitable for Apple’s bottom line. But it is appealing to the consumer because of the questions Apple asks itself, because of the DNA of Apple as an integrated company that marries technology and the arts and wants to make the best products it can.

        So, you have consumers wanting to take a little leap of faith with it. I think people find themselves saying to themselves: well, a lot of people are raving about Apple products and it gets great satisfaction ratings, so, I really want to believe it’s all it’s hyped to be. I just hope its all true. That’s a little different than hiring it as a “replacement solution” — it’s more like hiring it to “surprise me”.

        Despite a lot of real analysis that the conscientious consumer could perform (such as TCO and productivity and quality) being overwhelmingly in favor of the Mac, there was a flood of other numbers and spec lists drowning it out.

        Which is maybe why iPhones and iPads have taken off the way they have and the Mac never did — these devices are far more personal and viral. I think a lot of people WANT to be surprised. “Take me to Paris; I did Las Vegas six times for Spring Break; now I want to go to the City of Love.”

        All Android has to offer is claims of “Open”, while MS appeals to tradition and how they are finally now the natural solution they always claimed to be. Apple never discusses specs and details in their ads and promotion — it IS all about “real world” uses and case studies and *experience* (MS and Google claim “experience” in their industries for themselves; Apple shows real people having an experience enabled by Apple products). That’s working for Apple since: 1) their products really are good and live up to the hype, and 2) Baby Boomers are buying less and Gen X and Y are doing more of the buying.

      • capnbob67

        I agree with the principles but I’m not sure they are as central to the job to be done as to how well it does the job (and for different market segments).

        Macs are hired as tools to achieve specific or general productivity tasks. The specific tasks may change over time but that is Job #1. How well it does the job depends on your task list. If dicking about with the OS is a task, the Mac (or iPhone) won’t be as successful a tool as another device. If it is to be productive without need to understand much about the OS, it will fare much better. Gaming has different job specs to design, to general office productivity or to home use. Most people have a low bar of tasks, have someone else manage their PC regardless of OS or can’t afford (or choose not to pay for) the less tangible benefits of a Mac.

        I think Job #2 (as much as we might hate to admit it) is to be a status symbol. This can represent what you want: “I have better taste”, “I am a smarter geek”, “I have more money”, “I hate MS and all it stands for” etc. Not everyone hires it for Job #2 but many do.

        Job #3 might be to be part of the furniture, a visible statement within your decor schema. Notice how a lot of Macs get to be out in the open while a lot of black/beige boxes are hidden in the “office” (spare bedroom). This relates to #2 a little but some people buy Macs because they need a computer and choose one that fits their aesthetic style.

        It’s the more marginal Jobs (#2/3) where Apple excels and keeps it both differentiated and also justifying the high prices/margins but it is in expanding its suitability to different use cases within Job #1 that drives growth in the platform. Apple has always been good at cherry picking high-value jobs (graphic design, road warriors, aesthetes in Job #1) and most of job #2/3 users, which still comes to a mid single digit share but 40-50% of PC profits.

      • Kizedek

        Well, yes and no. Number 1, the specific task, is what I was referring to, when I spoke of what Apple has designed its OSs and devices to achieve. Whether most people think of Apple first when considering one particular specific task or not, is beside the point (or another discussion). They might well think of Windows or Android if their specific job at hand is “word processing” or “spreadsheets”.

        I was being a bit tongue-in-cheek in my first post, because of course everyone wants to “do” something. And, “isn’t one tool as good as another when it comes to certain things”. This is because the general perception has been that you need certain software or certain hardware to perform certain tasks in certain ways — you have to initiate yourself into some kind of geekdom in order to do these things “properly”.

        But, the reality is that not all tools are equal — precisely because the question that Apple is asking itself is different, just as the article brings out about Apple and Ikea.

        Happily, no, I don’t really think it depends on the specific task list for most ordinary people (the rest of us). Only geeks are concerned about certain specific tasks, because they have a certain expertise in certain tasks already. For most people, like my aunt or my mother, they say: “I just want to be able to email” (or some such). They don’t worry about any other tasks, because they already think they are too hard for themselves to ever accomplish. So they get an iPhone, because they know from the ad they can email. Then they end up doing all the tasks they ever dreamed of anyway. Then they tell someone they can finally email. Then that person says proudly, “well, with my Android, I can do x, y, z.” And my aunt or mother gets to say, “oh, I can do that too, I just never thought about those things before because it was so hard till I got my iPhone”.Apple has made it possible for everyone to be more than competent in many areas. The barrier to entry is not really price, it’s “thinking differently” than we have been conditioned to think. When you realize that, and get over the “Apple is closed, Android is open”, or “MS is required to do anything” type meme, you realize Apple is far more empowering, in a real, practical way, no matter what your specific task may be.

        Those who hire an Apple product for #2 and #3 are also missing out. I don’t think many of these first time Apple buyers are buying for #2 or #3. I think they are buying out of frustration over their old computers and devices, saying they will give anything a go, they just want it to do what it’s supposed to (what they hired it to do).

    • http://www.asymco.com Horace Dediu

      Like a computer, the iPhone is hired to do many things for many people. I also believe that the product is not yet good enough and as such it does not do a very good job for consumers. (There is a separate job it’s hired to do by operators, which it does very well, but that’s a different discussion). The reason the iPhone might be more successful than other mobile computers is that, being not good enough, the buyers depend on the brand to help them cross over the gap of doubt. The iPhone brand gives more comfort than alternative brands and thus is more successful with consumers.

      • Morgan

        I am curious why you say the iPhone does not do a very good job for consumers.

        I understand that most mobile computing experiences are often shadows of the full computing capabilities of regular PC’s, and that we are still a long ways from a ‘Star Trek’ like computing experience. But i gather that is not what you are referring too. 

        While i am no Apple fan boy (or any platform for that matter) i have to accept the fact that Apple’s attention to detail and experience often delivers very high loyalty.

        Using your logic, if the handset does not do what it is hired to do…it gets fired. 
        Could it be that consumer’s don’t know what they want, and Apple is the only one with the courage to tell them?

      • http://www.asymco.com Horace Dediu

        I did not say it does not do a very good job. I said that it is not yet good enough, which, I may add, is a great compliment. Being good enough is the kiss of death. Products that are not good enough get hired because the alternative is not getting anything done at all. Think of cars or planes 70 years ago. Those were really awful in comparison to today’s cars and planes but the industries were booming then while they’re in crisis now.

      • http://twitter.com/AdamChew1 Adam C

        “The reason the iPhone might be more successful than other mobile
        computers is that, being not good enough, the buyers depend on the brand
        to help them cross over the gap of doubt.”

        This part really boggles the mind, you mean the iphone buyers are wrong in choosing Apple. You mean people can’t distinguish what is best what is not.

        And it is funny that an iPhone that can upgrade to the latest OS is not good enough whereas the rest can’t upgrade or use an older generation is ‘better’.

        Your logic failed me.

      • http://www.asymco.com Horace Dediu

        iPhone buyers are very astute. They are buying what they perceive to be good. They are satisfied and loyal. It does not mean however that the iPhone can’t get better. Meaning that the next, better version will also be good. The most tragic thing for the iPhone would be that the product would be good enough. At that point there won’t be a next iPhone.

  • Z Kariv

    * IKEA, like Apple, has for the most part a simple–thus not minimalistic–design.
    * Comparission of revenue/SqrFT is misleading somewhat since IKEA’s rent per SqrFt is dramatically cheaper.
    * Customer service is definitly not pushing you into buying and usually emphesize the ease of return.
    * Perhaps IKEA has, simmilar to Apple, a well integrated system from growing the wood, cutting etc. all the way to the store–allowing not only quality control but shipments timing, allocation and pricing.
    * It is more philosophical than real to enter these markets without name recognition, financing, WELL TRAINED staff and perhaps timing??
    * I wonder if IKEA has some kind of R&D for social behavior and needs. Not inventing a new wood but rather looking to trands in localities and regions.

  • capnbob67

    I am sensing some kind of Scandinavian conspiracy here… IKEA is Swedish, Horace lives in Helsinki, Finland, Christiansen sounds pretty Nordic… where are the Swedish Bikini Squad?

    More to the point, where’s my tin foil hat!!

  • capnbob67

    Also interesting in reading the graphs that as much as we all know that Apple in in line for a $170Bn year and had a $108Bn year in FY2011, relatively little of that comes from the retail stores. I mean it is staggering that they have built a retail empire that delivers $12Bn from such a small acreage but it is still only about 10-12% of that overall revenue.

  • capnbob67

    Also interesting in reading the graphs that as much as we all know that Apple in in line for a $170Bn year and had a $108Bn year in FY2011, relatively little of that comes from the retail stores. I mean it is staggering that they have built a retail empire that delivers $12Bn from such a small acreage but it is still only about 10-12% of that overall revenue.

  • http://twitter.com/richmerritt Rich Merritt

    One company that might be worth a similar analysis one day is Muji. Their profits and retail presence currently is probably too small to show any significant data at this time but might be worth a look if Muji were to challenge IKEA here – currently they only have 3 stores in America. (all in Manhattan) 

  • http://twitter.com/hi_endian hi-endian

    I’m not sure that I agree that IKEA doesn’t have a brand position. In fact, I would say that they have a pretty strong one: inexpensive, good-looking furniture.

    If what the author says is true, that people think, “I need to furnish my apartment (or this room) today,” when they think of IKEA, what do you think they furnish it *with*?? Furniture, obviously – inexpensive, good-looking furniture.

    • http://twitter.com/disc1979 Dirk Schmidt

       I don’t think we argue that.

  • JohnDoey

    I disagree.

    Apple and IKEA are polar opposites. Apple’s products are the best in the world and “it just works” (no assembly) is a key feature. IKEA’s products are crap that looks good but doesn’t last very long and rarely survives a move. In other words: PC’s. If you need to furnish a business TODAY you call Dell. They ship in a box of cheap parts and instructions and “IT staff” assembles it. It is cheaper today than shopping at Apple, but more expensive in the long run. Same as IKEA because you are going to have to buy 5 of those bookshelves instead of one decent one.

    So IKEA is Microsoft. Also not replicated. Because it is hard to get a scam like this started. The difference is only that IKEA serves customers who want instant home furnishings with no regard to quality, and Microsoft serves customers who want instant business furnishings with no regard to quality.

    IKEA is also run with very, very creative accounting. Same as Microsoft. They also both offload responsibility for whether something works to the consumer. They both shirk as much responsibility as possible. Apple, on the other hand, takes more and more responsibility all the time. They are not only guaranteeing it works out of the box, they guarantee it is easy to use, and they guarantee it will keep working at 100% for the warranty period or they immediately fix it for free. Microsoft doesn’t even guarantee Windows will boot on a Windows-compatible PC. You are on your own. Get out your screwdrivers.

    • Aguest

      Have you ever been in an IKEA store? Sure, they sell a lot of furniture requiring at-home assembly, some of which is low quality and disposable, but they also sell many pieces that are durable and well finished, good quality organization, kitchen, and bath items, a huge selection of rugs, lights, artwork and even a few houseplants, delightful children’s toys, and food.  All of which, every single one, informed by a commitment to design and value–the lower quality stuff may not be great, but is i dirt cheap, and still looks better i a dorm room than some crap from Pier One that costs three times as much.  And it is a pointless fantasy to think that “a little handcrafted furniture maker” could open a chain of stores (that’s fantasy right there, unless the “hands” are third world sweatshop workers) and somehow compete on price with IKEA.  

      • Boxoffrogs

        Agreed. As a long term IKEA customer I bought a lot of stuff there. Most of it I moved thrice and I am still happy with it. Most of the times IKEA gives you better quality per dollar (or in my case euro) than competing retailers.

    • boxoffrogs

      The bottom line of the article is not IKEA is apple. It’s both deliver outstanding retail experiences and are therefore outstandingly successful.

  • vladiim

    There’s been some recent speculation* about Amazon opening a retail store.

    It would be really interesting to see you work through a hypothesis scenario of how they might enter the market and the level of disruption to be expected on other retailers based on learnings from Apple. 

    Amazon’s price comparison app** is starting to turn the retail store into a museum***, how will a physical Amazon store perpetuate this?* http://www.forbes.com/sites/ericsavitz/2012/02/06/amazon-reportedly-plans-to-open-retail-store-in-seattle/
    ** http://news.cnet.com/8301-1023_3-57338378-93/amazon-pricecheck-app-use-it-get-a-discount/
    *** I believe credit for this term goes to either yourself or Clayton Christensen from the last Critical Path episode. 

  • http://www.facebook.com/profile.php?id=553365620 Bill Haynes

    I would argue that there is a clear similarity between Apple and IKEA. Good design at a reasonable price.

    When I lived in the north of England in the 1990’s the only place that one could get well designed furniture (if you were not immensely wealthy) was IKEA. Apple has a reputation for pricey products but if one compares Macs or phones with to competitors with similar feature sets there really has never been a huge price differential.

    And good design at a reasonable price explains the lack of competition for both companies. Most competitors focus on features and/or price. And by good deisgn I include minimalism, aesthetics, utility and ease of use.

    • Publiclee

      I note that that both Ikea and Apple pay homage to their design gods. We all know about Jonny Ive and Steve Jobs and the control they have over product development. Ikea also makes a point of giving their designers a voice (and often an image) on the POS material for the product that they worked on.

    • OgilvyTheAstronomer

      I was going to make precisely this point. Since I had already budgeted for typing, may as well spend it recommending your post. :)

  • http://twitter.com/crenelle MichaelBrianBentley

    My wife and I noticed a strange big box store off of 355 in the Chicago area called the Høme Store. Having no idea what either the Høme Store or IKEA was, we stopped by the Høme Store and were rather amazed at the place. 

    After a few minutes, we were less amazed. I mean, the place was amazing, huge, but the merchandise was awful. The Høme Store went out of business within months.  

    A year or two later, we were driving around Los Angeles and saw a yellow and blue thing called IKEA. By that time, we had heard of it, but had never actually been in one, and decided to stop and go in.

    We were not just amazed at the place, we finally made the connection: IKEA WAS A COPY OF THE HØME STORE! But…the merchandise was obviously a lot better. So we figured out that it was more likely that the Høme Store was an IKEA clone, not the other way around.

    I’ve been to an IKEA about four times now, in different places in the US. I remember buying one (1) thing in all those visits. Yeah, the merchandise is better, but we’re not real IKEA customers. We might have been back in the 80’s if an IKEA had been handy.

    • Modaca41

      Everyone’s focusing on what seems like heavy duty furniture but I loved IKEA (too far away now) for its design in lamps, vases and other accessories, plus designer items including a collapsing wicker table (24″ round), high-back wicker chairs and other fun things we wouldn’t have found anywhere else.

      • abeere

        In my opinion, both Apple and Ikea do an amazing job of innovating on existing product designs to make them their own. I believe these highly recognizable products are a major ingredient to their success, or as the article puts it, they get the job done their own way.

    • kibbles

      nice story, bro.

  • Peter

    I don’t know about the rest of the world, but there are certainly companies who (sucessfully even) copied IKEA. In Germany http://www.moemax.de/ is a almost perfect copy, although everything is green and purple instead of blue and yellow. They even have the exact same iconic bags.

    • pendolino

      IKEA is a global player. never heard of the German one. There will always be a serious competitor sooner or later so maybe this is it.

  • DaveChapin77

    Horace

    Speaking of retail, I would hope at some point you can turn your analytical attention toward AMZN. They are disruptive, large, complex, fascinating, and *very* opaque.  They are AAPL in reverse in many ways.

  • TLonnegren

    There is another major difference between Apple and IKEA. IKEA does a fantastic job to turn external factors into their advantage. Their history as full of examples where they have managed to turn external issues into a business advantage.
    Apple on the other hand, does not really respond to external challenges in the same way. They build their business based their own strategy.

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  • bosse hansson

    I think there is a similarity to the success of IKEA and APPLE. It is the long term determination of what they do. Think of IKEA, there is no “wall street” that directs what they do. They operate very long term and by doing that they can make small changes all the time but over a long time and so they perfect a concept/product and then maximize their profit. 

    APPLE have done a similar thing by not handing out dividends and following their own strategy. Company that is forced (and let them self be forced to) wall streets 3 month cycle demands have problem to innovate new business processes (and some products) that takes time to implement.If IKEA was a public company I think they had been part of the book “From good to great” and their operation had been a great example for the flywheel effect that is described in there./Bosse Hansson

  • Arek Dreyer

    Horace, I’m amused that you used yellow and blue, IKEA’s brand color, for your graphs.

    • http://www.asymco.com Horace Dediu

      Those are Dirk’s graphs.

  • http://twitter.com/twistmeyer Mike Meyer

    There actually was an IKEA copycat at one time,  they called themselves ‘STOR,’ and copied the IKEA schtick all the way down to the vaguely swedish product names.  Eventually they got shut down for infringement.

    • dashiel

      I remember those. There was one a few miles from us.

    • http://www.benzado.com/ Benjamin R.

      Maybe they would have survived if they didn’t pretend to be Swedish.

  • Roger

    There actually was an Ikea knockoff called STØR. Ikea sued it for copyright infringement and later bought the company. http://en.wikipedia.org/wiki/ST%C3%98R (I remember this because I grew up in Houston, and the Houston Ikea was originally a STØR. They had really obnoxious and annoying ads.)

    • DaveChapin77

      So basically other stores HAVE tried to copy IKEA.  They tried, IKEA sued, IKEA won, and maybe that’s why no one is doing what IKEA is doing

      • http://www.benzado.com/ Benjamin R.

        I doubt that the only way to copy IKEA is to pretend to be Swedish. That’s probably the only reason they had grounds to sue in the first place. STØR : IKEA :: Xoom : iPad

      • DaveChapin77

        No, STOR was exactly like IKEA. I’m from Houston where one of these clones existed.  When the STOR store became an IKEA they barely had to change anything about it.

      • http://www.benzado.com/ Benjamin R.

        That’s my point: if they had copied everything EXCEPT the Swedish names, they probably could have stayed out of court.

  • Junes_Junes

    This is a great pice, thanks. I think one significant factor in Ikea’s success that is easily overlooked is that Ikea sells furniture at seemingly lower relative prices because its entire production and manufacturing model is predicated on shifting *assembly* labor costs onto the buyer or enduser. The TV stand that Ikea sells for $250 in flat packaging still needs one or two or three hours to assemble. This is time (and money) that the buyer has to spend one way or another. It may be beyond the scope of this piece, but I wonder how Ikea numbers would look if assembly time were figured into the total cost of purchasing Ikea product. It is ingenious in many ways — certainly Ikea’s efficiencies in producing, packaging, distributing/shipping products has been revolutionary for the sheer scale of its reach and dominance. But it also seems to be a bit misleading when the full costs of acquiring Ikea products are rendered invisible because of the shift of labor and time away from the factory and into people’s homes.

    • hittrj01

      As much as this is true, I actually quite like putting together my own furniture. I am not handy enough to buy the wood, finish it, cut it to length, make everything piece together, build it, paint it, etc, but I do like being able to actually put it together. That time spent assembling the furniture gives me a sense of ownership and makes it mine, rather than just another slab of wood or glass sitting in my house.

      People identify with IKEA because the assembling of the products makes them theirs. Even though my coffee table looks exactly like yours, I put mine together with my own hands, and my coffee table is now completely different than yours is.

  • Graham

    What about Rooms To Go? http://www.roomstogo.com/  They’re selling rooms.

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  • Simlap

    In Europe, there is a company called Conforama that actually sells furniture designed to look like IKEA’s. To be more precise, some of their pieces are actually the same as IKEA furniture.

  • elemenoh

    It seems strange to me that IKEA has so many employees. The only IKEA employees I ever encounter are at the checkout — unlike Apple, where employees are everywhere in the store talking to customers and I never have to walk to a cash register. Are most IKEA staff involved in shipping and stocking work rather than customer-facing roles?

  • Fake Tim Cook

    I think the greatest similarity is their highly integrated supply chain.
    IKEA makes and sells their own furniture.
    Apple makes and sells their own computers.
    Most furniture stores sell other companies furniture and most computers are sold by other retailers.

  • Kaleberg

    Does anyone else remember Scandanavian Design from the 70s & 80s? They sold “Scandanavian” style flat pack, assemble it yourself furniture for years. The stores were smaller and usually based in malls, but some of them were larger. I don’t think there were any Ikeas in the US back then, and SD owned the market. I’m not sure what happened, but they were gone by the mid-90s.

    • PJ Roberts

      yes, there were quite a few in the Bay Area…up until at least 10 years ago…coinciding with…OH! Ikea’s rise in CA!

    • mediagrunt

      They are still around, mostly in the SF Bay Area. I walk by one near my Berkeley office all the time. 

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  • JoeyBill

    STØR.

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  • http://www.yusufibili.com YuSuPh

    I think, the impact of the “Word-of-mouth” should have been in article. Because, these, both, companies are creating “likable/fable” products and this is a(+) reason beyond that their retailing (scheme) success.
    My opinion;
    * IKEA is successful NOT because of very successful shop/retail design. The main reason is, their products give you a feeling of accomplish something and buying/filling needs in economic way.
    I actually don’t like the idea of, a customer is spending all day in IKEA shop without having something not extraordinary. (I don’t count seminar, training, DIY lessons etc.)
    IKEA most focus/invest on fast-shopping ways. There will be almost all everything by online soon and retail shops will not be popular as today when people get enjoy of shopping at home for the same things.
    * I find APPLE retailing successful. You have to be double sure for enter a Apple shop, not like IKEA, kind of you must deserve it, that unique design is really lighten you and you must be triple sure that going-out from an Apple shop without buying something. I mean, when you walk out from shop, you feel people around you has focused on you and you feel like walking away from a question/answer million-dollar game had not able to answer correctly any of questions, loser.
    I believe, that is why almost all Apple shops are in sight, in the heart of especially public places.

    On other hand, there is a fact that for both companies’ big part of buyers already had decision to buy something/what-need before enter shop. The next question could be; How we are capable/successful to sold something (last minute goods, services) to our customers actually they have never planned.

  • http://www.edsoehnel.com/ Ed Soehnel

    From my viewpoint, Ikea has a competitive advantage due to the following:

    1. Ikea has a complex operation from the large SKU selection offered. This translates to significant investment in logistics, vendor/supplier relationships and expertise to make it all happen.
    2. This competitive advantage in operations and SKU selection appeals to customers because one visit to Ikea is better than multiple visits to other retailers.
    3. Ikea manufactures many of its own products, or at least, if contracts the manufacturing for sale under its brand. Trader Joe’s does this well in the food category, with 80% of its products being private label. I don’t know household items, but I know food. And in food, private label affords much better margins to the retailer, and I assume the same translates to household items.

  • teckid

    IKEA did have one imitator: STOR.

    Copied IKEA’s store/furniture/marketing/concept.

    http://en.wikipedia.org/wiki/STØR

    • http://www.asymco.com Horace Dediu

      Imitation is not copying. A copy is a successful imitation.

  • http://www.facebook.com/kadunakashima Carlos Eduardo Nakashima

    Congratulations for this amazing and rare comparison. I´m actually studying the growth of retail companies, and I´d be so grateful (even more) if you could share with me the citations of it. I´d certainly cite your website on this project. Thank you

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