Last week, Ikea opened its smallest store in Australia. Only 98sqm, nestled between the trees of the brightly lit Warringah Mall in the Northern Beaches, it’s a far cry from the experience of the ‘Weekend Trek’ to the superstore with which Australian customers have a love-hate relationship. I visited the Brookvale store over the weekend to get a first-hand look at how this small brick and mortar store might revolutionise the face to face retail industry through its unbelievably customer focused business strategy.
After years of success from the large format superstore, why would Ikea suddenly change one of the core components of its whole business model?
The Answer: Customer behaviour
Australian consumers are obsessed with renovating. The renovation market is booming with the final quarter of 2018 proving the best for the renovation Industry in Australian history. We’re also a nation that lives for the pursuit of leisure time. To us, convenience and accessibility are key to gaining our share of wallet. Finally, Ikea identified a high-value customer segment, those that were looking for a package solution in the kitchen and bedroom range rather than individual pieces. Customers can attend two hour, one-on-one consultations where an IKEA co-worker walks through every aspect of the kitchen and bedroom planning process.
Identifying these customer needs, it has used customer focused business strategy to roll out a new solution to meet them. Planning stores that leverage digital experiences in accessible locations to provide extra focus to the high-value customer set. It’s leveraging the current assets in its business model (warehouses), but building new channels in which a customer can have an experience that better meets their needs.
Ikea’s execution of customer focused business strategy is clever
There’s something so clever about this approach that many organisations fail to do because they get caught up in the hype of their ideas. Rather than investing significantly into this approach, they’ve built a pop-up store. It’s an experiment.
The initial store is a four-month trial of the new model. Its customer strategy has led to a new and innovative, nested business model for the organisation. But it’s still in the “explore” phase where the model is being tested and risk and uncertainty remain high.
Completing a four-month experiment will provide vast customer insights. Ikea can continuously review and refine the experience based on feedback, and potentially even perish the idea without significant investment into several stores across the country.
The small format store is more than a “planning store”, it’s a living customer test lab. Testing the potential of an extremely customer focused business strategy in the Australian market.
I’m personally looking forward to the outcomes of the experiment.
Have any questions? Want to know how we can help you and your organisation? Contact us using this form.
We can work with you to design and support implementation of a strategy for your business unit, for your entire organisation, or for any segment of your organisation where a fresh approach will add value.
We will use a combination of globally-recognised leading-edge processes, coupled with our proprietary validated toolbox to develop a bespoke, customised strategy, which we can assist you in implementing, that will deliver tangible impact and value to your organisation and your customers.
We have been designing and implementing strategy solutions since 2003 and we have the expertise and the experience not only to deliver, but to overdeliver.
Join 10,000 others who want the latest insights, tools, tips and resources. We help you get better results by staying on top of the latest methodologies and thinking.