Greenland_Case03[1]

strategicCommunication

26

case 3

It’s all in the design: How IKEA makes

you buy with clever store design

introduction

This case study reflects on one of the most significant challenges facing modern-day retailers—online versus high street distribution and the viability of physical outlets. Here we examine the importance of ‘place’ in the marketing mix, covering aspects such as channel strategy, store design objectives, and the critical role that outlets play in communicating with customers.

Shopping behaviour has undergone a dramatic evolution over the past decade with many retailers struggling to keep up with the rapidly evolving, contemporary consumer (IBM 2011). Future success will go to those best able to adapt their delivery modes and communication strategies to this modern shopper.

The case study looks at the Swedish furniture giant IKEA, which is not only surviving difficult economic times but is rapidly expanding its retail presence in the Asia-Pacific (APAC) region. A cornerstone of IKEA’s success has been an innovative multichannel distribution and communication strategy.

n

steve greenland and Bernadette van lunenBurgSwinburne University of Technology


28

Trends in retail distribution and shopping habitsA poor global economic climate has had a massive impact upon consumer spending, resulting in mounting

retailer insolvency. Australia is no exception, with downward-spiralling consumer confidence being further

eroded by rising interest rates and a looming carbon tax. High street retailing with its significant operating

costs has witnessed numerous casualties that include Clive Peeters (electrical), Colorado (clothing) and

Just Jeans, as well as REDgroup Retail, the parent company of leading bookstore chains in both Australia

and New Zealand (for example, Johnston 2011; Speedy 2011).

The total proportion of online versus high street sales is currently still relatively small. However, despite

the economic downturn, the online amount is growing rapidly (Bell 2011). Shopper segments that

previously had not considered purchasing online goods have begun to appreciate the convenience and

cost benefits offered by this shopping mode (Zehner, Bradley & Sanders 2011). A new breed of shopper

has emerged; one that uses high street outlets to inform purchase decisions and then the internet to track

down the best value.

The expanding range of distribution channels and evolving shopper habits mean that retailers wishing

to remain competitive must review their reliance on traditional store channels. Those that neglect to do

this and bemoan the evolving marketplace will no doubt struggle further. The successful retailers of the

future will embrace these changes and clearly demonstrate that the high expenditure involved with high

street retailing is justified and has the maximum positive impact on customers.

IKEA distribution channelsIKEA is an example of a retailer that has gone with the flow and moulded itself to the changing world. Today,

it operates a highly effective multichannel distribution and communication strategy that successfully

blends the physical outlet with a paper catalogue, as well as online shopping. In 2010, 198 million

copies of the catalogue were printed in 56 editions and 27 languages; globally, IKEA stores welcomed

590 million visitors (IKEA 2011a), with Singapore’s two stores alone seeing more than seven million visitors

(Tay 2011). IKEA shoppers in many regions and markets also enjoy online shopping options. In Australia

in 2011, IKEA offered online shopping to consumers in South Australia and Western Australia, but not in

other states (IKEA 2011b). IKEA’s distribution channels also reinforce the retailer’s key communication

messages relating to its contemporary Scandinavian design and quality, value, as well as corporate social

responsibility and sustainability.

This strategy fuelled the rapid growth in IKEA’s business, which tripled between 1999 and 2009. IKEA

has also expanded rapidly in the APAC region and is now present in China, Japan, Taiwan, Singapore,

Malaysia, Hong Kong and Australia. Given the success of the cost-effective online channel, one might

imagine that the long-term future of IKEA stores may be in doubt. However, the opposite is in fact true:

the number of outlets in China is predicted to double to 18 by 2015

(Fangfang 2010), and a further six stores are on the agenda in Australia

(news.com.au 2010). Indeed, in September 2011 IKEA opened its largest

outlet in the Southern Hemisphere in Springvale, Melbourne. Clearly, for

IKEA the physical outlet remains core to its future expansion plans.

‘ For IKEA the physical outlet remains core to its future expansion plans. ’

case 3Steve Greenland and Bernadette van Lunenburg

29

Atmospherics and store design Store design is generally something to which consumers pay little attention. Shoppers often only consider

it when there is a problem or some level of discomfort is experienced, perhaps due to overcrowding, poor

climate control, long queues or difficulty in finding a product. This is because the impact of retail design

is more frequently subliminal in nature. Its effects are experienced in terms of basic emotional responses

that shoppers find difficult to verbalise, and that translate into simple approach or avoidance behaviours.

Put simply, we automatically tend towards, spend more time in and are more likely to interact with others

in environments that we find more pleasing, while we avoid those that are less so. (See Greenland &

McGoldrick 2005 for further insights.)

While consumers are unaware of the impact of store design, retailers have become expert at using

it to shape shopper attitudes and behaviour. Philip Kotler (1973) coined the term ‘atmospherics’ to

describe the impact of retail design. Atmospherics can be considered as ‘the tailoring of the retail/

service environment to enhance the likelihood of desired effects or outcomes for users’ (Greenland

& McGoldrick 1994). The concept of atmospherics reveals that retail designs can be created with

specific objectives in mind, and considering these helps in appreciating the role of the physical outlet.

Table 3.1 presents ten key generic communication and marketing objectives for store design, many

of which seek to enhance approach behaviour. (These are in addition to health and safety and other

compliance considerations.)

Top ten generic store design objectives Table 3.1

1 Communicate the corporate image and differentiate it from competitors’ images

2 Complement other channels of distribution

3 Complement other channels of communication—for example, media campaign support

4 Stand out on the high street—visually attracting new and existing customers

5 Communicate the range of services and products on offer

6 Facilitate efficient and friendly service delivery

7 Control customer movement to maximise impulse purchase opportunities

8 Create appeal for specific customer segments/target groups

9 Provide a comfortable shopping environment and favourable customer experiences

10 Increase customer interaction with the retailer and build the relationship

While the concept of atmospherics may be clear, creating designs that achieve specific objectives

is often difficult. This is because the environment–behaviour relationship is highly complex and our

understanding of how certain features affect behaviour is incomplete. Furthermore, achieving some


30

objectives may oppose the fulfilment of others. For example, designing

stores that maximise the duration of a shopper’s visit may actually

end up irritating shoppers and result in avoidance behaviour.

Numerous studies have examined the impact of various design

dimensions upon customers and staff. A summary of these effects is

presented in Table 3.2.

‘ Creating designs that achieve specific objectives

is often difficult. ’Potential atmospheric customer effects Table 3.2

SenSory cue AtmoSphericS dimenSion potentiAl reSponSe/impAct

ViSuAl colour Affects mood and emotional states Health/physiological reaction Image reinforcement Temperature perception Spatial demarcation and direction of instore traffic

lighting/brightness User satisfaction Attention (breaking through the attention gate) Approach behaviour (attraction to goods handling) Task performance Image perception Direction of instore movement Visual privacy Metamerism (colour) varies under different lighting

natural light/ windows Psychology and mood (connecting the outside pattern and shape spatial world) arrangement Direction of instore movement Symbolic association/psychological connotations Interaction with others and reaction to space limitations Ergonomics and productivity Efficient flow of instore traffic Mood/emotional response Avoidance behaviour/stress (crowding) Clearly demarcated zones/dominance and territoriality Identity reinforcement/standardised formats Personal space (visual and aural privacy, performance)

AurAl music Speed of movement Emotional response Image reinforcement

Sound/noise Perceived length of shopping trip Arousal, task performance Acoustic privacy


31

Fulfilling marketing objectives through effective store design IKEA uses atmospherics to achieve a wide range of marketing and communication objectives.

Communicating the core brand principles of value and quality is, of course, a key function of the retail

outlet. IKEA is synonymous with ‘Brand Sweden’. All stores have exteriors and entrances emblazoned in

tActile temperature Performance, interaction with others

comfort—hard and soft zones Speed of movement/time spent in area

contrasting fabrics Tactile quality associations/evaluation/arousal

olFActory pollutants/air quality Aggression/irritation/fatigue

negative ions Performance

Scents and odours Mood/behaviour/arousal Quality associations and image reinforcement Learning and memory recall

tASte Food/drink Arousal, approach behaviour

Source: Based on S. Greenland & P. J. McGoldrick. (2005). Evaluating the design of retail financial service environments. International Journal of Bank Marketing, 23(2), 132–52.

iKea store entrance communicating the corporate logo and ‘Brand sweden’ connotations


32

colours matching the Swedish flag. Global surveys associate Swedish products with quality, technological

innovation, user friendliness and social responsibility (The Swedish Institute 2011a, 2011b). These

associations are further supported with instore exhibits and information regarding IKEA’s stringent

furniture quality testing, as well as information about their Swedish designers. Furthermore, the store

restaurant not only enables shoppers to stay in the outlet for longer, but the low-priced, exclusively

Swedish menu matches the brand values, as does the separate grocery section encountered after the

main checkouts, which also sells Swedish food items.

iKea restaurant food reinforces the swedish brand and value image associations.

Shoppers are constantly reminded of IKEA’s value associations

via messages throughout the store (for example, on walls and in

elevators). The shopping experience reinforces the concept of

value obtained through self-service; this is also communicated in

the instore map, which virtually every shopper has in their hands

for the duration of their shopping trip. The flat pack furniture items

not only provide IKEA with a clear competitive advantage in terms

of distribution efficiency, but also send a clear message relating

the added value that customers gain by choosing to construct the

items themselves. Similarly, the design of the homewares section

of the store, with products displayed on pallets, further reinforces

perceptions of cost saving.

‘ The shopping experience reinforces the concept of

value obtained through self-service. ’


33

the 2011 springvale store map of the furniture showroom and the iKea shopping concept


34

the 2011 springvale store map of the homewares market hall and self-service furniture area

Another obvious objective of IKEA outlet design is to keep shoppers in the store for the maximum

time possible. The longer shoppers spend in a store, the greater the chance of an impulse purchase.

By offering child-care, rest-room and restaurant facilities, shoppers’ basic needs are taken care of.

This facilitates the lengthy process of leading customers through the entire store with its numerous

Art

icle

num

ber

Pcs

Product

nam

ePr

ice

Ais

le

Plea

se n

ote:

som

e of

our

pro

duct

s co

nta

in m

ore

than

1 b

ox.

Opening hoursMonday to Friday 10am - 9pmSaturday to Sunday 9am - 7pm

IKEA Springvale917 Princes HighwaySpringvale VIC 3171

Phone: (03) 8523 2154

© In

ter IKEA S

ystems B

.V. 2011

Find your way in the

Self-serve furniture areaGround floor

Shopping list

Loca

tion

Find your way in the

Market hallGround floor

Tableware andCookshopCutlery

Glasses and jugs

Pots and pans

Tableware

Home textilesBlinds

Curtians

Cushions and throws

Fabrics

Bed textilesBed covers

Bed linen

Pillows

Quilts

RugsRugs

Oriental rugs

BathroomaccessoriesBath mats

Shower curtains

Towels

HomeorganisationBoxes

Cloth organisers

Desk accessories

Laundry organisers

Shelves and brackets

LightingIntergrated lights

Floor lamps

Shade bar

Table lamps

Wall lamps

Wall decorationand MirrorsFrames and pictures

Mirrors

Ready to hang

Home decorationCandles and candle holders

Clocks

Plant pots and plants

Vases and flowers

Self-servefurniture area

Check-outs

Customer service areaMerchandise pick-up

Exchanges and returns

Home delivery service

IKEA Bistro

IKEA Swedish Food Market

Playroom Småland

Exit

To:Self servefurnuture areaCheck-outsExit

Bathroom accessories

Home organisation

Rugs

Home textiles

Bed textiles

Tableware

Wall decorationand Mirrors

Lighting

Home decoration

Shortcut

Småland pick up

Shortcut

Self servefurniture areaCheck-outsExit

Meeting point 3

Cookshop

3

5

1

2

4

6

8

10

12

14

16

18

20

22

24

26

28

30

32

34

36

38

40

42

7

9

11

13

15

17

19

21

23

25

27

29

31

33

35

Exit

Bargain corner

PlayroomSmålandIKEA Swedish

Food Market

IKEA Bistro

Customer service areaExchanges and returnsHome delivery serviceMerchandise pick-up

Check-outs


35

merchandise displays. The store design uses the concept of hard and soft zones to good effect. The hard

zones are delineated by hard surfaces and encourage faster movement, while the soft zones use product

displays, spot lighting and softer surfaces to slow down consumers and encourage browsing.

Most shoppers enter IKEA for a particular furniture item or substantial home purchase, such as bath-

room or kitchen fixtures and fittings. These items make up the area encountered as shoppers enter the

Homeware items displayed on pallets reinforce the customer’s value perception of the iKea offering.

Hard zones of the pathways encourage faster movement, while the soft zones use spot lighting and softer surfaces to encourage browsing.


36

initial showroom section of the store. However, in order to get to the checkouts shoppers must also

navigate the substantial homewares market hall section. This area contains a huge array of kitchen, light-

ing, bathroom, textile, floor covering and decorative items, which are primarily impulse purchase items.

IKEA achieves the top ten generic store design objectives in many ways, some of which are detailed in

Table 3.3.

How IKEA achieves some of the top ten generic store design objectivesTable 3.3

1 Communicate the corporate image and differentiate it from competitors n flat-pack self-assembly furniture, as well as the warehouse-style goods collection and checkout

area, which reinforce the idea of value n low-cost restaurant with Swedish food n special offers, loyalty membership, family card n corporate information and posters on walls, in elevators, restaurant, etc. n consistent use of corporate logos and colour schemes throughout the store n staff uniforms n displays showing product quality testing.

2 Complement other channels of distribution n consistent ranges, images and themes across the different channels n advertising the other channels—for example, catalogues in high-profile instore positions n special instore displays that have been communicated via catalogue and online offers.

3 Complement other channels of communication—for example, media campaign support n consistent messages, images and themes throughout the store, even in rest rooms and café,

that match the promotional messages communicated across other media channels n catalogues available instore for customers to collect, carry and make notes in.

4 Stand out on the high street—visually attracting new and existing customers n maximise length of store frontage n huge distinctive yellow and blue signage n colourful backlit exterior signage n high-profile locations with high traffic flows (pedestrian and road).

5 Communicate the range of services and products on offer n separate product/service areas themed around different rooms in the house n room displays presenting interior design ideas and homewares combinations n store maps, layout information and clear signage n visible and accessible staff help/information points.

6 Facilitate efficient and friendly service delivery n visible and accessible staff help/information points n staff uniforms n self-serve checkouts for fast processing of transactions n standardised design/retail format across the network, enhancing customer familiarity and

aiding store navigation n ergonomically sound environment that functions as a store n adequate checkout and car pick-up points n adequate parking.


37

7 control customer movement to maximise impulse purchase opportunity n take advantage of the principles of compliance and conformity using guided walkways

(lights, floor patterns and surfaces, colours, signs, barriers, entrance, escalators, lifts) to lead the customer around the entire store along a specific path

n maximise the time customers spend in the store by controlling direction of movement past displays, promotions, information, and sales staff

n have more store entrance points compared to exits n soft zones/comfortable seating areas/wide aisles to reduce speed of movement n grocery and snack section after main checkout.

8 Create appeal for specific customer segments/target groups n product ranges that appeal to specific target market groups—for example, young singles,

families, etc. n services and facilities needed/required by specific target market —for example, young families,

etc. n colour schemes and designs that appeal to specific target market groups.

9 Provide a comfortable shopping environment and favourable customer experience n physically comfortable and aesthetically pleasing environment n appropriate temperature, humidity and ventilation n use of complementary colour schemes n appropriate personal space (avoid crowding, bottlenecks, adequate privacy where required,

reduce territoriality and avoidance behaviour) n restaurant, child-care facility, rest rooms.

10 Increase customer interaction with the retailer and build the relationship n increase shopper interaction with IKEA via the store—for example, kitchen planner, catalogue

dissemination, etc. n store loyalty membership, family card.

ConclusionWhile online retail sales will no doubt continue to rise, the physical retail outlet remains the key channel

of distribution for many product and service categories. However, given the enormous expenditure

associated with maintaining high street networks, organisations must clearly justify maintaining this

distribution channel. Many retailers and service providers now consider their stores in terms of achieving

specific marketing objectives and ensure that they are fully integrated with their other distribution and

communication channels. Retailers such as IKEA that have developed effective integrated systems are

more likely to withstand difficult economic times and survive in the longer term.


38

Questions1 One of the strongest arguments against traditional main street retailing relates to cost. What are the

key dimensions of cost associated with the store distribution channel?

2 Thinking of your own shopping habits, how is your expenditure and shopping behaviour currently

split between online and the main street? To what extent does this exercise help you to appreciate

the roles of retail stores and websites?

3 What can physical stores achieve in terms of promotion that other channels of distribution cannot?

4 To what extent is the IKEA store a medium for communication—rather than just a place to buy

things?

5 This case presents some examples of IKEA store design features that achieve particular marketing

objectives. Visit an IKEA store, or another type of retail outlet, and find other examples of design

features that impact upon consumer behaviour and attitudes.

6 Brand Sweden is being used to enhance company reputation; what are the potential risks involved

with doing this and how might they be addressed

ReferencesBell, N. (2011). It’s adapt or die for retailers. The Sydney Morning Herald, 4 July. Retrieved from <www.smh.com.au/business/its-adapt-or-die-for-retailers-20110704-1gyn1.html#ixzz1aLeR0k4w> (2 November 2011).Fangfang, L. (2010). IKEA to double stores in China. China Daily, 16 December. Retrieved from <www.chinadaily.com.cn/bizchina/2010-12/16/content_11711019.htm> (2 November 2011). Greenland, S. J. & McGoldrick, P. J. (1994). Atmospherics, attitudes and behaviour: Modelling the impact of designed space. The International Review of Retail, Distribution and Consumer Research, 4(1), 1–16.Greenland, S. & McGoldrick, P. J. (2005). Evaluating the design of retail financial service environments. International Journal of Bank Marketing, 23(2), 132–52.IBM. (2011). Capitalising on the Smarter Consumer: Executive report. IBM’s Institute for Business Value Executive Report. Retrieved from <www-935.ibm.com/services/au/gbs/pdf/capitalising-smarter_consumer_aus_study_final.pdf> (2 November 2011).IKEA. (2011a). IKEA website—IKEA facts and figures section. Retrieved from <www.ikea.com/ms/en_AU/about_ikea/facts_and_figures/index.html> (2 November 2011).IKEA. (2011b). Welcome to IKEA SA and WA, How to shop online. Retrieved from <www.ikea.com/ms/en_AA/customer_service/how_to_e-shop/how_to_e-shop.html> (2 November 2011). Johnston, E. (2011). Thrifty shoppers and high dollar spark collapses. The Sydney Morning Herald, 8 July. Retrieved from <www.smh.com.au/business/thrifty-shoppers-and-high-dollar-spark-collapses-20110707-1h4q8.html> (2 November 2011).Kotler, P. (1973). Atmospherics as a marketing tool. Journal of Retailing, 49(4), 48–64.news.com.au. (2010). IKEA set to open up to six new Australian outlets. news.com.au, 6 September. Retrieved from <www.news.com.au/business/ikea-set-to-open-up-to-six-new-australian-outlets/story-e6frfm1i-1225914729314> (2 November 2011).Speedy, B. (2011). Borders, Angus & Robertson parent REDgroup Retail in voluntary administration. The Australian, 17 February. Retrieved from <www.theaustralian.com.au/business/borders-angus-robertson-parent-redgroup-retail-in-voluntary-administration/story-e6frg8zx-1226007712326> (2 November 2011).


39

Tay, E. (2011). How IKEA embraces sustainability globally and in Singapore. Green Business Times.com, 24 May. Retrieved from <www.greenbusinesstimes.com/2011/05/24/how-ikea-embraces-sustainability-globally-and-in-singapore/> (2 November 2011).The Swedish Institute. (2011a). How the image of Sweden can enhance a company’s brand. Retrieved from <www.sweden.se/upload/promotion_forum/Promotion_Tools/Infoblad%20f%C3%B6retag%20engelska.pdf> (2 November 2011). The Swedish Institute. (2011b). Brand Sweden—The road to an updated image of Sweden abroad. Retrieved from <www.si.se/upload/Brand-Sweden.pdf> (2 November 2011).Zehner, D., Bradley, K. & Sanders, M. (2011). Online shopping starts to register. Business Spectator, 14 April. Retrieved from <www.businessspectator.com.au/bs.nsf/Article/Australian-shoppers-come-on-down-the-queue-at-the--pd20110406-FMVKY?OpenDocument> (2 November 2011).

Photo and image creditsT/C

Greenland_Case03[1]

Documents

Transcript of Greenland_Case03[1]