News Analysis: No rest for Ikea in the furniture wars

Its furniture is in millions of homes and research says its customers are satisfied. But with a new competitor on the horizon and negative publicity over service, Ikea still has work to do in the PR stakes, says Dan Bloch.

Whether they love it or hate it, countless British households can lay claim to something from the Swedish homewares chain Ikea. From humble beginnings in 1943 as a small family business, founded in a shed by Ingvar Kamprad, Ikea has grown into a multi-billion- pound global business.

Ikea has established a strong reputation for providing minimalist chic at affordable prices. But it might no longer have it all its own way.

Last week, it emerged that former Habitat and B&Q chief executive Martin Toogood was on the lookout for a PR agency to launch Danish rival Ilva into the UK, with three stores on Ikea's turf in Manchester, Gateshead and Thurrock opening later this year (PRWeek, 20 May). But although Ilva plans to open ten stores in the next ten years, it will be some time before Ikea, with 13 UK outlets and two more in the pipeline, will feel the heat.

The Swedish giant's turnover was over £1bn in the UK last year.

It also gained a fillip earlier this month, coming top in Verdict Research's customer satisfaction index - a survey of 69 retailers conducted among 6,000 consumers - pipping John Lewis, which has come first in three out of the past five years. Verdict analyst Andrea Cockram says: 'Ikea has made a huge impact on the furniture market since its entry in 1987. Whereas other furniture retailers offer cheap prices, Ikea combines low prices with a design philosophy. It markets itself as a complete lifestyle solution.'

Broadening demographic

Ikea appeals mainly to students, first-time homebuyers, tenants and landlords.

Demographically speaking, the core market, says UK PR manager Nicki Craddock, is female ABC1s aged 25 to 49. But Ikea UK, which has four in-house PROs - two PR managers, a press office co-ordinator and product placement co-ordinator - is looking to broaden that market by offering a wider range of prices and styles.

'We want to offer something for those with thin wallets, who want a dream lifestyle, and those with fat wallets who want nice things but also want to be able to afford to spend on other things like holidays,' says Craddock.

Ikea's PR and marketing strategy in the UK is planned independent of Ikea headquarters, which advises on commercial, consumer and product priorities, as well as logistical issues.

While most of the UK operation's PR to date has consisted of community relations on a local level and product placement nationally, Ikea UK is working on a media plan to target a wider audience, supported by retained agencies Cooke & Brand PR in England and PDS Media in Scotland, in time for the launch of its next catalogue in September.

'Right now, we are reacting to requests as they come in and pre-arranging things like catalogue launches or big announcements,' says Craddock. 'In future, we want to be more proactive. A lot of our negative coverage - such as the stories about Kamprad's youthful Nazi leanings - are down to the fact we haven't had a culture of proactively going out to the media.

Now we're working to open the doors and build a partnership with the British media.'

It could also help minimise the rough ride from the press it will get should things go badly wrong. The chaotic opening of the Edmonton branch in north London in February made the main news headlines, as several people got hurt in a crush after an unexpectedly large crowd of 6,000 people turned up in the vain hope of bagging some of the heavily discounted goods on offer. Media coverage described it as a 'PR disaster'. 'Those scenes at Edmonton really damaged Ikea's image,' says Retail Week editor Tim Danaher. 'People won't shop at the same store forever. There are basic levels of service they expect.'

Lack of service

Most of the criticism levelled at Ikea by both the media and the public relates to its customer service - or lack of it.

There are plenty of cases of individual complaints and some incidences of opposition to planning applications to be found on the internet, but no groups opposing Ikea in the same way as those targeting Shell or McDonald's.

'If you look at the big bad guys, targeted by environmentalists, anti-capitalists or the Left, Ikea doesn't seem to be high on that list,' says Daily Telegraph consumer affairs editor David Derbyshire.

The chain has apparently sound ethical policies. Suppliers must not use child labour and must adopt a 'responsible attitude' to the environment.

It supports UNICEF projects in Angola, Uganda, India and Kosovo.

But Ikea is acutely aware of the service problem, says Craddock. 'We are not complacent. We cannot pretend these things do not matter. They do. We are trying to address the needs of people coming in.'

Jane Reade, managing director of Grylls & Reade, which does PR for John Lewis, points out: 'Even when the broadsheets criticise Ikea, they always say the service is dire but that it sells products people want to buy.'

And the Verdict survey supports this. 'Ikea scored high in the price and product range categories,' says Cockram. 'But it fell down on service and convenience. Coming top shows that it is not necessary to be very strong on customer service. It is about knowing who your customers are and targeting them in a way you know will satisfy them.'

IKEA IN THE UK

- 1987 Opens first store in Warrington, Manchester

- 1988 Second store opens in Neasden, North London

- 1991 Announces profits of £1.4m on £91.4m turnover despite

recession

- 1992 Buys Habitat from Sir Terence Conran

- 2000 Plans to add 20 stores over ten years, creating 10,000 jobs

- 2002 Office of the Deputy Prime Minister rejects plans for a new

mega-branch in Stockport, saying Ikea should look at smaller sites

- 2004 Annual turnover surpasses £1bn

- 2005 Opening of new branch in Edmonton ends in chaos as more than

6,000 bargain-hunters descend on the store following advertisements of

heavy discounts

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