For Ikea, It's Time to Overhaul Perceptions
When Chief Marketing Officer Leontyne Green joined Ikea in 2006, it was experiencing explosive growth, adding multiple locations a year. Today, the U.S. is still a top-performing market for the Swedish company, but the brand is in transition.
Ikea debuted in the U.S. in 1985 and two decades later was rapidly unveiling massive stores that averaged 320,000 square feet. Fourteen locations, accounting for more than one-third of the total store base, have opened in the past six years alone. Not surprisingly, as Ikea expanded and introduced itself to new audiences, the retailer was constantly changing gears -- and agencies. Since 2000, five different shops have fielded creative duties.
With 38 stores in 27 markets and no new stores on the horizon, Ikea is taking a deep breath and looking inward. The retailer has established solid agency relationships, is getting more strategic about marketing programs, and is doing the work necessary to change perceptions around quality, style and service.
"We've had to come face-to-face with the reality of what's working and what's not," Ms. Green said, during an interview at Ikea's Brooklyn, N.Y., location. "Unfortunately, [some customers] have had a bad product experience or a bad customer experience. I've had one myself, with the service provider and getting something delivered. It was very frustrating, but it was also very enlightening. ... We have to rebuild trust with those customers whose experiences may not have been as positive."
On a recent Friday morning, Ms. Green traveled from the Philadelphia area, where Ikea's U.S. headquarters is located, to talk with Ad Age about the journey the brand has been on and how it's going about shifting perceptions. She explained that Ikea has been doing a lot of listening and immersing itself in market research, determining what the barriers are to choosing Ikea over, say, Raymour & Flanigan, West Elm or Home Depot.
Ms. Green, a former Tylenol marketing manager, is also careful to stay close to what's happening in stores, especially since being promoted in 2009 to chief marketing officer for Ikea U.S. from regional marketing manager for the Midwest and mid-Atlantic. In an unusual move, Ms. Green opted to take on personal responsibility for the single-store Atlanta market, becoming the area's regional marketing manager at the same time she took on the top job.
"I think it's very easy to become disconnected. And, in all honesty, if I'm going to lead this organization and drive the business from a marketing standpoint, I don't have a choice but to be connected," Ms. Green said. "I didn't want to keep one of the stores I already had, because it felt like choosing between my babies. And I also wanted a newer market that was a single-store market. Atlanta is doing very well, but it's also in a diverse environment, from a socioeconomic standpoint. There are a lot of outside factors that make it interesting."
As Ikea looks to attract new customers and persuade past customers to take a second look, it's adding services and emphasizing different types of products. A pickup and delivery service for furniture items launched this year. And existing services, such as warranties (sofas are guaranteed for 10 years and kitchens for 25 years) and planning tools are being more heavily promoted. Inconsistencies around the country with things such as delivery services are also being addressed.
Ikea is also evolving from a product perspective. It's staying true to its low-price messaging, but it's being careful to offer a wider array of products. Yes, there are $3.99 rugs, but there are also $499 rugs. Yes, there's plenty of blond wood and sleek white furniture, but there's also leather, rich brown and basic black. The retailer is also stressing that its products are built to last. In the Brooklyn store, a display features a machine opening and closing drawers, illustrating to customers that its products will endure heavy use -- well, maybe not that $3.99 rug.
"A lot of our focus in the beginning was on low prices and, unfortunately, that can sometimes be translated into cheap -- we realized we need to tell a broader story," Ms. Green said. "The interesting thing is , Ikea has a great reception when it comes to being innovative; when it comes to design and creativity, people do come to us for ideas. But that doesn't always translate into believing we have something for them."
Indeed, the retailer's huge stores are the de facto destination for college students and recent graduates looking to furnish dorm rooms and first apartments. Plenty of customers grew up with Ikea, Ms. Green said. The problem arises when they start to believe they've grown out of the brand.
Several ideas from Ikea's agencies -- it works with Ogilvy and MEC in the U.S. -- are helping to bridge that gap. The A&E series "Fix This Kitchen " transforms outdated or inadequate kitchens for home chefs, using Ikea products. The show, which Ms. Green says is attracting the attention of her global counterparts, has changed consumer perceptions. Viewers showed a 60% increase in agreeing that "Ikea offers high-quality materials." And two of three viewers said that they would visit Ikea if they were considering a kitchen renovation. Share Space, a photo-sharing site launched this summer, gives people the chance to share photos of Ikea products in their homes.
Those kinds of integrated marketing ideas will help the U.S. business continue to grow, Ms. Green said. The U.S. market, which is second in size only to Germany, is already one of the company's top performers, with sales up 7% for the fiscal year ended in August. Roughly half of Ikea's annual marketing budget goes to paid media, with another 20% spent on the catalog. Ms. Green said the retailer is looking for new ways to develop owned and earned media, adding that its stores, which have more than 70 million visitors annually, are a prime opportunity for "efficient impressions."
To that end, local marketing specialists such as Lorna Montalvo, whom Ms. Green invited to join the tour in Brooklyn, are given leeway to create store-specific programs and tweet from handles such as @Ikea_Brooklyn. Ms. Montalvo described how the store used Twitter to promote meet-ups for locals remodeling kitchens. Four to five people showed up each week throughout the summer looking to compare notes and get ideas -- a significant number, given that each person could represent several thousand dollars in sales, Ms. Montalvo said.
"When we look now at how is the best way to message to our customers, we're actually starting to bridge what's happening in-store to what we're talking about outside," Ms. Green said. "We're looking at the business more strategically and looking at how to really position Ikea in the consumers' minds in a way that makes sense."