Ikea jockeys for space in the DIY market

Home Channel News, Nov 6, 2000 by Brae Canlen

The home furnishings behemoth makes inroads with lighting, kitchens and decor adjacencies

Furniture sold in Ikea has always been known for its modern lines and its low cost. With 157 stores in 29 countries, Ikea is the world's largest home furnishings retailer. In the United States, however, Ikea carries the image of a place where college students and apartment dwellers buy their furniture.

But a walk through Ikea's latest U.S. store -- all 200,000 square feet of it -- in San Diego exposes an assortment of merchandise that, in several departments, could be found in most home centers. The selection will certainly compete with the Lowe's under construction next door. Home improvement retailers in the San Francisco arm and in Orange County, Calif., might also take notice, as Ikea is planning new locations there. It is also building an 1.8-million-square-foot distribution center just north of Los Angeles.

Ikea's lighting, flooring, kitchen cabinets, sinks, window treatments and storage are displayed in a unique style that has cultivated legions of loyal shoppers from every walk of life, who come because the merchandise is trendy and the store is fun to shop. But the real draw at Ikea is price.

A cobalt-blue ceiling light fixture with three spotlights costs $9.95. A wood-framed bathroom mirror with shelf goes for $29. Who can resist a sleek stainless-steel tea kettle for $14.95? An array of kitchen gadgets that look like they came from Pottery Barn are offered for less than $5.

"The stuff is well designed and it's cheap," said Connie Johns, who visited the San Diego store six times during its first month of operation. She also showed up on Sept. 20, the store's opening day. "I couldn't find a parking space, so I had to leave," Johns reported. "But my sister got in. She said the the checkout lines stretched all the way through the store.

Local television stations were also present at the opening, which drew 22,500 customers in one day. (Some even camped out the night before.) Many San Diego shoppers expressed gratitude because they no longer had to drive 85 miles to the nearest Ikea in Orange County. And the new Ikea had all the amenities they'd come to expect, like a free day care center for the kids and a cafeteria that serves inexpensive meals.

Taking private label to the hilt

Like most Ikeas, the San Diego location funnels shoppers entering the store up a wide staircase. A horseshoe path winds through the second-story showroom, where most of the ready-to-assemble furniture is displayed. Customers are led through each department by a floor plan that defies shortcuts. Vignettes of every configuration and size encourage browsing and present multiple opportunities for cross merchandising. For example, a round rattan side table might also appear as a footstool and a plant stand. Chairs and stools are displayed in dinette sets, with desks, against kitchen counters, and finally, in sections devoted exclusively to chairs and stools.

Almost 90 percent of what Ikea sells is designed and manufactured exclusively for the company. The Sweden-based private company sources products from about 50 countries, often mixing parts from different suppliers in a single piece of furniture. Exotic and sometimes unpronounceable names don't seem to throw off its customers, most of whom are looking at the price, anyway. Signage on the fully equipped "Abstrakt" kitchen makes the math easy: $2,845 for the white acrylic cabinets (including handles and visible molding), $380 for the sink and faucet and $3,455 for the countertop. (Ikea doesn't sell appliances, but the vignettes display GE ranges, dishwashers, refrigerators and microwaves.) Total price: $6,680.

Over at the "Kvadrat" kitchen, a consumer NHCN interviewed while shopping the store was using one of Ikea's disposable tapes to measure beech veneer cabinets with tempered glass fronts. The $3,495 price tag is cheaper than comparable models at Home Depot, he said. As for other retailers selling kitchens this shopper has visited -- forget about them. "Home Depot will tell you how to [install] it, though," this consumer said. "I think these people just sell."

One of Ikea's reputed secrets to success is its reliance on customers to carry, load, haul and assemble the furniture they buy. (Even small items are wrapped and bagged by their purchasers.) Kitchens are the exception, however. Ikea offers a free instruction guide and video, but many customers choose one of the "certified" Ikea service providers who complete a three-day course in installation, customer service and product knowledge. Ikea will also send representatives for in-home measurements; the charge is $60, which is later subtracted from the overall cost of the project.

At the store level, sales associates sit with customers to draw up plans and print out estimates. Kitchen vignettes, scattered throughout the furniture showroom, are augmented by a two-wall display of cabinet doors in 20 styles and finishes. (Listed prices are $1,195 to $2,495 for a standard 10- by 10-foot kitchen.) In another section, door-less cabinets allow customers to get a better look at the interior shelving and mechanisms.