Sunday, September 06, 2020

The Truth about IKEA

It is pretty cool that among all the stores in the world - Johan's book chose IKEA Alexandra as the cover.  Available since 2010, I may read it since 2014-2015, some of the the things do ring true.


We took a LONG time to go online and maybe it is because it is as it is, we want people to go through the store and be lured to pick up many more things..

All the Sales Supply Support people will find the following very familiar , always trying their best to keep Service Level 1 Products up.

The following probably illustrates even better how IKEA is as much a Logistic business as it is a retail business.  How can we keep all Service Level 1-3 products always available in the store with limited space?  With the priority given to Service Level 1 products rightfully, there may hard to stock the Service Level 3 products.

Yet at the same time, there is a desire to ship the products directly from Supplier to store, but the turnover rate of the products in the store in weeks while a entire container will be enough for months...

Yet, there is the curse of instant gratification which applies to both an egg cup and leather sofa.  Johan suggests maybe that Instant Gratification should not apply to bigger products like kitchen and sofa - to free up another 30% of store warehouse space.
Hence, it seems the following principles are  contradictory but true at different levels:
- Instant Gratification  hence all things must be in stock according to IKEA mantra.
- Yet, we are told  that Service Level 2,3 products move slowly and hence may not need to be in stock
- Best to ship Supplier to Floor, which by its turnover rate may be suitable only for Service Level 1 products. 

Johan seems to suggest:
- For even service level 1 products best sellers like certain sofas, there should not be instant gratification because many customers want it to be delivered anyway.
- Probably can free up warehouse space for a) Service Level 2-3 products, b) more supplier to floor shipping and c) a depth of products in each segment as stated below why it is to be important.

And finally to the dark secrets of IKEA we all have an issue with, if we bother to learn more:

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There are 2 parts of it: One is the complicated structure of IKEA that allows it to pay little taxes - one could argue that all MNC does that to some extent. 

The other part of it is how IKEA coworkers are sold the idea that they are "creating a better everyday life for the many people", on a social mission, to fatten the wallets of a man/family who is pretending to be poor.  If you search, you will be able to find Ingvar Kramprad in suits when he first started out IKEA before the later look of an old man wearing a flannel shirt for years.. 

 Still, this maybe too like the ongoing debate with Workers Party and the government. Why do you need so much money for? Spend it on the people.  I must say through all these means, IKEA has been able to open store after store - with no need to raise money through the stock market or having any other investors...

That says a lot, but the question to ask while it really works to grow the brand, what good does it do for the coworkers, customers and the planet if IKEA keeps growing? 

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