IKEA gets its act together in home
January 13, 2003-- Home Textiles Today,
Though IKEA has been enticing U.S. customers for 18 years with its Swedish-influenced, value-priced products, it has shifted its textiles business over the past year to more closely fit an American style of shopping, with an emphasis on full coordination.
"We went from having products in different departments to ones that coordinate," said Pernille Lopez, president, IKEA North America. "It's more of a fashion business; people want to see things that go together."
Designs have always revolved around Scandinavian, country and modern looks — not always to the tastes of American home textiles consumers. But over the past few years they have been developed to translate throughout all of the textiles categories, with each design having several options.
"Everything is coordinated, with the exception of Oriental rugs," said Lisa Davis, commercial manager, IKEA North America, textiles.
Modern patterns constitute the majority of designs for IKEA, while country styles have the fewest. New collections will now be brought in twice a year, during February and August.
Textiles is definitely a growing business, Lopez said. Although the Conshohocken store was planned before the new textiles department existed (it still incorporates some of the newer elements), the new layout for the department will also be seen in other, newer stores.
"[Textiles] is one of the engines going forward," Lopez said.
The Vancouver store, which opened last April in the Coquitlam area, was the first unit to adopt the new home textiles layout, where instead of separating the product categories, they were integrated together based on coordination.
"These products are then merchandised where the coordination is visible and can provide easy shopping choices for the customer, rather than in a functional shop," said Davis. However, she noted that some categories are best displayed by function because of planned shopping behavior or non-descript style, such as quilts and pillows, fabrics, curtains, suspension systems, door mats and Oriental carpets.
"We're trying to determine, with the new layout, how much textiles can grow," said Davis.
Over the past two years, textiles has been about 12 percent to 14 percent of sales, Davis said. She didn't expect that number to change too much, since many other businesses within IKEA are also improving their offerings and merchandising. But she said that once most stores implement the new department, the company should see all stores leaning toward the higher end of that range.
Previously segregated from the other textiles categories, rugs will now be placed in the department. And while most products are divided among sleeping, socializing and eating (which is 40 percent, 40 percent and 20 percent of the textiles merchandise, respectively), there will be some products that cross over, Davis said. This new arrangement "should produce add-on sales; that's how customers shop in North America."
Davis added that IKEA also strives to offer the lowest prices in the marketplace, and decreasing prices on items is not unusual. IKEA considers discounters such as Wal-Mart, Kmart and Target its biggest competition, with Wal-Mart being the most price competitive and Target offering the most unique design in the low price category. But it also watches others like Crate & Barrel, Bed Bath & Beyond, Pottery Barn and Urban Outfitters for new materials, designs and trends. "We're very goal oriented on low prices," she said. "That's where the most development lies."
A top-of-the-line twin down quilt, for example, cost about $179 a few years ago; IKEA plans to offer a comparable quilt for $119 in the new catalog, she said. And an approximately 6' 6" x 4' 6" handmade wool rug that retailed at around $150 will be in the 2004 catalog for less than $80. Davis said that sheets will also be reduced in price in the United States. Buying in larger volumes helps cut costs, as well as such things as suppliers buying new equipment.
Well-priced products have been the company's focus since the beginning. "It all comes down to being competitively priced on anything we sell," Davis said.
"In most product categories, we are priced a clear distance from the competition with the width of IKEA's range the low-price bracket," she said. "Where we do offer mid- and higher-priced articles, we are typically still priced mid to low on the market." Bath towels, sheets and pillows are some areas IKEA really has to watch, she added. "Competition does not even come close to quilt covers, Wilton and hand tufted carpets. Here we have a wide range of products priced below the competition's lowest price offer."
Some textiles categories do particularly well, and the rug business is "tremendously successful," said Lopez. Davis added that most competitors don't come close to its prices. Even modern designs, which have very high price points elsewhere, are reasonably priced here, she said. IKEA also entered into what it calls "bedside carpets," and that is also performing well, as are runners. Oriental rugs also do well, though that hasn't changed much over the last few years, Davis said.
Lopez also mentioned the huge opportunity the retailer has in quilts.
Fabrics were just re-introduced to the stores, after a few years' absence. "It supports coordinating products and the home decorative part of business," said Lopez. "It's more for coordination and service." Davis added, "It's an icon product for IKEA," though it's "not big in North America." However, with 200 fabric patterns to choose from, IKEA gives the customer an alternative to fabric shopping at Jo-Ann, Hancock or Wal-Mart, whose patterns tend to be more traditional.
The retailer also added buying guide signage in its new stores, to help people decide how to buy some of the bedding products and give information on fill power or thread count. Bedding also underwent a shift so that the American products were on the same par as stores in other countries.
The "socializing" portion of textiles - which includes decorative pillows, rugs and throws — is also a big business for IKEA, said Lopez. However kitchen and dining textiles do not constitute a huge volume, Lopez said.
IKEA sources from 3,000 manufacturers worldwide, Davis said. In the textiles area, China, Pakistan, India and Turkey are prominent resources, although North American suppliers are growing, especially countries like Mexico.
Lopez also discussed the businesses that complement the stores. The catalog, which is mailed annually to more than 110 million people worldwide, does generate some mail order sales, but its "purpose is to drive people to the stores," she said.
The company also doesn't sell online, though it has an informational web site. Adding the e-commerce is another possibility for the future, though nothing is in the works, she said. "We want to make sure we're well prepared and integrated so that it's a total service to the customer."
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