Transcript IKEA - HEC Paris

IKEA
Best in France Case study
March 19th, 2004
Edwige Ravry, Peggy Nicod, Marine Jubé, Dimitri Cournède, Alexandre Krouglikoff
IKEA
 IKEA is a furniture retailer (it started in Sweden in 1943)
IKEA came to France in 1981
- It opened 2 shops to test the market in Bobigny
and Vaux en Velun.
- Its first real-scale shop was opened in 1983 in
Evry.
IKEA’S KEY FIGURES.
 World sales : 11.3 billion €.
 IKEA France : n°3 on the French market (7.3%)
4500 employees
14 shops
Total revenue : 943 M € (+6.6%)
24 M visitors/yr
WHY IKEA CAME TO
FRANCE
 North to South expansion starting in
Scandinavia.
 Huge French market.
 Increase economies of scale.
 France’s central position in Europe.
COMPANY VALUES:
Most values come from the founder, Ingvar
Kamprad:
Simplicity
Modesty
Honesty
Economical approach to business
Respect for the environment
HOW ARE THESE VALUES
INSTILLED ?
 Few efforts to make:
IKEA’s corporate culture is easy to relate to.
Recruitment policy : prefer young people and
original backgrounds.
 2-day seminar (the « IKEA way »)
to make employees more familiar
with the Company.
IKEA’S CLIENTS:
 Age group: 20 to 45
years old (especially 25/35).
 Customer profile: Qualified, working
couples and executives, living in
urban areas.
IKEA’S CUSTOMERS’
EXPECTATIONS
The products must be :
 Affordable
 Convenient
 Varied and creative
 Environment friendly
ADAPTATION TO
FRANCE
 Although the main trends are fixed by the
« Board », each national head-office is free
to implement them as it wishes.
 Nowadays, IKEA’s designers
also get their inspiration from
other countries than Sweden.
 The colour range for each product changes
from one country to the other.
EXPECTED
CONSTRAINTS
 Fear that the French would be chauvinistic
and not buy IKEA’s products.
 Fear of social conflicts and civil service
inefficiency.
 Fear that the market would be saturated
(BUT, Fly…).
STAFF CONSTRAINTS:




Social security charges.
Harsh social legislation.
35 hour working week.
Trade unions.
CSQ: high costs.
BUREAUCRACY:
 Civil service inefficiency.
 Huge amount of paperwork.
MARKET CONSTRAINTS:
 Highly competitive segment of the market
(BUT, Fly…)
 No market growth since IKEA arrived in
France.
AS A RESULT …
 Tough financial constraints : the breakeven
threshold is increasing.
 IKEA does not expand in France as much as
it would like to.
EVOLUTION OF THE
NUMBER OF STORES
Sweden
France
Number of stores
Number of stores
20
15
10
5
0
1964
1974
1984
Years
1994
2004
20
15
10
5
0
1964
1974
1984
Years
1994
2004
EVOLUTION OF THE
NUMBER OF STORES
Great Britain
Germany
30
Number of stores
Number of stores
35
20
18
16
14
12
10
8
6
4
2
0
1964
25
20
15
10
5
0
1974
1984
Years
1994
2004
1974
1984
1994
Years
2004
LOCATION BENEFITS:
 Well-developed transport and
communication network.
 Central position in Europe.
 Quality of life (eg. Good health service).
MARKET BENEFITS:
 Market potential: Almost 60 million
inhabitants (high purchasing power, 70%
pop. In urban areas).
 French customers turn out
to be open to new products.
WORKFORCE BENEFITS:
 The high level of social
security charges significantly
reduces the turnover.
 As a consequence the French staff is, on
average, competent and serious compared to
other countries.
Advice to companies settling in
France
 Be careful to hire the right person:
laying-off is costly (financially and legally)
 Find a good accountant and specialist in
french labour legislation
Advice to French Government
 Insure competitiveness of company
contributions
 Review labour legislation
 Review trade union system
WE THANK
 M. DUBRANA, directeur marketing
opérationnel
 M. PIVET, directeur des ressources
humaines
 M. DANIELSON, directeur financier
BIBLIOGRAPHY
 IKEA web site: www.ikea.fr
 Questionnaires.
OUR TEAM
 Dimitri COURNEDE
 Peggy NICOD
45 chemin de Grézes
81000 Albi.
6 rue Mesnil
75116 Paris.
 Marine JUBE
108 ch. des Communaux
38 190 Bernin.
 Alexandre KROUGLIKOFF
Les Cèdres 21
55 bvd de Charonne
75011 Paris.
 Edwige RAVRY
9 imp. Des Bouvreuils
78112 Fourqueux.