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IKEA to focus on product quality

IKEA Southampton 725 x 500

Reuters has reported that IKEA is focusing on improving product quality and streamlining its manufacturing processes to control costs, as it looks to take on new competitors and meet evolving expectations from consumers who are increasingly demanding more durable products.

Peter Agnefjall, IKEA Group CEO said: “Customers expect us to do more (on quality). And nowadays you can't really make products that are throwaway: when you buy a sofa table it needs to be built to last," he told Reuters.

Learn more about IKEA’s target of €50bn sales by 2020

IKEA is noting competition from online retailers such as Amazon and Alibaba, as well as the increased focus on home furnishings by brands like Next, Zara and H&M, who are more traditionally known for their clothing.

The report suggests that IKEA is keen to brush off its image of disposable quality and complicated self-assembly, in a bid to attract a wider range of consumers, noting that reaching its target audience with high-end ranges will be challenging without compromising its affordability credentials.

To address the matter of offering better quality goods while maintaining low prices, IKEA has followed the automotive industry by developing platforms for five product groups for economies of scale.

The wardrobe and drawer categories are the first to have had the system applied, and IKEA is understood to be planning to roll this out during 2017.

Henrik Elm, purchasing manager, has been pushing the strategy - which features new materials and easier-assembly innovations - across IKEA's supply chain.

He commented: "We see value for money as one of the most important things to secure growth, and we know this is something which makes our customers sometimes choose not to go to IKEA."

Peter Agnefjall added: "The most important for us is to make our customers more pleased with their products, and then we will surely also reach new customer groups,"

Marcus Engman, chief designer, said: "One thing we stretch ourselves to do, is to find customer groups we don't reach today."

Kantar Retail's Ray Gaul said: "IKEA is at an interesting crossroads where they have to go back to people who have changed their lifestyle and say 'we aren't just the brand you experienced 10-20 years ago, we have other things that might be interesting for you',"

Verdict Retail’s Patrick O'Brien believes that IKEA is unlikely to start marketing ranges as premium, stating: "The challenge for IKEA is to make people aware of their higher-quality goods whilst at the same time maintaining that democratic appeal."

Source : Insight DIY

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06 July 2016

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