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Online Extra: Ikea's Design for Growth


After 20 years of operating in the U.S., Swedish furniture retailer Ikea Group is kicking into a higher gear. It has been opening an average of just one store annually, but it now plans to open four to five a year, with many of them in new markets, such as Phoenix, Atlanta, and Dallas. Privately held Ikea is increasing its push to sell to small businesses, as competition rises from companies ranging from Target (TGT) to Design Within Reach (DWRI).

BusinessWeek correspondent Louise Lee spoke with Lena Simonsson-Berge, a senior Ikea marketing and design executive about the U.S. furniture market and Ikea's growth plans. Edited excerpts of their conversation follow:

Q: How interested are U.S. consumers in modern-design home furnishings?

A: I perceive the U.S. market as still quite traditional when it comes to taste. It's increasingly opening up to modern design, yet I don't think modern design will take over traditional anytime soon.

I know of only two countries in Europe where overall design preferences are more modern than traditional: Holland and Denmark. At Ikea, 70% of our merchandise is modern, and [the rest] is in a traditional style. It's important to continue that mix, because modernism isn't taking over.

Q: Why is modern-design furniture rising in popularity?

A: People have less time. If your living room has a lot of traditional handicrafts and brass ornaments and decorations, if you have heavy velvet curtains, you can spend a lot of time cleaning them. People are interested in living a little lighter.

Also, the number of television shows and makeover programs are doing a lot to stimulate the home-furnishings industry in general, making more people look at what their homes look like. Then, they all want their own makeovers.

Q: How do U.S. consumers tend to balance modern and traditional design in their homes?

A: If you look at style preferences, people don't live in one single style. You have a mix. The bedroom might be the sanctuary, the most private room, and so still might be very warm and cozy and more traditional than the living room and kitchen.

In the family room and kitchen, nowadays many people have modern appliances and large-screen TVs, so those rooms might be more modern than the bedroom.

Q: How would you size up your competition?

A: There are more [players] coming into the market. Target is one, especially in accessories and smaller home furnishings. But they're helping the modern movement, so that helps us. Design has become more accessible because of Target. It's in more people's vocabularies than before.

And Design Within Reach's catalog is nicely presented. It presents the designers themselves, who they are, what they've done and their design philosophies. It creates credibility and educates people.

Q: What are some of the marketing challenges at Ikea?

A: This is a big country. We're big, but not as well known as we'd like. We're working on raising awareness. We want more people to discover that there's something for everyone at Ikea. In the U.S., our most important marketing tool, besides the store itself, is our catalog. It's 365 pages, more like a book than a catalog. We also do a lot of TV advertising. And e-commerce is of growing importance to us.

Q: What's an example of a new marketing initiative at Ikea?

A: Selling to small-business owners is an area we've put focus on recently. Small businesses are often run by women who want their office environment, whether it's at their house or elsewhere, to be homey.

At Ikea, we have items for home and office all under one roof. The Internet is a good way to connect with [these customers]. They're using the Net all day anyway.


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