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steve greenland and Bernadette van lunenBurg Swinburne University of Technology

Its all in the design: How IKEA makes you buy with clever store design

introduction This case study reflects on one of the most significant challenges facing modern-day retailersonline versus high street distribution and the viability of physical outlets. Here we examine the importance of place in the marketing mix, covering aspects such as channel strategy, store design objectives, and the critical role that outlets play in communicating with customers. Shopping behaviour has undergone a dramatic evolution over the past decade with many retailers struggling to keep up with the rapidly evolving, contemporary consumer (IBM 2011). Future success will go to those best able to adapt their delivery modes and communication strategies to this modern shopper. The case study looks at the Swedish furniture giant IKEA, which is not only surviving difficult economic times but is rapidly expanding its retail presence in the Asia-Pacific (APAC) region. A cornerstone of IKEAs success has been an innovative multichannel distribution and communication strategy.
n

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Trends in retail distribution and shopping habits

A poor global economic climate has had a massive impact upon consumer spending, resulting in mounting retailer insolvency. Australia is no exception, with downward-spiralling consumer confidence being further eroded by rising interest rates and a looming carbon tax. High street retailing with its significant operating costs has witnessed numerous casualties that include Clive Peeters (electrical), Colorado (clothing) and Just Jeans, as well as REDgroup Retail, the parent company of leading bookstore chains in both Australia and New Zealand (for example, Johnston 2011; Speedy 2011). The total proportion of online versus high street sales is currently still relatively small. However, despite the economic downturn, the online amount is growing rapidly (Bell 2011). Shopper segments that previously had not considered purchasing online goods have begun to appreciate the convenience and cost benefits offered by this shopping mode (Zehner, Bradley & Sanders 2011). A new breed of shopper has emerged; one that uses high street outlets to inform purchase decisions and then the internet to track down the best value. The expanding range of distribution channels and evolving shopper habits mean that retailers wishing to remain competitive must review their reliance on traditional store channels. Those that neglect to do this and bemoan the evolving marketplace will no doubt struggle further. The successful retailers of the future will embrace these changes and clearly demonstrate that the high expenditure involved with high street retailing is justified and has the maximum positive impact on customers.

IKEA distribution channels

IKEA is an example of a retailer that has gone with the flow and moulded itself to the changing world.Today, it operates a highly effective multichannel distribution and communication strategy that successfully blends the physical outlet with a paper catalogue, as well as online shopping. In 2010, 198 million copies of the catalogue were printed in 56 editions and 27 languages; globally, IKEA stores welcomed 590 million visitors (IKEA 2011a), with Singapores two stores alone seeing more than seven million visitors (Tay 2011). IKEA shoppers in many regions and markets also enjoy online shopping options. In Australia in 2011, IKEA offered online shopping to consumers in South Australia and Western Australia, but not in other states (IKEA 2011b). IKEAs distribution channels also reinforce the retailers key communication messages relating to its contemporary Scandinavian design and quality, value, as well as corporate social responsibility and sustainability. This strategy fuelled the rapid growth in IKEAs business, which tripled between 1999 and 2009. IKEA has also expanded rapidly in the APAC region and is now present in China, Japan, Taiwan, Singapore, Malaysia, Hong Kong and Australia. Given the success of the cost-effective online channel, one might imagine that the long-term future of IKEA stores may be in doubt. However, the opposite is in fact true: the number of outlets in China is predicted to double to 18 by 2015 For IKEA the physical (Fangfang 2010), and a further six stores are on the agenda in Australia its largest outlet remains core to its (news.com.au 2010). Indeed, in September 2011 IKEA openedClearly, for outlet in the Southern Hemisphere in Springvale, Melbourne. IKEA the physical outlet remains core to its future expansion plans. future expansion plans.

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Atmospherics and store design

Store design is generally something to which consumers pay little attention. Shoppers often only consider it when there is a problem or some level of discomfort is experienced, perhaps due to overcrowding, poor climate control, long queues or difficulty in finding a product. This is because the impact of retail design is more frequently subliminal in nature. Its effects are experienced in terms of basic emotional responses that shoppers find difficult to verbalise, and that translate into simple approach or avoidance behaviours. Put simply, we automatically tend towards, spend more time in and are more likely to interact with others in environments that we find more pleasing, while we avoid those that are less so. (See Greenland & McGoldrick 2005 for further insights.) While consumers are unaware of the impact of store design, retailers have become expert at using it to shape shopper attitudes and behaviour. Philip Kotler (1973) coined the term atmospherics to describe the impact of retail design. Atmospherics can be considered as the tailoring of the retail/ service environment to enhance the likelihood of desired effects or outcomes for users (Greenland & McGoldrick 1994). The concept of atmospherics reveals that retail designs can be created with specific objectives in mind, and considering these helps in appreciating the role of the physical outlet. Table 3.1 presents ten key generic communication and marketing objectives for store design, many of which seek to enhance approach behaviour. (These are in addition to health and safety and other compliance considerations.)

Top ten generic store design objectives

1 Communicate the corporate image and differentiate it from competitors images 2 Complement other channels of distribution 3 Complement other channels of communicationfor example, media campaign support 4 Stand out on the high streetvisually attracting new and existing customers 5 Communicate the range of services and products on offer 6 Facilitate efficient and friendly service delivery 7 Control customer movement to maximise impulse purchase opportunities 8 Create appeal for specific customer segments/target groups 9 Provide a comfortable shopping environment and favourable customer experiences 10 Increase customer interaction with the retailer and build the relationship

Table 3.1

While the concept of atmospherics may be clear, creating designs that achieve specific objectives is often difficult. This is because the environmentbehaviour relationship is highly complex and our understanding of how certain features affect behaviour is incomplete. Furthermore, achieving some

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achieve specific objectives is often difficult.

Creating designs that

objectives may oppose the fulfilment of others. For example, designing stores that maximise the duration of a shoppers visit may actually end up irritating shoppers and result in avoidance behaviour. Numerous studies have examined the impact of various design dimensions upon customers and staff. A summary of these effects is presented in Table 3.2.

Table 3.2

Potential atmospheric customer effects

SenSory cue ViSuAl AtmoSphericS dimenSion colour potentiAl reSponSe/impAct Affects mood and emotional states Health/physiological reaction Image reinforcement Temperature perception Spatial demarcation and direction of instore traffic User satisfaction Attention (breaking through the attention gate) Approach behaviour (attraction to goods handling) Task performance Image perception Direction of instore movement Visual privacy Metamerism (colour) varies under different lighting Psychology and mood (connecting the outside world) Direction of instore movement Symbolic association/psychological connotations Interaction with others and reaction to space limitations Ergonomics and productivity Efficient flow of instore traffic Mood/emotional response Avoidance behaviour/stress (crowding) Clearly demarcated zones/dominance and territoriality Identity reinforcement/standardised formats Personal space (visual and aural privacy, performance) Speed of movement Emotional response Image reinforcement Perceived length of shopping trip Arousal, task performance Acoustic privacy

lighting/brightness

natural light/ windows pattern and shape spatial arrangement

AurAl

music

Sound/noise

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tActile

temperature comforthard and soft zones contrasting fabrics

Performance, interaction with others Speed of movement/time spent in area Tactile quality associations/evaluation/arousal Aggression/irritation/fatigue Performance Mood/behaviour/arousal Quality associations and image reinforcement Learning and memory recall Arousal, approach behaviour

olFActory

pollutants/air quality negative ions Scents and odours

tASte

Food/drink

Source: Based on S. Greenland & P. J. McGoldrick. (2005). Evaluating the design of retail financial service environments. International Journal of Bank Marketing, 23(2), 13252.

iKea store entrance communicating the corporate logo and Brand sweden connotations

Fulfilling marketing objectives through effective store design

IKEA uses atmospherics to achieve a wide range of marketing and communication objectives. Communicating the core brand principles of value and quality is, of course, a key function of the retail outlet. IKEA is synonymous with Brand Sweden. All stores have exteriors and entrances emblazoned in

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colours matching the Swedish flag. Global surveys associate Swedish products with quality, technological innovation, user friendliness and social responsibility (The Swedish Institute 2011a, 2011b). These associations are further supported with instore exhibits and information regarding IKEAs stringent furniture quality testing, as well as information about their Swedish designers. Furthermore, the store restaurant not only enables shoppers to stay in the outlet for longer, but the low-priced, exclusively Swedish menu matches the brand values, as does the separate grocery section encountered after the main checkouts, which also sells Swedish food items.

iKea restaurant food reinforces the swedish brand and value image associations.

The shopping experience

reinforces the concept of value obtained through self-service.

Shoppers are constantly reminded of IKEAs value associations via messages throughout the store (for example, on walls and in elevators). The shopping experience reinforces the concept of value obtained through self-service; this is also communicated in the instore map, which virtually every shopper has in their hands for the duration of their shopping trip. The flat pack furniture items not only provide IKEA with a clear competitive advantage in terms of distribution efficiency, but also send a clear message relating the added value that customers gain by choosing to construct the items themselves. Similarly, the design of the homewares section of the store, with products displayed on pallets, further reinforces perceptions of cost saving.

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the 2011 springvale store map of the furniture showroom and the iKea shopping concept

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Self-serve furniture area

Ground floor
1 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33

Find your way in the

Find your way in the

Market hall
Ground floor
Meeting point 3

Self serve furniture area

Check-outs Exit

To : Self serve furnuture area Check-outs Exit

Shortcut

Wall decoration and Mirrors Lighting

Bathroom accessories

Home organisation

Shortcut

Bed textiles Check-outs Tableware

Home textiles

Bargain corner Customer service area

Exchanges and returns Home delivery service Merchandise pick-up

Exit

IKEA Bistro

Playroom IKEA Swedish Food Market

Smland
Smland pick up

Cookshop

Self-serve furniture area Check-outs Customer service area

Merchandise pick-up Exchanges and returns Home delivery service

IKEA Bistro IKEA Swedish Food Market Playroom Smland Exit

Tableware and Cookshop

Cutlery Glasses and jugs Pots and pans Tableware

Rugs
Rugs Oriental rugs

Lighting
Intergrated lights Floor lamps Table lamps Wall lamps Shade bar

Home textiles
Blinds Curtians Cushions and throws Fabrics

Bathroom accessories
Bath mats Shower curtains Towels

Wall decoration and Mirrors

Frames and pictures Mirrors Ready to hang

Opening hours
Monday to Friday Saturday to Sunday 10am - 9pm 9am - 7pm
Inter IKEA Systems B.V. 2011

Bed textiles
Bed covers Bed linen Pillows Quilts

Home organisation
Boxes Cloth organisers Desk accessories Laundry organisers Shelves and brackets

Home decoration
Candles and candle holders Clocks Plant pots and plants Vases and flowers

IKEA Springvale
917 Princes Highway Springvale VIC 3171 Phone: (03) 8523 2154

the 2011 springvale store map of the homewares market hall and self-service furniture area

Another obvious objective of IKEA outlet design is to keep shoppers in the store for the maximum time possible. The longer shoppers spend in a store, the greater the chance of an impulse purchase. By offering child-care, rest-room and restaurant facilities, shoppers basic needs are taken care of. This facilitates the lengthy process of leading customers through the entire store with its numerous

Pcs

Product name

Article number

35

Rugs

Price

Aisle

Home decoration

Location

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Homeware items displayed on pallets reinforce the customers value perception of the iKea offering.

merchandise displays. The store design uses the concept of hard and soft zones to good effect. The hard zones are delineated by hard surfaces and encourage faster movement, while the soft zones use product displays, spot lighting and softer surfaces to slow down consumers and encourage browsing. Most shoppers enter IKEA for a particular furniture item or substantial home purchase, such as bathroom or kitchen fixtures and fittings. These items make up the area encountered as shoppers enter the
Hard zones of the pathways encourage faster movement, while the soft zones use spot lighting and softer surfaces to encourage browsing.

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initial showroom section of the store. However, in order to get to the checkouts shoppers must also navigate the substantial homewares market hall section. This area contains a huge array of kitchen, lighting, bathroom, textile, floor covering and decorative items, which are primarily impulse purchase items. IKEA achieves the top ten generic store design objectives in many ways, some of which are detailed in Table 3.3.
Table 3.3

How IKEA achieves some of the top ten generic store design objectives
1
n flat-pack self-assembly furniture, as well as the warehouse-style goods collection and checkout n low-cost restaurant with Swedish food

Communicate the corporate image and differentiate it from competitors area, which reinforce the idea of value

n special offers, loyalty membership, family card

n corporate information and posters on walls, in elevators, restaurant, etc. n staff uniforms

n consistent use of corporate logos and colour schemes throughout the store n displays showing product quality testing.

n consistent ranges, images and themes across the different channels

Complement other channels of distribution

n advertising the other channelsfor example, catalogues in high-profile instore positions n special instore displays that have been communicated via catalogue and online offers.

n consistent messages, images and themes throughout the store, even in rest rooms and caf, n catalogues available instore for customers to collect, carry and make notes in.

Complement other channels of communicationfor example, media campaign support that match the promotional messages communicated across other media channels

n maximise length of store frontage n colourful backlit exterior signage

Stand out on the high streetvisually attracting new and existing customers

n huge distinctive yellow and blue signage n high-profile locations with high traffic flows (pedestrian and road).

n separate product/service areas themed around different rooms in the house n store maps, layout information and clear signage

Communicate the range of services and products on offer

n room displays presenting interior design ideas and homewares combinations n visible and accessible staff help/information points.

n visible and accessible staff help/information points n staff uniforms n self-serve checkouts for fast processing of transactions

Facilitate efficient and friendly service delivery

n standardised design/retail format across the network, enhancing customer familiarity and n ergonomically sound environment that functions as a store n adequate checkout and car pick-up points n adequate parking.

aiding store navigation

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7 control customer movement to maximise impulse purchase opportunity n take advantage of the principles of compliance and conformity using guided walkways (lights, floor patterns and surfaces, colours, signs, barriers, entrance, escalators, lifts) to lead the customer around the entire store along a specific path n maximise the time customers spend in the store by controlling direction of movement past displays, promotions, information, and sales staff n have more store entrance points compared to exits n soft zones/comfortable seating areas/wide aisles to reduce speed of movement n grocery and snack section after main checkout. 8 Create appeal for specific customer segments/target groups n product ranges that appeal to specific target market groupsfor example, young singles, families, etc. n services and facilities needed/required by specific target market for example, young families, etc. n colour schemes and designs that appeal to specific target market groups. 9 Provide a comfortable shopping environment and favourable customer experience n physically comfortable and aesthetically pleasing environment n appropriate temperature, humidity and ventilation n use of complementary colour schemes n appropriate personal space (avoid crowding, bottlenecks, adequate privacy where required, reduce territoriality and avoidance behaviour) n restaurant, child-care facility, rest rooms. 10 Increase customer interaction with the retailer and build the relationship n increase shopper interaction with IKEA via the storefor example, kitchen planner, catalogue dissemination, etc. n store loyalty membership, family card.

Conclusion
While online retail sales will no doubt continue to rise, the physical retail outlet remains the key channel of distribution for many product and service categories. However, given the enormous expenditure associated with maintaining high street networks, organisations must clearly justify maintaining this distribution channel. Many retailers and service providers now consider their stores in terms of achieving specific marketing objectives and ensure that they are fully integrated with their other distribution and communication channels. Retailers such as IKEA that have developed effective integrated systems are more likely to withstand difficult economic times and survive in the longer term.

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Questions
1 One of the strongest arguments against traditional main street retailing relates to cost. What are the key dimensions of cost associated with the store distribution channel? 2 Thinking of your own shopping habits, how is your expenditure and shopping behaviour currently split between online and the main street? To what extent does this exercise help you to appreciate the roles of retail stores and websites? 3 What can physical stores achieve in terms of promotion that other channels of distribution cannot? 4 To what extent is the IKEA store a medium for communicationrather than just a place to buy things? 5 This case presents some examples of IKEA store design features that achieve particular marketing objectives. Visit an IKEA store, or another type of retail outlet, and find other examples of design features that impact upon consumer behaviour and attitudes. 6 Brand Sweden is being used to enhance company reputation; what are the potential risks involved with doing this and how might they be addressed

References
Bell, N. (2011). Its adapt or die for retailers. The Sydney Morning Herald, 4 July. Retrieved from <www.smh.com.au/ business/its-adapt-or-die-for-retailers-20110704-1gyn1.html#ixzz1aLeR0k4w> (2 November 2011). Fangfang, L. (2010). IKEA to double stores in China. China Daily, 16 December. Retrieved from <www.chinadaily. com.cn/bizchina/2010-12/16/content_11711019.htm> (2 November 2011). Greenland, S. J. & McGoldrick, P. J. (1994). Atmospherics, attitudes and behaviour: Modelling the impact of designed space. The International Review of Retail, Distribution and Consumer Research, 4(1), 116. Greenland, S. & McGoldrick, P. J. (2005). Evaluating the design of retail financial service environments. International Journal of Bank Marketing, 23(2), 13252. IBM. (2011). Capitalising on the Smarter Consumer: Executive report. IBMs Institute for Business Value Executive Report. Retrieved from <www-935.ibm.com/services/au/gbs/pdf/capitalising-smarter_consumer_aus_study_ final.pdf> (2 November 2011). IKEA. (2011a). IKEA websiteIKEA facts and figures section. Retrieved from <www.ikea.com/ms/en_AU/about_ ikea/facts_and_figures/index.html> (2 November 2011). IKEA. (2011b). Welcome to IKEA SA and WA, How to shop online. Retrieved from <www.ikea.com/ms/en_AA/ customer_service/how_to_e-shop/how_to_e-shop.html> (2 November 2011). Johnston, E. (2011). Thrifty shoppers and high dollar spark collapses. The Sydney Morning Herald, 8 July. Retrieved from <www.smh.com.au/business/thrifty-shoppers-and-high-dollar-spark-collapses-20110707-1h4q8.html> (2 November 2011). Kotler, P. (1973). Atmospherics as a marketing tool. Journal of Retailing, 49(4), 4864. news.com.au. (2010). IKEA set to open up to six new Australian outlets. news.com.au, 6 September. Retrieved from <www.news.com.au/business/ikea-set-to-open-up-to-six-new-australian-outlets/storye6frfm1i-1225914729314> (2 November 2011). Speedy, B. (2011). Borders, Angus & Robertson parent REDgroup Retail in voluntary administration. The Australian, 17 February. Retrieved from <www.theaustralian.com.au/business/borders-angus-robertson-parent-redgroupretail-in-voluntary-administration/story-e6frg8zx-1226007712326> (2 November 2011).

case 3 Steve Greenland and Bernadette van Lunenburg Tay, E. (2011). How IKEA embraces sustainability globally and in Singapore. Green Business Times.com, 24 May. Retrieved from <www.greenbusinesstimes.com/2011/05/24/how-ikea-embraces-sustainability-globally-and-insingapore/> (2 November 2011). The Swedish Institute. (2011a). How the image of Sweden can enhance a companys brand. Retrieved from <www.sweden.se/upload/promotion_forum/Promotion_Tools/Infoblad%20f%C3%B6retag%20engelska.pdf> (2 November 2011). The Swedish Institute. (2011b). Brand SwedenThe road to an updated image of Sweden abroad. Retrieved from <www.si.se/upload/Brand-Sweden.pdf> (2 November 2011). Zehner, D., Bradley, K. & Sanders, M. (2011). Online shopping starts to register. Business Spectator, 14 April. Retrieved from <www.businessspectator.com.au/bs.nsf/Article/Australian-shoppers-come-on-down-the-queue-at-the-pd20110406-FMVKY?OpenDocument> (2 November 2011).

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Photo and image credits

T/C