EXCUTIVE SUMMARY
IKEA, the renowned Swedish furniture brand, has established itself as a global household name, with its products adorning homes worldwide The company focuses on operational efficiency across various sectors, including design, distribution, packaging, and sourcing, aiming to maintain low costs while delivering high-quality furniture.
IKEA aims to invest in the Vietnamese furniture market by establishing a chain of stores in Ho Chi Minh City, supported by strategic marketing and innovative developments The brand will offer Vietnamese customers affordable, high-quality, and functional furniture designed to meet their needs This comprehensive business plan emphasizes efficiency across various areas, including design, distribution, packaging, and sourcing, ensuring a seamless experience for consumers.
IKEA specializes in designing and selling both pre-assembled and ready-to-assemble furniture, kitchen appliances, home accessories, and a wide range of other goods and services for the home With a focus on affordability, IKEA provides a diverse selection of furniture styles that enhance any living space, including options for bedrooms, kitchens, bathrooms, and outdoor areas.
IKEA offers a diverse selection of stylish and functional home furnishings designed to meet the needs of every customer Through the innovative IKEA Concept, the company aims to enhance the lives of many by providing affordable solutions that promote better living at home.
Favorable cost position and quality guarantee
IKEA offers favorable prices to its customers Price of IKEA includes warranty services to guarantee quality for customers.
IKEA effectively balances its business model with local cultural nuances, recognizing that "life situations create the need for home furniture." By tailoring its offerings to meet the diverse needs of customers, IKEA ensures that it addresses various life circumstances, making it a diligent retailer in the home furnishing market.
The feature helps the cost of furniture to fall and inspires customers to make useful products on their own based on given instructions.
Vietnam's furniture market presents a lucrative investment opportunity, with an anticipated annual growth rate of 17.35% over the next decade By 2025, the market volume is projected to reach $3,106 million, and the number of users in the furniture sector is expected to increase to 21.7 million.
By 2025, Gen Z is expected to represent approximately 25% of Vietnam's labor force, totaling around 15 million individuals, according to Nielsen To tap into this demographic, IKEA plans to focus on serving Gen Z and millennials aged 20 to 45 in Ho Chi Minh City The growth of the Vietnamese middle class and the emergence of small businesses are anticipated to be significant factors driving IKEA's success in Vietnam.
IKEA's packaging technology system is designed to accommodate a wide range of products and meet diverse customer needs To enhance efficiency, in-store logistics personnel technology will be implemented to optimize the movement of goods within stores Additionally, the IKEA Kreativ app serves as a built-in analyzer, enabling users to virtually estimate furniture sizes.
IKEA faces competition from local furniture stores that have captured significant market share in Vietnam Nevertheless, the company's commitment to affordable home furniture, DIY convenience, and sustainability sets it apart from its competitors in the market.
The IKEA Group will be organized in four following Departments: Operation, Marketing, Financing and Commerce.
Income sources: the company’s revenue is primarily from sales of its products in Vietnam market including 18 main categories
Expenses: the company’s expenses is from salaries and wages, equipments and supplies, marketing, R&D and administrative costs They are based on managemnet;s estimates and industry averages
IKEA's investment in the Vietnamese market is projected to reach 450 million Euros, with funding sources including 30% from shareholders, 20% from retained earnings, 30% from bank loans, 10% from debentures, and 10% from trade credit.
COMPANY DESCRIPTION
Founder & Board
Ingvar Kamprad The Founder of INKEA
Chair and Board, Director, Entrepreneur, Investor, Advisor and Mentor
Retail CEO, Chair, Non-Exec Director
Professional Board Member and Industrial Adviser
Member of the Supervisor Board
Member of the Supervisory Board
Deputy CEO and Chief Financial Officer
Product and Service
IKEA covers product design with innovative home furnishings that are cost effective Providing this outstanding product experience is only made complete by wrapping an amazing service experience around it
The exceptional design of service, rather than the products themselves, transformed consumers' weekend visits into memorable experiences Effective service design creates a cohesive customer journey across all interactions with the business Three key elements were instrumental in achieving this success.
Customers can easily find the specific products they want by browsing online The product information for the store includes details about the exact aisle and bin where the item can be located, making it convenient for shoppers to pick up their desired items.
The bulk of our trips to IKEA were spent browsing the merchandise rather than standing in line because of the store's rapid checkout process
The comprehensive service design significantly improved client satisfaction and increased revenues, highlighting the equal importance of service design alongside product design in influencing customer purchases The IKEA ecosystem provided us with convenient shopping methods, enhancing our overall experience.
Service design is poised to gain prominence over product design, mirroring the user experience industry's evolution from a focus on usability to a broader understanding of user experience As competition intensifies, it becomes increasingly challenging to stand out in a way that is not easily replicated A key strategy for business differentiation lies in the collaborative design of both product and service experiences.
Transitioning to a holistic user experience strategy can be challenging, often clashing with existing organizational structures Yet, a truly comprehensive business experience for consumers is achieved only when products and services are seamlessly integrated.
To effectively implement innovative thinking, organizations must navigate departmental hierarchies that may resist change UX professionals should focus on creating memorable service and product interactions that leave a lasting impression on consumers.
Bedroom furniture encompasses a range of essential items, including wardrobes, beds, chests of drawers, bedside tables, mattresses, duvets, bedding, and clothes boxes Designed to create a comfortable and cozy atmosphere, Ikea products cater to the needs of even the most discerning customers, offering a variety of choices that enhance the aesthetic and emotional appeal of any bedroom.
Ikea, with 40 years of kitchen expertise, offers fully customizable options to enhance family gatherings and mealtime conversations Their convenient services range from planning to installation, ensuring a seamless experience With three main kitchen systems available, Ikea caters to diverse cooking needs, making it easy for anyone to find the perfect solution for their home.
Flexible system: design your own kitchen, many options for styles and fronts, matching appliances, 25 years of warranty
Create your own combination, easy to assemble and disassemble, 10 years of warranty
Basic kitchen for basic cooking needs, affordable
Transform your bathroom into a personal oasis with stylish, multifunctional accessories that complement your décor Take advantage of Ikea's Order-and-Install service to maximize efficiency and save time on your bathroom upgrades.
In the summer, your garden or balcony transforms into an additional living space, which is why IKEA prioritizes outdoor products Customers can explore a curated shopping list featuring popular outdoor series, top-rated items, and a variety of inspiring styles for IKEA garden furniture.
Long-term aim of the business
IKEA's first branch in Vietnam is fully owned by the IKEA Group, which has transferred key staff to ensure effective management While the Group oversees design, finance, and management, local personnel will handle other operations The primary focus is on supplying furniture to the Vietnamese market, with plans to establish a domestic factory aimed at reducing costs by approximately 20%, enabling IKEA to better meet local demands and capture a significant market share.
IKEA aims to establish itself as a leading furniture brand in Vietnam, with plans to expand its market presence across various provinces and cities The company envisions its furniture becoming a "national" brand, targeting to capture over 70% of the furniture market in Vietnamese households and ranking among the top five preferred choices for young consumers.
Infrastructure: Complete the construction of the factory in 1 year
Profitability: Make profit after 2 years of operations in Viet Nam
Productivity: Commodity output remaines at a stable level
Create products with standard quality
Update and select models suitable to the target market demand
Customer service: Make customer satisfy with the positive experience in online web as well as offline store
Shipment service: Make fast and careful shipment to avoid damage to the product
Reduce greenhouse emissions by reduce the carbon footprint from stores
IKEA ranked 41st among the best global brands aroung the world in 2006 with a brand value of $8,763
Strong internationally known brand attracting key demographic customer groups
Strong brands enhance customer loyalty and lead to repeat purchases
IKEA has to acknowledge its weaknesses in order to improve and manage them This can play a key role in helping it to set objectives and develop new strategies
For eg: There are only three retail shops in Hong Kong
Problem of product recall due to faulty base
For eg: IKEA had recalled Parodi and Apelsin glass cases
Own industrial group, Swedwood, which produces wood-based furniture and wooden components
Its operations cover every step of production, from forestry, saw milling and board manufacture to furniture
Efficient productions which enable it to maximize productivity and minimize waste-generation
Own design group which can makes sure that their products matches the trend of the industry
Maintained long-term partnership with its suppliers
Ensures that the company has access to high-quality materials at reasonable prices
Market positioning statement is “Your partner in better living We do our part, you do yours Together we save money.”
Market on its strengths – based on offering a wide range of well designed, functional products at low prices
Catalog – 175 million copies sold in 55 editions and 27 languages (2007)
IKEA is a global company, so product standards are difficult to maintain Some countries where IKEA products are made do not implement the legislation to control working conditions
Swedish designs not appealing to American customers
Limited Furniture Designs – IKEA had limited furniture designs which could obviously not cater to a wide range of customer needs and preferences
Other promotions include their seasonal sales, internet deals and television advertisements
Flat packing that helps in management
Flat packaging, which reduces shipping costs, minimizes transport damage, increases store inventory capacity, and makes it easier for customers to take the furniture home themselves, rather than needing delivery
But the original reason for it was competitive pressure from IKEA’s competitors to their suppliers, who actually boycotted IKEA, forcing IKEA to do it themselves
Friendly atmosphere and store layout
IKEA are moving from International to global status through the development of
Asia and Eastern European models
Targets all levels of the market, upper, middle and lower classes
By recognizing potential external threats, a company can strategically prepare to mitigate them IKEA can leverage its unique strengths to innovate and effectively counter market challenges.
Sourcing from China is one opportunity
Sourcing from low cost countries like
China would reduce its costs and enable
IKEA to concentrate on increasing its market share
Bright prospect of online sales
With economic concerns over rising living costs and depleting disposable income there is an overall threat to the performance of the business in UK and American markets specifically
The regulatory environment across the globe vary and can affect how IKEA does business and its product costs, especially the use of natural resources
MARKET ANALYSIS
Targeted market analysis and valuation
IKEA will cater to GenZs and Millennials, ranging from 20-45 years old, with middle income, and small businesses in Ho Chi Minh City, Vietnam
As lifestyle preferences evolve across generations, young Vietnamese individuals are increasingly prioritizing convenience and personal aesthetics in their interior spaces, while also emphasizing community conservation and environmental protection This shift is particularly evident in Ho Chi Minh City, recognized as Vietnam's dynamic economic and financial hub.
Market outlook in Vietnam
Vietnam's furniture market stands out globally due to its unique characteristics Despite a lower per capita income, the demand for high-end furniture in Vietnam rivals that of developed nations like China and Singapore Major urban centers, particularly Hanoi and Ho Chi Minh City, are experiencing a significant surge in the demand for premium furniture.
Vietnam's furniture market is anticipated to experience a robust annual growth rate of 17.35%, reaching an estimated revenue of US$3,106.00 million by 2025 By that year, the number of users in the furniture segment is projected to rise to 21.7 million.
Figure 1 Vietnam’s Predicted market revenue in million USD (2017-2025)
The thriving real estate market in Vietnam is significantly driving the growth of the high-end furniture segment Renowned furniture and decoration brands from Italy, Denmark, Germany, and Sweden are looking to enter this promising market Vietnamese consumers are increasingly focused on enhancing their living spaces, prioritizing aesthetics and artistic value in interior design over mere functionality.
Research indicates that Vietnamese consumers frequently alter their home layouts, with individuals aged 25-35 rearranging furniture every 6 to 12 months This demographic shows a strong preference for modern and convenient shopping experiences.
Millennials, born between 1980 and 2000, are becoming the dominant workforce and key target customers for the furniture industry Preferring the convenience of online shopping, they often avoid in-store visits and seek to save time When considering high-value purchases, they typically research product information and reviews on e-commerce platforms before visiting a store to see the item in person This trend highlights the significant influence of e-commerce on the purchasing behaviors of today's younger generation.
Figure 2 Vietnam’s Furniture Market Sales Channels (2017 - 2025)
In recent years, the minimalist lifestyle embraced by young people has significantly impacted interior design trends Simple yet sophisticated interiors that harmonize with various styles are increasingly dominating the market.
In the growing trend of minimalist furniture, Vietnamese youth are increasingly opting for modern, efficient designs that prioritize simplicity and functionality This shift leads to a preference for RTA (Ready to Assemble) furniture, which offers practical solutions that save time, effort, and money.
17 the product line of assembled furniture stands out with the emphasis on convenience, both in terms of functionality and transport, which are the foundation of these products d Concerns & Preferences
Millennials and Gen Z consumers are increasingly prioritizing social and environmental issues, significantly influencing their shopping habits This large demographic favors sustainable products and brands that align with their values, reflecting a growing commitment to responsible consumption in the second decade of the 21st century.
According to Nielsen, by 2025, Gen Z in Vietnam will account for about 25% of the national labor force, equivalent to about 15 million people, who will guide future consumption trends.
Market trends in Vietnam
In Vietnam, young people are increasingly embracing a Minimalism lifestyle, leading to a demand for simplified and space-saving furniture This trend is particularly relevant in densely populated cities like Ho Chi Minh City and Hanoi, where living spaces are becoming more compact Additionally, assembly furniture is gaining popularity due to its quick delivery and cost-effectiveness, making it an ideal choice for young individuals with low to middle incomes.
Consumers are increasingly environmentally conscious and prefer to buy sustainable products that are durable and minimize waste, even when damaged Consequently, high-quality industrial wooden materials that offer a diverse range of designs are in great demand.
Millennials and Gen Z are increasingly choosing online shopping for furniture, attracted by its convenience and efficiency in today's fast-paced lifestyle This method allows customers to explore a wider range of options quickly, contrasting sharply with the time-consuming nature of traditional shopping Additionally, online retailers often provide hassle-free return policies, ensuring customer satisfaction even if the products do not meet expectations.
Profile of competitors
Pho Xinh, Nha Xinh, and Nha Dep are leading Vietnamese furniture brands that pose significant challenges for IKEA's entry into Vietnam's furnishing market As major interior design firms with substantial market shares, they are likely to hinder IKEA's efforts to earn the trust of local consumers Additionally, European brands UMA and JYSK, which have been established in the market for years, are also notable competitors in the furniture sector.
Nha Xinh has established several large-scale, professional showrooms in Hanoi and Ho Chi Minh City, showcasing products designed and manufactured by skilled staff using advanced machinery The brand has earned prestigious titles such as "Vietnamese High-Quality Goods," "Trusted Brand," and "Top 100 Suppliers" in recent years, reflecting its commitment to quality and excellence.
IKEA, however, has some competitive advantages against its competitors, especially in customer service and sustainable products.
Competitive advantage, project’s benefits and benefits to clients
IKEA is a leading force in the retail furniture market, leveraging a diverse product range and innovative design to meet customer needs effectively The IKEA Concept focuses on providing a variety of well-designed, functional home furnishings at affordable prices, ensuring accessibility for a broad audience By prioritizing affordability over luxury, IKEA aims to enhance the quality of life at home for as many people as possible.
The company has also launched a range of add-on services like home delivery, installation, assembly service, and free pick up for product returns
IKEA also uses a unique direct delivery system, where goods are transported directly from its warehouses to its customers’ homes Through this strategy, it has managed to gain customer loyalty
IKEA employs an interactive website to give customers thorough product information, including instructions on how to assemble the products based on the preferences of their
19 end users It is also one of the few businesses that offer customers the ability to customize products before making a purchase
IKEA excels in adapting its business model to local cultures, which allows the retailer to effectively balance its global operations with regional demands This careful approach often results in a lengthy market entry process, taking several years to establish itself in new regions However, this commitment to understanding and meeting the specific needs of customers in host countries ultimately enhances IKEA's product offerings and strengthens its market presence.
IKEA's product design is rooted in a neutral aesthetic, allowing it to seamlessly adapt to various markets Unlike many retailers that impose their national style, IKEA's simple and versatile designs resonate globally, making them suitable for diverse environments.
IKEA products may not be the cheapest option available in Vietnam, but their prices reflect the added value of warranty services that many local brands do not offer Additionally, IKEA ensures high product quality, addressing the challenge of distinguishing between genuine and counterfeit furniture in today's market With a wide range of furniture types and functions, consumers often find it difficult to fully understand all available options.
IKEA's flatpack and self-assembly concept is a key competitive advantage in the furniture market, significantly reducing costs for consumers This innovative approach has encouraged designers to create functional, minimalist products that appeal to modern tastes.
MARKETING STRATEGY
Segmentations & Targeting
For household furniture, our target audiences have aged from 20 to 45, and are middle- income customers They have different preferences as follows:
love to decor their room/house on their own, interested in ready-to- assemble furniture
busy with their work, interested in fully-assemble furniture, prioritizing the safety, convenience, and versatility
For business furniture, we focus on small companies which have rigid budgets but want to make a modern workspace for employees
Different methods should be applied to access different groups of customers so that IKEA increases brand awareness and our products can meet the right demand:
Conducting monthly and yearly market research on Vietnamese customers’ tastes and preferences for furniture to update the new trends in the market
Based on the research of customers’ behaviors, give targeted customers favorable promotions to encourage them to be interested in IKEA products
Cooperate with businesses to introduce IKEA office products
Differentiation and positioning
IKEA leverages a deep understanding of consumer lifestyles to inform its design, manufacturing, and retail strategies The company offers stylish and affordable furniture, along with innovative designs that resonate with customers Committed to sustainability, IKEA's products are not only aesthetically pleasing but also environmentally friendly As a result, IKEA is recognized as a provider of high-quality furniture at competitive prices.
IKEA creates unique immersive environments that enhance customer interaction and inspiration, offering a comfortable shopping experience where individuals can leisurely choose everyday items for their homes.
Value proposition
IKEA’s business plan is to offer a wide range of well-designed, functional home furnishing products at prices that as many people as possible will be able to afford them
By using local materials in a novel way and minimizing production, distribution, and retail costs, their customers benefit from reasonable prices
IKEA's furniture is primarily designed for consumer assembly, allowing the company to lower costs and minimize packaging by shipping products without excess air For instance, the volume of an unassembled bookcase is significantly reduced compared to its assembled counterpart This DIY approach not only enhances affordability but also aligns with IKEA's commitment to efficient shipping practices.
21 customers, which not only attracts them to its easy nature of transportation and assembly, but also to the satisfaction gained from building something from the ground up
IKEA focuses on delivering high-quality, cost-effective designs produced in bulk to reduce prices The flat-packed furniture minimizes transportation and assembly expenses, contributing to overall savings Additionally, all IKEA products undergo strict testing to ensure compliance with national and international safety standards.
Marketing mix
IKEA prioritizes customer satisfaction by carefully studying their needs and developing a diverse range of products, including home and office furniture, kitchen and bathroom fittings, and children's furniture This extensive product portfolio not only enhances customer retention but also contributes to the company's growth Additionally, IKEA focuses on creating smart products that optimize utility, with all items designed for flat packing, allowing for easy assembly by customers Exclusive assembly and delivery services are available upon request, ensuring a convenient shopping experience.
IKEA's investment strategy in Vietnam leverages the country's rich natural resources by focusing on the research, production, and development of products crafted from traditional materials like wood, rattan, and bamboo By incorporating modern designs, IKEA enables Vietnamese consumers to preserve their cultural heritage while embracing contemporary global trends in home decor.
IKEA provides a diverse selection of stylish and functional home furnishings at competitive prices without compromising quality By producing items in bulk, IKEA effectively reduces costs, allowing for affordable pricing that boosts sales As certain products become popular, the company increases production and lowers prices to drive further sales, benefiting from low-profit margins paired with high sales volumes for long-term profitability Additionally, lower labor and production costs in Vietnam enable IKEA to offer its products at more attractive prices compared to other countries In the Vietnamese market, IKEA positions itself within the mid-price segment, delivering high-quality products that stand out against competitors.
We use 2 popular ways to distribute the products:
IKEA is making its debut in Vietnam by establishing stores in major shopping malls in Ho Chi Minh City, capitalizing on the city's significant customer base With a population of approximately 9 million, Ho Chi Minh City boasts over 4 million residents aged 20 to 45, representing nearly 50% of its total population This strategic move positions IKEA to attract a large and diverse audience in one of Vietnam's bustling urban centers.
IKEA stores feature a vibrant color scheme of yellow, white, and blue, creating an inviting atmosphere Each product is thoughtfully arranged to inspire customers, allowing them to easily envision how to utilize these items effectively in their own homes.
In response to the growing trend of online shopping and advancements in technology, we are launching an official website dedicated to the Vietnamese market This platform will showcase a full range of IKEA products while offering valuable information and innovative ideas to help individuals create their dream homes.
IKEA will launch print advertisements and billboards in high-traffic public areas, including bus stations, shopping malls, and office buildings, to effectively engage and attract local consumers to their products.
Social media platforms like Facebook, Instagram, TikTok, and YouTube are crucial for promoting IKEA products to the target audience Monthly assessments of advertising efforts on these channels will ensure maximum effectiveness and help generate qualified leads.
KOLs and influencers play a significant role in shaping the purchasing decisions of consumers, particularly among younger demographics IKEA aims to partner with design-savvy KOLs and influencers who resonate with our target audience By collaborating with these influential figures, we can effectively showcase IKEA's products and services to a wider audience.
Giang oi Anh ban than
IKEA is set to partner with Vietnamese artists to create sponsored music videos, aiming to enhance brand visibility and resonate with the local audience These videos will focus on themes such as family and workplace relationships, further strengthening IKEA's connection with the Vietnamese community.
IKEA's product placement strategy, featuring 24 offices, aligns seamlessly with the brand's identity and objectives This thoughtful approach ensures that IKEA's image and offerings are presented in a way that feels organic yet striking within music videos.
Every year, countless pieces of secondhand furniture are discarded, but our Buyback & Resell program offers a sustainable solution by allowing customers to sell their unwanted IKEA furniture safely and easily We purchase used IKEA items at a fair price and resell them at a significantly lower cost than new products, making high-quality furniture accessible to a wider audience This initiative not only reduces waste but also promotes the reuse of durable IKEA pieces, benefiting both sellers and buyers year-round.
Building a strong, ongoing relationship with IKEA customers is essential for effective communication and understanding their needs By joining the IKEA family, customers gain access to exclusive benefits, including discounts, damage coverage, and invitations to special events.
RESEARCH AND DEVELOPMENT
IKEA and the Ansoff Matrix
IKEA offers a diverse range of over 9,500 products and introduces approximately 2,500 new items annually, combining in-house manufacturing with supplier partnerships To maintain efficiency and adapt to evolving customer preferences, IKEA utilizes the Ansoff Matrix, a strategic tool that outlines four growth strategies: market penetration, product development, market development, and diversification This approach enables IKEA to effectively analyze and plan its growth initiatives.
Existing Market Penetration Product Development New Market development Diversification
Within the scope of Ansoff Matrix, IKEA uses all four growth strategies in an integrated manner:
1 Market penetration Market penetration implies selling existing products to existing markets Effective marketing strategy in general and IKEA catalogs in particular play an instrumental role in increasing the efficiency of market penetration for the furniture retailer
2 Product development This involves developing new products to sell to existing markets Product development is one of the main growth strategies for IKEA
3 Market development Market development strategy is associated with finding new markets for existing products
4 Diversification Diversification involves developing new products to sell to new markets and this is considered to be the riskiest strategy
This section delves into the product development strategy, examining its advantages and disadvantages while also addressing solutions to product development challenges in the Vietnamese market.
Product research and development
One of IKEA's key advantages in the market is its extensive product variety, which enables the company to adapt to emerging market segments and invest in new opportunities Below is a list of products tailored for the Vietnamese market.
Explore a wide range of gaming furniture, including gaming desks, chairs, and accessories designed for optimal performance Enhance your gaming experience with complete desk and chair sets, and consider versatile options like modular sofas and sofa-beds for relaxation Our collection also features fabric and leather sofas, ottomans, and outdoor lounging chairs to suit any style Discover practical furniture sets for bedrooms, dining areas, and bathrooms, along with multifunctional tables that maximize space Elevate your home with stylish coffee tables, bedside cabinets, and outdoor dining sets, ensuring every area is both functional and aesthetically pleasing.
Explore a diverse range of storage solutions, including display cabinets, sideboards, and buffets, perfect for enhancing your living room Our collection features versatile storage units, TV consoles, and media storage options to keep your space organized Discover stylish chests of drawers, bedside tables, and children's storage solutions that combine functionality with design For bedroom organization, choose from fitted wardrobes, sliding wardrobes, and walk-in options, along with mirrored and corner wardrobes for added elegance Enhance your hallway with specialized wardrobes and enjoy practical wardrobe shelving and lighting Complete your home with our selection of chairs, stools, and benches for a cohesive look.
Explore our extensive range of seating options, including armchairs, chaise longues, desk chairs, office chairs, and dining chairs Discover versatile dining sets and kitchen bar chairs, along with comfortable children's chairs and café chairs Enhance your space with chair pads, step stools, and baby highchairs, as well as dressing table chairs and stools Our collection features benches and outdoor furniture, including outdoor dining sets, bistro sets, and sofa combinations, complemented by outdoor cushions and tables Enjoy alfresco dining with our outdoor lounging chairs and sofas, alongside children's outdoor furniture Protect your outdoor investments with furniture covers and relax in style with sun loungers and hammocks Additionally, we offer sideboards, buffets, console tables, and a variety of children's furniture, including toy storage and wardrobes.
Discover a wide range of children's furniture designed to enhance any space, including children's desks, chests of drawers, small chairs, and tables Explore outdoor furniture options, such as children's stools, benches, and armchairs, perfect for playtime For dining, consider junior dining chairs and versatile kitchen islands with trolleys Create cozy nooks with armchairs, chaise longues, and ottomans, while café furniture like tables and chairs adds charm to any setting Organize with nursery furniture, toy storage solutions, and children's wardrobes for a tidy environment.
30 o Children's Chests of Drawers o Children Cots o Baby Chairs & Highchairs o Baby Changing Tables o Bookcases & Shelving Units
IKEA offers a diverse range of 1,300 products that embody democratic design, balancing appealing aesthetics, quality, functionality, and sustainability at affordable prices By embracing a culture of democratic design, IKEA effectively meets the daily needs of the residential market while implementing this concept in practice.
IKEA's commitment to product innovation is exemplified by its innovation lab, Space 10, located in Copenhagen, where it explores futuristic projects such as 3D-printed meatballs, urban farming solutions, energy-harvesting furniture, and air-improving windows The company's innovative product lineup features unique offerings like Vava lamps crafted from leaves, adhesive-free furnishings, severed seat storage, building block kitchens, and even flat-pack funerals, all reflecting a dedication to democratic design and sustainability.
With the diversification of products, IKEA’s packaging system plays an important role to fulfill a lot of different demands
The project's objective is to establish IKEA's official distribution channels and store in Vietnam, with a primary focus on the logistical aspects of packaging This encompasses three key demands: logistical, marketing, and environmental considerations.
When creating a packaged product, it is crucial to prioritize customer desires Factors beyond the product specifications significantly impact its appeal to potential buyers, making it essential to address these elements Effective packaging serves as a vital tool in delivering additional value that complements the product itself.
We hereby provide the checklist of packaging and product development process:
Specifically for a manual packing line: Can erection, filling and sealing of the packaging be done in an ergonomically sound manner?
Protective properties of packaging: Is the packaged product protected from the stresses occurring during transport, handling and storing?
Prevention of theft and manipulation: Does the packaging prevent the possibility of putting other objects in it, for example by having little empty space?
Minimize empty space in packaging / Fixation of product within packaging
Minimize empty space in means of transportation
Stackability - Can pallets be stacked on top of each other in order to enable good volume utilization during transportation?
Minimize empty space in means of transportation
Minimize empty space in packaging
Packaging adapted to means of transport
Quantity adapted to needs of retail
Has an assessment been conducted on the balance between adjusting the quantity of multi-packs to meet retail demands and the additional handling required during picking? Is the packaging quantity tailored to the anticipated product turnover, thereby reducing handling in the sales area?
Stackability: Are all packaging levels stable enough to be handled efficiently, separately as well as a unit, throughout the IKEA Supply Chain?
Ergonomic demands - When manual handling occurs, is it possible to handle the different packaging levels separately in an ergonomically sound manner?
When packaging fragile products, it is essential to ensure that they are clearly marked with appropriate symbols to indicate their delicate nature Additionally, for products that require specific orientation during handling and transport, the packaging should be labeled to illustrate the correct positioning This attention to detail in packaging not only protects the products but also helps prevent damage during transit.
To streamline the flow of goods in and out of its stores, Ikea operates with a unique and rare feature: in-store logistics personnel
These personnel monitor deliveries, record all inventory coming into stores, sort goods, and ensure they’re placed in the appropriate areas
Ikea's in-store logistics management enables each location to effectively monitor and control processes, resulting in exceptional inventory accuracy at the store level, a significant advantage over many retailers that depend on forecasting and distribution center-based inventory replenishment.
Ikea enhances customer loyalty and reduces costs by providing a seamless shopping experience, enabling consumers to conveniently purchase the furniture and housewares they need, whenever and wherever they choose.
Ikea Kreativ is an innovative app that enables users to scan their room photos with a built-in analyzer, allowing for easy furniture replacement using items from the Ikea catalog For those hesitant to scan their own spaces, the app offers 50 inspiring 3D galleries where users can effortlessly swap, rotate, stack, and hang various objects in a virtual interior environment.
Ikea Kreativ's scene scanner provides an approximate size estimate for furniture, helping you visualize how the item will fit within your space While it doesn't offer precise measurements, it enhances your understanding of the overall design and how well it aligns with your current needs and aesthetics.
STAFFING AND OPERATIONS
Management (including Board) Organisation Chart
- CEO: be responsible for leading the development and execution of the IKEA VIETNAM long term strategy with a view to creating shareholder value
- COO: ‘Operations’, be responsible for the procurement, planning, manufacturing, processing and distribution of products and focus on Operations capabilities across the IKEA
- CMO: ‘Marketing’, be responsible for all marketing functions of the IKEA
- CFO: “Financing”, be responsible for financing of company
- CCO: “Commerce””, be responsible for the commercial strategy and the business development of company
Staffing
- Department: Operation, Merchandising, Human resources, Marketing, Finance
Department Roles and responsibility Functions Number of staffs
Operation - The operations team will handle day-to-day running of stores and warehouses at different regions where the retail organization exists
- Deliveries between stores and warehouse
Marketing - Responsible for all the marketing and creative aspects of the business
- Marketing materials and posters sourcing
- In-store activations and events
Finance - Recording operating transactions, analyzing them and preparing financial statements to inform top management, regulators and investors
- Ensuring that internal mechanisms and policies comply with regulatory standards, industry practices and
Merchandising - Responsible for all the commercial aspects of the retail business
- Managing the lifecycle of inventory
- Hiring employees, maintaining employee well-being and dismissing employees when necessary
- Handling many tasks related directly to employment issues, such as payroll, insurance, benefits and taxes
- Staying up-to-date on legal issues affecting employment
Manager Makes detailed, short-range operating plans
- Reviews daily and weekly reports, performance of subordinates
- Supervises day-to-day operations
- Maintains close contact with operative employees
Mainly in the office and real market
Supervisor Primary role is as an observer to ensure that all necessary tasks are completed in time with specifications and deadlines
In the warehouse and store
Executive Perform all tasks involved in the department in according to manager’s instruction
- Academic knowledge and skills related to department
Mainly in the office and store
Worker Perform all tasks involved in the department: shipping; assembling, loading and unloading…
Trainee Work alongside managers and accept delegated responsibilities and duties
- Academic knowledge and skills related to department
Mainly in the office and store
Full- time and part- time
Business Need Solved Priority Resource
How will the training help my company
Link to Business Strategic Plan
- Cross training for all new hires in Vietnam
- Engage new employees in the working environment, the culture, the operation system and working process
Part of strategic plan to improve capacity
- Assistant from parent company in Sweden
- Provide them hard skills of working in retail company
- Equip them with specialized and professional knowledge
- Promote law education activities for employees, establish company‟s regulations, enforcement mechanism along with sanctions with an aim to raising awareness of employess of legal framework
Part of strategic plan to improve capacity
- The Trainer – curriculum development belonging to each department
- Evaluate the effectiveness of training program and check the ability and the progress of employees as well
Part of strategic plan to improve capacity
- Establish a mechanism for employees to give their feedbacks, share the fellings, difficulties, desires with BOD
Creating work-life balance for employee
Operations
Infrastructure system a Store and warehouse location
To open an IKEA store, secure a rental space at Crescent Mall, a prominent shopping destination in Ho Chi Minh City This mall is situated at 101 Tôn Dật Tiên, Tân Phú, District, making it an ideal location for attracting customers.
Ho Chi Minh City, a bustling urban center, was chosen for our store due to its vibrant shopping culture and the medium to high-income levels of its residents, who are willing to spend on desired goods Initially, we opted against building a large IKEA mall in Vietnam because prime locations are no longer available Furthermore, as IKEA remains relatively unknown to Vietnamese consumers, placing our store in a smaller venue within a popular shopping area will enhance visibility and encourage accidental discoveries by shoppers.
Renting a warehouse in Eastside Tan Thuan, Ho Chi Minh City, offers a prime location just 5km from the city center and the official IKEA store at Crescent Mall It is conveniently situated 13km from Tan Son Nhat International Airport and only 2km from VICT Deepwater Port and Tan Thuan Port, making transportation of products to stores and businesses highly efficient.
42 offices inside and outside Ho Chi Minh city Moreover, the price for renting is more reasonable and convenient than building one b Infrastructure
Square: 5000m2, the space is large enough to contain a large quantity of IKEA furniture products
All the necessary facilities are provided such as electricity, water and fire protection systems are checked frequently Cameras are a must-have item in the storage
Working space is large and comfortable This area has hospital, restaurants to satisfy workers’ needs
Therefore, the storage ensures providing the most comfortable and safe space for employees to work
The 1000m2 square space is designed to showcase best-selling products and exciting new updates tailored specifically for Vietnamese consumers This stall features distinct areas, each dedicated to different categories of home furniture, including options for the bedroom and living room.
The store is equipped with essential facilities, including reliable electricity, water supply, and regularly inspected fire protection systems Surveillance cameras are installed for security, while ambient lighting and music create a welcoming and comfortable atmosphere for customers.
Our delivery system features a fleet of 100 trucks ready to transport large quantities of products to households, businesses, and official stores throughout Ho Chi Minh City and other regions in Vietnam.
Raw materials are shipped from international suppliers to a factory in Vietnam, where they are processed and packaged into finished products These products are then stored in a warehouse in Tan Thuan until they are needed for display in official stores or delivered directly to customers' homes or business offices.
IKEA, a recent entrant to the Vietnamese market, faces stiff competition from local brands like Baya, Pho Xinh, and Nha Xinh To effectively cater to the preferences of Vietnamese consumers, IKEA should partner with a local marketing team and incorporate products from Vietnam's handicraft workshops into its offerings.
Crescent Mall prioritizes establishing strong partnerships with official stores to offer prime rental locations equipped with comprehensive working facilities.
To ensure a reliable supply chain, it is crucial to import finished products and materials from IKEA factories in China, in addition to those in Vietnam This strategy addresses the limitations of Vietnamese manufacturers, who may struggle to meet high demand quickly As a result, the IKEA factory in China serves as an essential backup source for production.
FINANCIAL PLAN
The center generates its revenue mainly through the sale of furniture products across 19 key categories in the Vietnamese market Revenue forecasts are informed by IKEA's 2022 sales data and industry averages, ensuring a comprehensive understanding of market potential.
Expenses: the center’s expenses are mostly rent, salaries & wages, equipment and materials, marketing, R&D, and administrative costs The expenses are based on management’s estimates and industry averages
Breakeven Sales in Dollars (Annual)
Tables & Desks $21,000,000 $25,200,000 $28,980,000 Display Cabinets & storage systems $1,600,000 $1,920,000 $2,208,000
TV Console, Stands & Cabinet $4,800,000 $5,760,000 $6,624,000 Chest of Drawers & Drawer Units $4,800,000 $5,760,000 $6,624,000
Sideboards, buffets & console tables $4,800,000 $5,760,000 $6,624,000 Children's Furniture $4,800,000 $5,760,000 $6,624,000
Trolleys & kitchen islands $3,000,000 $5,580,000 $6,417,000 Bar Tables & Chairs $4,800,000 $5,760,000 $6,624,000 Armchairs & Chaise Longues $4,800,000 $5,760,000 $6,624,000
Total Revenue $164,151,800 $117,460,000 $135,079,000 Cost of Goods Sold
Tables & Desks $7,000,000 $8,400,000 $9,660,000 Display Cabinets & storage systems $533,333 $640,000 $736,000
TV Console, Stands & Cabinet $1,600,000 $1,920,000 $2,208,000 Chest of Drawers & Drawer Units $15,016,667 $1,920,000 $2,208,000
Sideboards, buffets & console tables $1,600,000 $1,920,000 $2,208,000 Children's Furniture $1,600,000 $1,920,000 $2,208,000
Trolleys & kitchen islands $1,000,000 $1,860,000 $2,139,000 Bar Tables & Chairs $1,000,000 $1,920,000 $2,208,000 Armchairs & Chaise Longues $1,600,000 $1,920,000 $2,208,000
Bookcases & Shelving Units $1,600,000 $3,841,440 $4,417,656 Total Cost of Goods Sold $68,133,333 $68,241,440 $78,477,656
Contract Labor (Not included in payroll) $12,000 12,360 12,731
Insurance (other than health) $120,000 123,600 127,308 Legal and Professional Services $24,000 24,720 25,462
Rent or Lease Vehicles, Machinery,
Rent or Lease Other Business
Total Expenses $25,152,000 $25,761,440 26,623,307 Income (Before Other
ASSETS First Year Second Year Third Year
Total Equity $234,503,152 $284,143,356 $350,393,797 Total Liabilities and Equity $299,230,612 $337,808,720 $392,034,986
SALES PIPELINE
Prospecting customers’ data collection
IKEA focuses on attracting young, budget-conscious customers, including students and young professionals with middle to high incomes The brand appeals to those who embrace minimalism, engage with advertisements, and are newly married, as well as individuals who discover products through various marketing and communication channels.
Their salary ranged between $15000 and $50000, they are most likely budget-conscious families whose lifestyle makes them first-time shoppers of furniture
Sources: vinhomes residents’ data, KOLs, Social media influencers,…
Customers qualification
Applying filters of target market categories: Demographics, geographic, behavioral,… to classify potential customers into specific groups Proper approach will then be developed for each groups for better conversion rate
Sales call, proposal and negotiation
Appointment set: Contact and work with selected customers through the following forms: face-to-face meeting, online consultation, telephone consultation
Appointment completed: They showed up to the meeting, and you confirmed the next steps
To effectively address customer pain points and leverage opportunities, it is essential to propose tailored solutions that incorporate relevant products Additionally, introducing complementary products that specifically target and resolve the challenges customers encounter can enhance their overall experience and satisfaction.
Proposal sent: The buyer reviews the proposal or contract.
Close deal
Contract signing: Make signing the contract simple by using an e-signature service that allows your soon-to-be-customer to sign and upload from anywhere.
Post purchase
To create an unforgettable experience for new customers, it is essential to provide attentive service through effective customer care during the implementation phase and ongoing account monitoring The customer care team plays a crucial role in enhancing customer satisfaction by timely cross-selling new services and upselling premium solutions to existing clients.
FUNDING REQUIREMENT
Total funding requirement
IKEA Corp., recognized as one of the world's largest furniture companies, remains relatively unfamiliar to Vietnamese consumers Thus, successfully penetrating the Vietnamese market is crucial for IKEA's growth and expansion in the region.
According to the initial estimate made when investigating the Vietnamese market, The investments of IKEA in Viet Nam market are expected to account for 450 million Euro
After thorough research, we conclude that a $450 million investment in Vietnam is justifiable While entering the Vietnamese market presents challenges, such as IKEA's lack of familiarity and the slow adaptation of local consumption habits, the country's strong market potential can attract additional investment from other stakeholders.
Sources of fund
All the funding requirements are expected to be gained from “ External and Internal investors”
Shareholder equity serves as a vital and sustainable financial resource for businesses, making it the primary source of investment funds The profitability of shareholders is closely tied to market performance, and despite the inherent risks of entering new markets, Vietnam presents significant potential Consequently, shareholders are inclined to invest approximately 135 million Euros, which represents 30% of IKEA's total investment in the Vietnamese market.
Retained earnings serve as a valuable source of investment capital, similar to shareholder equity, and are considered risk-free However, since retained earnings influence shareholder interests, it is crucial to determine an appropriate investment amount In this case, a decision has been made to invest 90 million Euros, representing 20% of the total investment in the Vietnamese market.
To effectively finance 30% of the total project costs, it is crucial for IKEA, as a foreign firm, to secure consistent dollar cash flows Therefore, we aim to pursue long-term financing options from Vietcombank, Viettinbank, and Eximbank Although these banks offer high interest rates, the total amount borrowed will be limited to 135 million Euros.
IKEA, the world's oldest and largest furniture retailer, is leveraging its strong reputation to secure a practical financing option through Debenture, aiming to raise approximately 45 million Euros.
IKEA has always had a close cooperation relationship with furniture factories in Vietnam.Therefore, about 45 million Euro is expected to be borrowed through this method.