IKEA Group, from Sweden, is the world’s largest furniture retailer, owning over 280 stores in 26 countries as of last summer. Like many foreign companies, IKEA chose Shanghai to start its business in China, opening its flagship store there in 1998. Now IKEA runs ten stores across nine cities in mainland China, and is about to open its eleventh store in Wuxi this June. IKEA China achieved total sales of ￥4.9 billion (about $775 million) and attracted 31 million customers visiting its stores in 2011.
Compared to fellow retailers, IKEA adopts a relatively conservative approach to opening new stores in China. IKEA locations were limited, thus making it hard to reach a young generation of white-collar consumers spread across China’s first-tier and lower-tier cities. IKEA found it challenging to build a distinctive brand and influence consumers’ tastes given Chinese customers chose to treat visits to their stores as entertainment destinations rather than a place to purchase new furniture.
In October 2010, IKEA China expanded its PR team with an emphasis on social media. IKEA started to organize real-world and virtual events to engage potential customers both on- and off-line. For instance, IKEA created its own profile page on Douban, a popular Chinese social network website which allows users to recommend, comment on and compare their favorite books, films, and music. Its profile page contains tips on decorating homes using IKEA products. In September 2011, IKEA launched an event on its profile page called “the dream home in films” (“电影里的梦想空间”). The idea was simple: users were required to upload screenshots of their favorite home furnishing styles from famous films and write a description of the scenes. Each episode had a different theme, focusing on different types of room in a virtual home including bedroom, living room, bathroom and kitchen. Participants could win gifts sponsored by IKEA.
IKEA successfully attracted widespread and active engagement amongst Douban users, which are considered to be well-educated and creative urban Chinese. IKEA’s online and offline events provided potential customers with an outlet for self-expression, giving them a positive impression of the IKEA brand. IKEA’s profile page on Douban at the moment has over 30 thousand followers and 210 thousand visitors. By investing in its brand in China, IKEA was able to achieve a 20% increase in sales so far this fiscal year.
The China Observer View:
In China, and most of the world, marketers understand that they need to have a presence on social media sites, but the problem is they do not always know the best areas to invest online. Understanding the needs of its target customer segment (young, white-collar Chinese), IKEA chose to build an online community on Douban, a social networking site aligned with its customers’ interests. Furthermore, IKEA used this online channel to provide potential customers with a positive experience interacting with the IKEA brand. The IKEA approach requires a deep understanding of the preferences of your target consumers as well as knowledge of where they prefer to spend their time online.