Edwige Ravry, Peggy Nicod, Marine Jubé, Dimitri Cournède, Alexandre Krouglikoff IKEA Best in France Case study March 19th, 2004

IKEA  IKEA is a furniture retailer (it started in Sweden in 1943)  IKEA came to France in It opened 2 shops to test the market in Bobigny and Vaux en Velun. - Its first real-scale shop was opened in 1983 in Evry.

IKEA’S KEY FIGURES.  World sales : 11.3 billion €.  IKEA France : n°3 on the French market (7.3%) 4500 employees 14 shops Total revenue : 943 M € (+6.6%) 24 M visitors/yr

WHY IKEA CAME TO FRANCE  North to South expansion starting in Scandinavia.  Huge French market.  Increase economies of scale.  France’s central position in Europe.

COMPANY VALUES: Most values come from the founder, Ingvar Kamprad: Simplicity Modesty Honesty Economical approach to business Respect for the environment

HOW ARE THESE VALUES INSTILLED ?  Few efforts to make: IKEA’s corporate culture is easy to relate to. Recruitment policy : prefer young people and original backgrounds.  2-day seminar (the « IKEA way ») to make employees more familiar with the Company.

IKEA’S CLIENTS:  Age group: 20 to 45 years old (especially 25/35).  Customer profile: Qualified, working couples and executives, living in urban areas.

IKEA’S CUSTOMERS’ EXPECTATIONS The products must be :  Affordable  Convenient  Varied and creative  Environment friendly

ADAPTATION TO FRANCE  Although the main trends are fixed by the « Board », each national head-office is free to implement them as it wishes.  Nowadays, IKEA’s designers also get their inspiration from other countries than Sweden.  The colour range for each product changes from one country to the other.

EXPECTED CONSTRAINTS  Fear that the French would be chauvinistic and not buy IKEA’s products.  Fear of social conflicts and civil service inefficiency.  Fear that the market would be saturated (BUT, Fly…).

STAFF CONSTRAINTS:  Social security charges.  Harsh social legislation.  35 hour working week.  Trade unions. CSQ: high costs.

BUREAUCRACY:  Civil service inefficiency.  Huge amount of paperwork.

MARKET CONSTRAINTS:  Highly competitive segment of the market (BUT, Fly…)  No market growth since IKEA arrived in France.

AS A RESULT …  Tough financial constraints : the breakeven threshold is increasing.  IKEA does not expand in France as much as it would like to.

EVOLUTION OF THE NUMBER OF STORES

LOCATION BENEFITS:  Well-developed transport and communication network.  Central position in Europe.  Quality of life (eg. Good health service).

MARKET BENEFITS:  Market potential: Almost 60 million inhabitants (high purchasing power, 70% pop. In urban areas).  French customers turn out to be open to new products.

WORKFORCE BENEFITS:  The high level of social security charges significantly reduces the turnover.  As a consequence the French staff is, on average, competent and serious compared to other countries.

Advice to companies settling in France  Be careful to hire the right person: laying-off is costly (financially and legally)  Find a good accountant and specialist in french labour legislation

Advice to French Government  Insure competitiveness of company contributions  Review labour legislation  Review trade union system

WE THANK  M. DUBRANA, directeur marketing opérationnel  M. PIVET, directeur des ressources humaines  M. DANIELSON, directeur financier

BIBLIOGRAPHY  IKEA web site:  Questionnaires.

OUR TEAM  Dimitri COURNEDE 45 chemin de Grézes Albi.  Marine JUBE 108 ch. des Communaux Bernin.  Alexandre KROUGLIKOFF Les Cèdres bvd de Charonne Paris.  Peggy NICOD 6 rue Mesnil Paris.  Edwige RAVRY 9 imp. Des Bouvreuils Fourqueux.