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THEHUSTLE

How Ikea tricks you into buying more stuff

How Ikea tricks you into buying more stuff

thehustle.co

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The Retail King

Ikea has an enviable position in the struggling retail landscape. As of 2021, it boasts:

  • ~$47.6B USD in annual retail sales
  • 458 stores in 61 markets
  • 775m store visits + 5B web visits per year
  • 225k global employees

It’s estimated that 60% of Ikea purc...

A Unique Retail Model

Ikea sells meatballs and lamps under the same roof. It has been described as both “Disneyland for adults” and “a nightmare hellscape.” And the idea of spending an afternoon stuck in a one-way maze — then going home and assembling your own bookcase — isn’t exactly appealing.

But these eccent...

The Normal Store Layouts

In general, retailers design their stores with 3 goals in mind:

  • Intelligibility: Easy to understand the floor plan
  • Accessibility: Easy to navigate
  • A clear visual field: Exposure to products and the lay of the land 

Most companies use store layouts that give ...

Breaking All Layout Rules

The unique one-way labyrinth design of Ikea:

Forces wider product exposure: At most retail shops, customers only lay eyes on ~33% of all the items for sale; Ikea’s layout herds shoppers past its entire catalog.

Creates a false sense of scarcity: When...

The Gruen Effect

Ikea has mastered the use of a psychological principle called the Gruen effect — when the layout of a store is so bewildering that it makes you for...

Strategically placed mirrors: When you catch a glimpse of yourself in an Ikea room, you’re primed to believe you belong in it.

Contextual positioning: Rooms are set up exactly as they would be in a natural setting. Familiarity encourages purchasing. 

...

The Decoy Effect

Something else you’ll likely see at play in Ikea is decoy pricing: when a retailer throws a less appealing option into the mix to make other products seem like a better deal.

Let’s say there are 2 cabinets for sale: a $40 budget unit, and an $80 unit with more premium m...

Ikea often follows a “price first, design later” philosophy: It starts with a price target — say $6.99 for a new stool — then reverse-engineers the design process to meet that goal.

And once an Ikea product hits the shelves, the company is militant about maintaining or even reducing, its re...

How Prices At Ikea Stay Affordable

The main ingredient of the company’s affordability is a technique called flat packing.

The company reduces manufacturing, logistics, and fulfilment costs by disassembling items and fitting pieces together in a box as tightly as possible.

“We hate air” is a c...

The Ikea effect

In a 2011 Harvard Business School study, researchers divided subjects into 2 groups: One was given pre-assembled origami, and the other was given paper to build their own origami. At the end of the experiment, subjects were asked how much they’d pay for the creations.

The result: Th...

The Cake Mix Story

In the 1950s, manufacturers noticed that powdered cake mix sales were suffering. All the consumer had to do was add water. But this process was too easy: It removed the effort and emotion from baking. When manufacturers 

Ikea The Food Court

Ikea may be a home furnishings store, but it also reels in ~$2.4B in food sales per year (~5% of its overall revenue).

To put that into perspective: If you were to look at Ikea’s food operation as a stand-alone entity, it would rank as one of the 50 highest-grossing food chains in the world...

Selling Cheap Food

The real objective of selling cheap food at the furniture store is to reinforce Ikea’s low price profile.

A person might not know if $500 is a good price for a couch, but they surely know that $0.99 is a fantastic deal for breakfast. The idea is that customers will associate Ikea’s low food...

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