This Post is a Collection of Learning Videos & Public Information on the Gruen Transfer & Marketing Strategy of IKEA and How it Capitalises on it for Incremental Sales
What is a Gruen Transfer or Gruen Effect?
Based on Public Facts, In shopping mall design, the Gruen transfer is the moment when consumers enter a shopping mall or store and, surrounded by an intentionally confusing layout, lose track of their original intentions, making them more susceptible to making impulse buys. It is named after Austrian architect Victor Gruen, who disapproved of such manipulative techniques
The Gruen Effect of IKEA
Based on the VOX Report, Researchers estimate that 50 percent of purchases are unplanned. These purchases, especially impulse buys, present an opportunity for retailers who can entice consumers to deviate from their shopping lists. One of the most effective ways to influence this is through a store’s architecture.
In the 20th century, the architect Victor Gruen, who pioneered the first American shopping malls, used light and space to dramatically stage goods in storefront windows. His designs were meant to capture the attention of passersby — and convert them into customers. This conversion became known as the “Gruen effect.” Learn how Ikea has mastered the Gruen effect with a carefully designed store layout that gets customers to travel further distances.
How IKEA influences the Customer to buy more?
Based on CNBC Make it Report
Ikea was founded in 1943 by a young Swedish man named Ingvar Kamprad. Today, there are 433 stores in 53 countries. The name Ikea comes from Ingvar’s first and last initial, the farm he grew up on — Elmtaryd — and the village he lived near — Agunnaryd. Initially the company started by selling pencils and postcards.
In 1948, it began selling furniture, and the rest is history. In fiscal year 2019, Ikea sold 7 million Billy bookcases, and brought in $45 billion in retail sales. At the heart of Ikea’s success is value: You know what you’re going to get when you shop at Ikea, and it’s going to be affordable.
In fact, price is so important to Ikea’s strategy that the company first decides on the price of a piece of furniture and then reverse engineers the construction, the company says. Ikea has a “democratic design approach,” according to Antonella Pucarelli, the chief commercial officer of Ikea retail U.S., which means that it “delivers form, function and quality products at a low price. Even though our products are affordable, we don’t compromise on quality,” she says. (Ikea has had high profile recalls of millions of chests and dressers after several tipped over, killing children. In response, Ikea admitted the chests and dressers could be dangerous and offered free kits to anchor the chests and dressers to the wall, as well as refunds.)
Some of Ikea’s furniture is made from wood, some is made from particleboard (recycled wood chips fused together), keeping production more affordable. Ikea furniture is shipped and sold in flat-packs, which makes transporting it cheaper, and customers put it together themselves (or pay for someone to do it for them), keeping labor costs down. And the trademark simple style of the furniture Ikea sells is not just because it’s a Scandinavian aesthetic.
It’s easier and cheaper to make affordable versions of such furniture look good. “Ikea’s aesthetic is pared down and minimal, which is not an accident. Uncomplicated forms with very little applied decoration are easier to manufacture. More can be produced in a shorter amount of time, increasing efficiency and decreasing production costs,” Ashlie Broderic, interior designer for Broderic Design, tells CNBC Make It.
“The Malm bed is an excellent example of simple rectangular shapes combined to create a very chic bed.” And “most of Ikea’s furniture is available in black, white, or unfinished wood. By producing more items in fewer finishes, Ikea takes advantage of economy of scale,” she says. All this makes Ikea’s “aesthetic per dollar” ratio very high, says neuromarketer and author of “The Buying Brain” Dr. A. K. Pradeep. Ikea’s affordable style is its “category-busting-metric,” or what makes it stand out from all the other brands in that space, he says.CNBC Make it
Why is IKEA a Global Marketing Success Story? Learn more below
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