In this edition PLMALive! Christopher Durham looks at private brand at the Home goods chain IKEA. The retailer might be famous for inexpensive Scandinavian design and Swedish meatballs, but it also sells more than 150 private brand food products.
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IKEA’s Food Sales
Retailer Ikea has long been known for its clean Scandinavian design and inexpensive flat pack furniture, but private brand groceries and Swedish meatballs are the experiences helping to convert value shoppers to rabid Ikea fans.
Founded in Sweden in 1943 by then-17-year-old Ingvar Kamprad. Adding the first initials of his family’s farm (Elmtaryd) and his village (Agunnaryd) to his own initials, the IKEA name was born. Kamprad began selling IKEA private brand products in flat-pack form from his warehouses. Thus, the basic IKEA concept – simple, affordable flat-pack furniture, designed, distributed and sold in-house – was complete.
The Swedish home goods chain offers its food products for purchase in their restaurants and Food Markets. As anyone who has shopped Ikea knows, it can take hours, or even an entire day, to work your way through the immersive maze-like store. So, it makes sense to offer shoppers something to eat and drink, whether you’re in the mood for a plate of Swedish meatballs or an ice cream cone. Ikea food runs the gamut from ordinary private brand packaged SKU’s to Swedish specialty products consumers would be hard-pressed to find elsewhere, like their frozen meatballs, lingonberry jam, Swedish salted licorice, marinated herring in mustard sauce and muesli cereal.
The retailer introduced its private label food program in 2005. The small selection of specialty products lived side by side with recognized Swedish specialty products until 2011, when the retailer delisted the branded food and committed to selling a little more than 150 private brand food products.
Leveraging its history of clean, modern design, Ikea has created a collection of private brand packaging that perfectly expresses the IKEA brand. A highly-focused brand positioning and great design are the key differentiators for IKEA.
IKEA said at the time, “The purpose is to be able to fully control the recipes, the quality, and make sure the code of conduct is respected. It is a way to take responsibility for people, animals, and the environment because this way we can trace the products more easily.”
That sense of responsibility can be seen in the retailer’s commitment to developing responsible salmon farming standards that are better for the fish and the environment. All IKEA private brand salmon is sourced from Aquaculture Stewardship Council (ASC) certified farms.
After realizing that their restaurant division is under-leveraged — an astounding 30% of customer’s head to Ikea strictly for the food alone — the company started looking at the idea of stand-alone cafés. The furniture giant sells more than 1 billion meatballs every year — that’s equal to 2.9 million a day.
The iconic meatballs have been on U.S. menus ever since the stores opened stateside 32 years ago — more recently, it added chicken and veggie meatball options to keep up with consumer tastes.
For the doomsayers, analysts and pundits who bemoan the end of retail, IKEA is proof that meatballs, great design, compelling private brands and an immersive retail experience at a great price are the keys to differentiation and ultimately success.