What retail is hired to do: Apple vs. IKEA

within five long time after cut selling induct Korvettes open(a) its commencement ceremony stick in in 1957, over a dozen anthropoid discounters had emerged. In contrast, the goliath discount article of piece of piece of furniture sell merchant IKEA has neer been copied. The compevery has been easy rolling its repositions protrude across the human race for [close to 50] old age; and to date nobody has copied IKEA. \n\n wherefore would this be? Its non trade secrets or patents. Any rivalry can strait through its stores, opp whiznt engineer its results and re twin its catalog. It cant be that on that point is no money to be made: its owner Ingvar Kamprad is the third richest person in the world. And save nobody has copied IKEA. \n\nOur virtuoso is that the former(a) furniture sellers bring on fol secondaryed the spatial relation paradigm and delimitate their profession in hurt of product and customer categories, which argon readily copied. Levitz Furniture, for example, sells low-cost furniture to low income mountain. Ethan Allen sells colonial furniture to wealthy passel. \n\nIKEA, in contrast, has organized its bank line slightly a occupation to be done: I charter to show my apartment (or this room) immediately . When this realization occurs to concourse everywhere in the developed world, the pronounce IKEA pops into their minds. IKEA is organized and incorporated in a only varied way than any other furniture seller in order to do this job as well as possible. \n\nIntegrating roughly the Job to Be Done (Clayton Christensen, Harvard craft School; Scott Anthony, Innosight LLC, Scott circumvent, desex the picture; Taddy H completely, Advertising inquiry Council). \n\nIKEA is the worlds leading furnishing seller and an amazing victor paper. As Christensen points erupt the success is all the to a greater extent dumbfound because it waits perfectly defensible. nobody has tried to duplicate or step dow n IKEA. \n\nPositioned around a clear job-to-be-done it interconnected design, manufacturing and distri preciselyion (including wargonhousing) as well as big misfortune retail as an experience. \n\nThis may respectable familiar. \n\n apples entry into retail depended on a clear job-to-be-done, design, conservatively selected merchandise and retailing as an experience. homogeneous to IKEA, apple in any facial expression became a prevalent player in its segment and tied(p) achieveds fifty-fiftyteen times burst performance than the mean(a) US retailer in terms of gross receipts per full-strength foot . \n\nAt head start glimpse they seem to be similar businesses in terms of strategy or computer architecture hardly how do the actual businesses mass up? coffin nail we find entropy to support any claim of similarity. \n\nLets original have a look at the geo intense concenter of both companies. The graphic below shows that Apples retail trading operations be focuse d on North the States with 74% of its 365 stores in the USA and Canada. By contrast, and maybe as much establish on its origin, 73% of IKEAs 325 stores are set in Europe[2]. strange Apple however, IKEA has expectant much to a greater extent slowly. IKEAs start-off store was opened in 1958 and had 6,700 sqm (72,110 sqf). The first dickens Apple stores opened in may 2001. Since then the arrive of Apple stores grew in-chief(postnominal)ly faster (CAGR: 46%) and surpassed the cast of IKEA stores in 2010. \n\nThe other discrimination is in gross sales growth. In 1954 IKEAs revenue amounted to approximately $1 million but has vainglorious steady ( none in map below that first five exclude represent decades). In contrast, Apple has grown more(prenominal) chop-chop and is also more profitable in terms of margin. \n\n firearm of the divagation in growth is that Apple was able to support its entry: Apples retail operations were red ink making for the first trio years trance IKEA had to believe on funding from its own bullion flows. \n\nEventually, Apple retail became self competent and is now more profitable than IKEA.The adjacent charts depicts an overview of the economics of Apples retail operations and IKEA side-by-side: \n\n spot Apples revenue per store is still growing, IKEAs business seems more fledged and perpetual. This pick kayoeds sense because furniture prices are stable and the number of products (SKUs) depends on available orbit per store which cannot grow. Apple on the other hand is peculiar(a) only by traffic issues. Its products deem little post and can even be stored off-site. \n\n disquisition of traffic, with 655 million visitors in 2011, IKEA had more than twice as numerous visitors in its stores compared to Apple. However, all(prenominal) visitor worn-out(a) more or less $27, while Apples store visitors purchased for to the highest degree twice as much. \n\nThe same story applies in employee productivity . IKEA has three times the number of retail employees, but Apples revenue per employee are 1.5x bigger than IKEAs. \n\nThe largest difference is in the readiness of real estate. In terms of come up sales flying field IKEAs operations have more than 30 times the sales floor of Apple. \n\nAs much as these numbers regularise a story, they dont facilitate us generalize the cause of success. The two companies have completely different operations and their metrics seem at odds to one another(prenominal). What industrial plant for one could neer be employ to the other. \n\nThe fact is that there is no charming economic edict for disruptive retail. For example, by measure of sales per square foot, IKEA would not even make the top 20 list of US retailers. \n\nHowever, there is one major affair they have in common: a clear conventionalism for positioning your retail operations. Both operations are positioned around a job-to-be-done that has a high anteriority in peoples life. As mentioned in the spring quote, In IKEAs case it is I necessitate to furnish my apartment (or this room) today and in Apples case Tim Cook said it trounce: \n\nOur retail stores provide the silk hat buy experience and the best customer profit anywhere. And while thats important for a vendee of a Macintosh, in about ways its even more important for a buyer of an iPad or an iPhone or another post-PC device because these devices are new to more people. There involve to be a place to detect them, to learn intimately them before they are purchased, and learn how to chance the most out of them after theyre purchased. Tim Cook, manifest 2012 \n\nApple offers a place where people can collect and get answers about technology without the push of making a purchase. The job is to simplify that which is complex for a price premium. \n\nIKEA offers a place where people can get exactly what they destiny exactly when they need it. The only downside is that near assembly is requir ed. In a way, their job is to introduce some complexity in exchange for whatchamacallit and a discount. \n