IKEA's journey in Japan is a tale of initial misjudgment, reflection, and eventual triumph. As the Swedish furniture behemoth navigated the complexities of the Japanese consumer landscape, it painted a masterclass in adaptability, resilience, and the art of listening to the local heart while speaking a global language.
一：Setting the Stage: The "Economic Miracle" in Japan
The 1970s was a decade of remarkable transformation for Japan. Emerging with vigour from the wounds of World War II, the nation, by 1968, had the world's second-largest GDP growth, trailing only behind the US. This rapid post-war economic rise made Japan an attractive destination for foreign businesses. Among these was IKEA, the Swedish furniture giant founded by Ingvar Kamprad in 1943. What set IKEA apart was its avant-garde approach to furniture-making—using unconventional materials like cardboard and plastic and pioneering the DIY assembly model. With significant market conquests in European nations such as Norway, Denmark and Germany, Japan appeared to be the next logical frontier for IKEA's global ambitions.
However, Japan was not without its economic fluctuations. By the mid-70s, the booming Japanese economy began to temper, with growth rates dipping to 3.6%, primarily due to the ripples of the Middle East oil crisis. Yet, the allure of Japan's vast consumer base remained undiminished for international ventures. Simultaneously, within Japan, a compelling narrative unfolded in wooden furniture production. Starting with a modest shipment value of approximately 600 million USD in 1955, the sector's value burgeoned to about 5.4 billion USD by 1973-74, reflecting an almost ninefold increase in less than twenty years. The reasons for this explosive growth were manifold and intricately tied to the socio-economic fabric of the nation.
Often referred to as the period of the "economic miracle", post-war Japan was a hive of intense industrialisation. As the country became an industrial juggernaut, prosperity spread, and domestic purchasing power soared. Furniture was no longer seen as necessary but became emblematic of the country's modern aspirations. Concurrently, the demographic shifts in Japan were equally transformative. Urban migration surged, replacing the rustic charm of rural Japan with sprawling cityscapes, creating a surge in demand for residential and commercial furniture. But this wasn't just about populating spaces with wooden fixtures. The urban shift also marked a change in domestic aesthetic preferences. The traditional tatami-mat-laden homes started integrating elements of Western designs, and this permeated into furniture choices as well. As Japanese craftsmanship began intertwining with contemporary designs, the resultant furniture wasn't just functional—it was art. In this landscape, IKEA's market entry in Japan should have been a home run. But as history has shown us repeatedly, even the best strategies for market entry in Japan, created by the most notable companies, can still fall apart.
二：The Initial Missteps: The First Attempt (1974-1986)
When IKEA ventured into Japan in 1974, they brought a strategy that had worked wonders in Northern Europe. The cultural and living standard similarities between the Nordic countries and Germany, where IKEA had already gained a strong foothold, were undeniable. Yet, Japan was a different ballgame altogether, and as we know from other articles I have written, it is culturally rich and unique in its ways. The critical oversight of IKEA in viewing Japan as "just another country on the map" meant that they underestimated the deep-rooted differences in the markets in Europe and Japan, which became one of their earliest missteps in market entry.
IKEA's European charm, while attractive, was a misfit in Japan. Japanese apartments and homes, historically, have been compact, catering to the nation's high population density and urban-centric living. When IKEA brought their standard European-sized furniture to this market, they ran into a wall - sometimes quite literally, as their furniture was often too big for the average Japanese home. It wasn't just about the size of the furniture but also about the functionality that the Japanese sought in their homes – multipurpose, collapsible, and space-efficient designs. And while IKEA tried to woo Japanese consumers with smaller, cosier pop-up stores opened in partnership with the trendy "hyakkaten" or department stores, it started to become clear that the root of the problem holding back IKEA's popularity wasn't purely root to market, but rather it lay in the size and design of the products themselves.
Another layer to the story is the uniqueness of the Japanese transportation landscape overall. With a strong emphasis on public transport, many people in cities lack personal vehicles, the transportation of large, bulky items is not just an inconvenience; it's a significant challenge. Imagine a consumer, attracted by IKEA's designs, purchasing furniture, only then to realise the logistical nightmare of getting it home.
"I went to IKEA, saw some great furniture, but couldn't carry it home."
Whether it's the cramped spaces in trains or the added cost of hiring services to move items, the transportation dilemma was a stark reality that IKEA hadn't accounted for, and this immediately wiped out a large portion of the possible market due to bad word of mouth. The post-IKEA store trip story over a cup of green tea with friends of, "I went to IKEA, saw some great furniture, but couldn't carry it home", must've been one that was repeated again and again, and I can imagine the reply would have been something like, "What? You have to carry the furniture home yourself?"
Japanese service culture is rooted in the idea of "omotenashi"
One of the final nails in the self-assembly coffin was IKEA's do-it-yourself assembly concept, which, while groundbreaking, was a poor fit for Japan at that time. The idea was simple: by letting the consumers be a part of the assembly process, the costs were driven down, making the products more affordable. In Europe, this idea was accepted, even celebrated. But in Japan, this concept hit a cultural roadblock. Japanese service culture is rooted in the concept of "omotenashi" which emphasises wholehearted service and minimising inconvenience for the guest or customer. Thus, the very notion of buying furniture and then having to assemble it was counter-intuitive to the Japanese at the time, who were used to the furniture they had bought in stores being lovingly delivered to their homes, carefully brought indoors, by polite and well-mannered and impeccably smart, uniform-clad shipping agents, and then finally receiving the very much needed and appropriately measured comment of eternal thanks finalised with a deep bow from the delivery people. Instead of being seen as a cost-saving measure, this flat pack, do-it-yourself nonsense was perceived as an additional chore, making IKEA's offerings less attractive than those of competitors who offered ready-to-use furniture at an albeit higher price.
As the years rolled on, these challenges mounted, creating a scenario where IKEA's brand, while well recognised, wasn't resonating deeply enough with the Japanese consumer. It was a wake-up call that would eventually lead to IKEA packing up shop and exiting the Japanese market in 1986.
三：Adaptation and Market Mastery: The Second Attempt (2006 - Present)
IKEA's 2006 reemergence in Japan wasn't merely a replay of its past endeavours but a total strategic re-envisioning. Their initial retreat from the Japanese market in the mid-80s provided invaluable lessons, propelling the brand into two decades of introspection and recalibration. IKEA had realised that to resonate with the Japanese consumer, they needed to understand the market in a way they had yet to be able to grasp in their previous foray into Japan. To this end, they initiated an ambitious, wide-ranging and in-depth marketing survey. This was no cursory study; IKEA's teams visited over a hundred homes across different prefectures, spanning from bustling urban areas of Tokyo to more tranquil residential towns in Kyushu. Their observations were both broad and minute—capturing the essence of Japanese domestic life. They noticed the intricacies of the "ofuro", the traditional Japanese bath, and how it differed from the Western-style showers, underscoring the need for specific bathroom furniture and accessories. Their exploration into Japanese kitchens revealed a penchant for specific types of cookware, the importance of rice cookers, and a strong tradition of home-cooked meals even in compact spaces.
Based on insights, IKEA made conscious decisions about their product offerings.
But it wasn't just about observing; IKEA actively sought feedback. They engaged in conversations about sleeping preferences, understanding the continued reverence for futons in some homes while acknowledging the growing acceptance of beds in others. Their study on storage solutions highlighted the Japanese knack for organisation, stemming from centuries-old traditions of living efficiently in limited spaces. Based on these insights, IKEA made conscious decisions about their product offerings. They channelled their energies into curating a selection that seamlessly fit into the Japanese home. Of the 10,000 items in their global catalogue, 7,500 were chosen for Japan. This included focusing on space-efficient items like two-seater sofas, convertible furniture for studio apartments, and multi-functional storage solutions—each designed or selected considering Japan's urbanised and compact living conditions.
While IKEA championed its cost-saving mantra of letting customers handle transportation and assembly, it recognised the need to align this with Japan's unique customer service expectations. Enter the “box on the table” feature. Here, customers could curate lists of desired items, and for an additional fee, IKEA would ensure home delivery. (This can still become costly if you live far from an IKEA store, say +100km). This innovative service model resonated so profoundly with customers that it was replicated across IKEA's global stores. Many of IKEA's younger clientele in Northern Europe today might be unaware of a time when such delivery services were non-existent.
More than just selecting items, it was about families coming together in the tactile act of creation.
The DIY ethos, central to IKEA's brand identity, underwent a subtle transformation in Japan. While the option for at-home expert assembly as a service (AHEAaaS?) became available for those less inclined to wield a wrench, IKEA simultaneously celebrated the joys of self-assembly. Drawing from Swedish traditions, they highlighted the communal joy of building a home. More than just selecting items, it was about families coming together in the tactile act of creation, which resonated in a country where it is still common to have 3 generations living under one roof. This collaborative construction fostered deeper family bonds through a shared experience, cultivated a sense of cherished ownership and built lasting favourable memory structures, essential for building salience for any brand.
In the world of retail, IKEA is often lauded for its synthesis of affordability and quality. However, its strategy in Japan amplified this formula by embracing the nation's profound culinary ethos. IKEA's in-store restaurants in Japan became emblematic of this cultural amalgamation, offering a harmonious blend of traditional Swedish dishes and Japanese gastronomic delights. Introducing special events like the Matcha Fair was more than just a nod to Japan's revered green tea tradition; it positioned IKEA as a culinary destination, offering patrons an immersive dining experience that transcended its primary identity as a furniture retailer.
This innovative culinary approach parallels the strategies of other global brands successfully localised in Japan. Take KitKat, for instance, whose unprecedented success in the country came from its bold introduction of flavours like Wasabi and Sake. Much like KitKat, IKEA's gastronomic offerings resonated deeply with the Japanese ethos, reflecting a seamless blend of Swedish simplicity and Japanese sophistication. Through these endeavours, IKEA reaffirmed its commitment to tailoring its brand experience, ensuring customers enjoy a holistic shopping journey that tantalises not just their home design sensibilities but also their palates.
IKEA’s success in Japan hasn't merely been about its products; its marketing campaigns also played a pivotal role, intertwining humour, relatability, and the uniqueness of local experiences.
Most recently, what I feel is their most effective marketing campaign to date brought IKEA's famous soft toy shark, Blåhaj, to the forefront. Transformed from a mere stuffed toy into an animated real estate agent, Blåhaj's journey reflected the beauty of small living spaces. It might seem quirky to think of a plush shark championing the merits of small apartments, but Blåhaj's narrative resonated with many. Having hailed from the expansive waters of Sweden, this affable shark embraced the compact charm of Tokyo's urban life, showcasing how even the tiniest of spaces, with thoughtful furnishings and design, could be turned into delightful abodes. This narrative closely mirrors the journey of many young Japanese, from comfortable, large and, more importantly, rent-free family homes in rural towns and small cities across Japan to urban conurbations like Tokyo yearly. It is here where the reality of city living hits home hard, with cramped living conditions, sky-high rents, and often poorly insulated one-room apartments being the norm. The deeper story told via the use of Blåhaj, which at first glance may appear as a typical "use-a-cute-character-in-your-TVC-in-Japan" move in the hope of evoking a Japanese "kawaii" vibe (it does this too BTW), actually provides the backdrop for a more profound, well-crafted and societal narrative — creating deep and lasting memory structures from a shared experience common to the younger generation in Japan. Truly a masterstroke in J-marketing.
Crafted by the creative minds at Wieden+Kennedy Tokyo, the campaign saw the lovable plushy shark championing the joys of modest living. Blåhaj's fervent enthusiasm was not just entertaining but was also a testament to the potential of small spaces. Moreover, in a masterstroke of experiential marketing, IKEA offered a small apartment in Tokyo's bustling Shinjuku district, furnished with IKEA products, for rent at an unbelievable 99 yen per month, exclusive to its IKEA Family Members. While the price point was staggering, especially given the district's average monthly rent of around £319 or 49,000 yen, there was a playful catch. The apartment spanned less than 10 square meters, emphasising that with the right IKEA products, even such compact spaces could be made homely.
In Japan, as elsewhere, IKEA's marketing brilliance lies in its ability to craft narratives that are deeply local while echoing universal emotions. It’s not just about selling furniture; it’s about selling an experience, a lifestyle, and a feeling of belonging, no matter the size of one’s dwelling.
四：The Current Era: Growth, Expansion and Ongoing Challenges:
One significant challenge IKEA has faced has been navigating Japan's meticulous packaging and labelling regulations. Known for stringent quality controls, the nation emphasises clarity, transparency, and environmental sustainability in product packaging. Given IKEA's diverse product range, ensuring adherence to these standards has been a top priority. Correct labelling, clear instructions, and maintaining local safety and usage guidelines are critical focus areas. Despite these challenges, IKEA's commitment to quality and compliance (and quirky quasi-Swedish product names) remains unwavering, ensuring the brand retains its esteemed reputation among the Japanese populace.
Additionally, the company faced a different challenge, as highlighted by a Mainichi Shimbun report published on August 28, 2023. Since its inauguration in 2006, it was reported that IKEA Japan K.K. (the registered entity in Japan), had not compensated its employees for their time changing into their uniforms. An internal document, "Regarding attendance management," advised employees to clock in after donning their uniforms, suggesting they should finish suiting up before logging their work hours. While Japan's Labor Standards Act doesn't have a clear directive on changing time as labour hours, a Supreme Court decision from 2000 and labour ministry guidelines from 2017 emphasise that the time for changing into work attire, when mandated by employers, does constitute labour hours. Addressing this oversight, from September 1, 2023, IKEA Japan has introduced a new in-house rule setting the changing time at 5 minutes, thereby adding 10 minutes to daily work hours.
Despite all the ups and downs since its re-entry in 2006, IKEA has seen robust growth in Japan, and with the population clocking in at an impressive 126 million people (albeit a population that is in decline), there is still a vast market to cater to. The Kanto region alone, encompassing Tokyo and its surrounding prefectures, boasts a staggering 43 million residents. This accounts for approximately +30% of Japan's population, making it a prime location for brands like IKEA. From its singular presence initially, IKEA's footprint has expanded impressively nationwide. As of writing this article, there are 12 IKEA stores peppered throughout Japan, including three strategically placed city shops within Tokyo's bustling confines. While the vast IKEA Tokyo-Bay (Chiba) stands as the largest store, spanning a massive 44,000 m², the Harajuku city store, tailored for urban dwellers, measures around a more compact 2,500 m². As for total footfall, 2021 was a landmark year, with 26 million visitors flocking to IKEA stores across Japan!
Some brands in Japan are in for the long haul.
IKEA's journey in Japan is a testament to the importance of cultural understanding, adaptability, and resilience. From initial missteps rooted in cultural misjudgments to a triumphant return fuelled by deep market insights and innovative strategies, IKEA's experience offers invaluable lessons to global brands aiming to penetrate new markets. By immersing itself in Japanese culture, collaborating with local entities, and effectively leveraging its global brand appeal, IKEA transitioned from a foreign entity to a beloved household name in Japan. Their ability to evolve while maintaining their core ethos showcases that global businesses can succeed in the most nuanced markets by engaging in sincere cultural conversations and truly understanding local consumers. As a case study, IKEA's Japanese saga is an enduring reminder that success is not about merely transplanting a formula but about crafting bespoke strategies that resonate deeply with local hearts, tastes, and traditions.
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