Industry Analysis: IKEA's Strategy in Latin America Furniture Retail

This report provides a comprehensive analysis of the Latin American furniture retail industry, with a specific focus on IKEA. It begins by defining the industry and assessing the market size both globally and within Latin America. The report then examines industry trends expected over the next five years, identifies IKEA's competitors in the region, and presents financial data including sales, operating income, and return on sales for IKEA and its competitors. A Porter's Five Forces analysis evaluates the competitive landscape, followed by a SWOT analysis of IKEA. The report also explores emerging trends, IKEA's strategic responses, and the financial implications of these responses. Finally, the report offers recommendations for IKEA's strategic expansion into the Latin American market, specifically suggesting entry into Chile, Colombia, and Peru, and provides relevant references to support the analysis.

Latin America Retail
Furniture Industry
Analysis
1

Contents
MAIN BODY...................................................................................................................................3
1. Industry definition..............................................................................................................3
2. Market size for Retail Furniture in global and Latin America...........................................3
3. Industry changes/trends in the next 5 years........................................................................4
4. List of competitors to IKEA in Latin America...................................................................4
5. Chart showing Total Sales, Operating Income, and Return on Sales for IKEA and
competitors.............................................................................................................................5
6. Porter 5 force analysis of Retail Furniture Industry in Latin America...............................6
7. SWOT analysis of IKEA....................................................................................................7
8. Emerging trends, IKEA’s Strategic responses to each, and financial implications of each
response..................................................................................................................................7
9. Recommendation for IKEA................................................................................................7
2

MAIN BODY
1. Industry definition.
The term industry can be defined as a sector that manufactures goods or any services in a
particular economy (Liu and Xu, 2017). Such as IKEA company is a multinational organisation
that is involved in designing and selling of furniture, kitchen appliances and home accessories.
This company deals in furniture industry.
2. Market size for Retail Furniture in global and Latin America.
The global furniture market size was of $480.7 billion in year 2017 and estimated to
enhance by 5.1% in next years. The below mentioned chart shows about global furniture
market share including residential and commercial segment.
According to CSIL (Centre for industrial studies), the total market share of furniture industry in
Latin America is of around $ 16 billion. In USA, the largest market of furniture is Brazil,
Mexico, Chile and Peru (About Market size for Retail Furniture in global, 2019)
3

3. Industry changes/trends in the next 5 years.
In the aspect of USA, furniture industry is expected to grow by huge margin in upcoming
years. Herein, below graph has been presented that shows the future growth of furniture
industry in entire USA.
4. List of competitors to IKEA in Latin America.
IKEA company operates in furniture industry and that has below mentioned competitors:
Serial
number
Name of company
1 Steelcase
2 Herman Miller
3 Kimball
4 Foliot furniture
5 Indiana furniture
4

5. Chart showing Total Sales, Operating Income, and Return on Sales for IKEA and competitors.
IKEA furniture limited.
Herman Miller
Kimball
5

6. Porter 5 force analysis of Retail Furniture Industry in Latin America.
Porters five force analysis:
 Buyers power- In the Latin America, buyers have strong power to buy new products
because of higher income of people.
 Suppliers power-In the USA, suppliers do not have enough power. It is so because of
availability of more number of suppliers.
 Threat of new entrants- In the market of USA, there is threat of new entrants as there is
no barrier of entry of competitors.
 Threat of substitution- In the USA, there is threat of substitution products because of
availability of more option of products to customers.
 Competitive rivalry- In addition, there is rivalry among furniture companies in the USA
because of easy entry option in market.
7. SWOT analysis of IKEA.
SWOT analysis:
6

Strength-
 The strength of this company is that
they have clear vision and mission.
 More number of customers is also a
main strength of company (About
SWOT analysis of IKEA, 2019).
Weakness-
 Company operates into various nations
and due to which they are unable to
manage their operations.
 Company face environmental issues in
different nations.
Opportunity-
 They have scope to expand their market
in emerging market.
 As well as they have opportunity to
launch green market model.
Threats-
 They have threat of tough competition
in the market.
 Ineffective management of cost is also
a problem for this company.
8. Emerging trends, IKEA’s Strategic responses to each, and financial implications of each
response.
 E-commerce- IKEA company is applying this trend in order to make their services more
suitable for customers.
 Eco friendly design- Company is designing their products by considering aspect of
environment.
9. Recommendation for IKEA.
IKEA company should enter in market of USA including Chile, Columbia and Peru. This
is so because Chile and Peru has higher growth of furniture market. As well as company
should go in all three markets at same time.
7

REFERENCES
Books and journal:
Liu, Y. and Xu, X., 2017. Industry 4.0 and cloud manufacturing: A comparative
analysis. Journal of Manufacturing Science and Engineering, 139(3).
Online:
About Market size for Retail Furniture in global, 2019. [online], available through:<
rfdtv.com/story/41382655/online-retail-furniture-market-2019-global-market-size-
growth-share-demand-trends-competitive-landscape-and-forecasts-to-2024>
About SWOT analysis of IKEA, 2019. [online], available through:<
https://www.managementstudyguide.com/swot-analysis-of-ikea.htm >
8