Analysis of IKEA's Online and Offline Store Performance in Sydney

This report, prepared for the CEO of Silk Road Furnishings, evaluates the effectiveness of IKEA's online and offline stores in Sydney to inform Silk Road Furnishings' market expansion. The analysis highlights IKEA's strategy of initially establishing physical stores to build brand identity and customer...Read More

Running head: MANAGEMENT COMMUNICATION
Management communication
Name of the student
Name of the university
Author note

1MANAGEMENT COMMUNICATION
To,
The CEO
Silk Road Furnishing
Sydney, NSW
Date: 21/09/2017
Sub: Evaluation of effectiveness of online and offline stores.
Dear Sir,
As discussed earlier, I have visited the store of IKEA in Sydney for the evaluation of
their offline and online market strategies. IKEA is being chosen due to the reason that, they are
effectively operating in both online and offline market in Sydney. Moreover, the business sector
of both IKEA and Silk Road Furnishings is similar. Thus, evaluation of their marketing activities
will help to determine the effectiveness of both the offline and online marketing activities.
Moreover, it will also help to identify an ideal plan of implementation for Silk Road Furnishings
in expanding their market presence and area.
In Sydney, IKEA opened their physical store in their initial period. Online shop is being
initiated in the later stage. In doing this, they had certain plan. According to them, having the
physical store helps in effectively catering to the market (Pauwels and Neslin 2015). In addition,
the brand identity is being enhanced with the help of physical store. Thus, in the initial stage,

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they had opened their physical store in Sydney and with having favorable brand identity in the
market; they came up with their online stores. Thus, they do not have to prove their authenticity
and reliability, which online marketers have to do in operating in the market. Initiation of the
physical store is having more advantages for them due to the reason that customers are having
the chance or access in having the touch and feel option before going for buying decision. It is
being observed that, customers tend to prefer more of the physical stores compared to the online
stores in buying furniture from IKEA (Aghekyan-Simonian et al. 2012). This is due to the reason
that, buying of furniture normally involves good amount of money and thus customers want that
touch and feel before investing their money.
It is also been seen that, physical store of IKEA is helping them in getting directly engage
with the customers. This is due to the reason that, physical stores enable the salespersons to
physically interact with the customers. It helps them in determining the market requirement and
expectation of the customers effectively. In addition, initiation of various added activities and
schemes to enhance the satisfaction level of the customers is only being available in the physical
store (Zhao et al. 2012). However, the initiation of online store by IKEA has also some benefits
of its own over their physical stores. One of the key limitations of physical store of IKEA is
having limited market reach. This is due to the reason that the service being available in the
physical store will only be applicable for the customers those will visit the store. However, in the
case of the online shop of IKEA, they are catering to huge number of customers beyond the
reach of their physical stores.
People, who cannot avail the service in their physical stores due to the reason of distance,
can have the access of their products in the online shop. Thus, the market reach is increasing for
them. Moreover, product variety is one of the key issues with the physical stores. This is due to

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the fact that, IKEA is having huge number and variety of products, which are not possible IKEA
to display them all in their physical store. However, in the case of their online store, they have
made available their entire product portfolio along with their pictures and details. Thus,
customers are having more options in choosing their products. In the case of IKEA, it is also
been seen that, their online and offline stores act as complimentary for one another (Verhoef,
Kannan and Inman 2015). This is due to the reason that, several customers choose their products
from the online portfolio and visit their physical shop to have the touch and feel for the particular
product. Thus, it involves less time for them in choosing their product in the physical stores.
On the other hand, some customers gain the access about the particular product from their
physical store and order for it in online afterwards according to their convenience. Thus, the
effective integration of both the channels is helping them in attracting the maximum market
attention effectively. Thus, it is being recommended that Omni channel marketing will be the key
to success for Silk Road Furnishings. It should go ahead with the initiation of the physical stores
and later on, it should initiate the online shop to act as complimentary and performance booster
for the existing marketing activities.
Thank and Regards

4MANAGEMENT COMMUNICATION
Reference
Aghekyan-Simonian, M., Forsythe, S., Kwon, W.S. and Chattaraman, V., 2012. The role of
product brand image and online store image on perceived risks and online purchase intentions for
apparel. Journal of Retailing and Consumer Services, 19(3), pp.325-331.
Pauwels, K. and Neslin, S.A., 2015. Building with bricks and mortar: The revenue impact of
opening physical stores in a multichannel environment. Journal of Retailing, 91(2), pp.182-197.
Verhoef, P.C., Kannan, P.K. and Inman, J.J., 2015. From multi-channel retailing to omni-channel
retailing: introduction to the special issue on multi-channel retailing. Journal of retailing, 91(2),
pp.174-181.
Zhao, L., Lu, Y., Zhang, L. and Chau, P.Y., 2012. Assessing the effects of service quality and
justice on customer satisfaction and the continuance intention of mobile value-added services:
An empirical test of a multidimensional model. Decision support systems, 52(3), pp.645-656.