How IKEA Dominates the Retail Market with the Psychology of Selling

Harshit Verma Harshit Verma Shashank Bhatt Shashank Bhatt
Jan 25, 2023 13 min read
How IKEA Dominates the Retail Market with the Psychology of Selling

Ever wonder what happens behind the scenes of a successful sale? It all starts with understanding the process of selling. Sales are the process by which goods and services are sold. When business and sales are combined, it is possible to create a powerful combination that can be used to drive success.

It is also important to understand the strategies and tactics that can be used to make the most of these two forces. With the right knowledge and understanding, business and sales can be used to generate success in any organization. There is one organization that has taken the principle of sales to new heights. That company is Ikea and is so famous that its tricks are a benchmark in the sales world.

The IKEA effect is a cognitive bias in which consumers place a disproportionately high value on products they partially created. Consumers tend to have greater satisfaction with the products they partially assembled than with the same products when fully assembled by the manufacturer. The IKEA effect is seen as a form of the endowment effect, in which people overvalue things simply because they own them. Shocked by this? There are plenty more business tricks in the belt of Β IKEA.

What is IKEA?
IKEA’s Psychological Tricks
The IKEA Effect
Location
The Long Maze
Guiding arrows
Fully closed stores
Listing help
In-house dining
Mirrors everywhere
Colour Coding
Limited Edition Products
Smells

What is IKEA?

IKEA is a multinational group of companies from Sweden that designs and sells ready-to-assemble furniture, kitchen appliances, and other home accessories. It is one of the most popular eCommerce and recognized home furnishing brands in the world. It is famous for its modern designs, low prices, and innovative flat-pack assembly system. The company's furniture is designed to be disassembled and reassembled easily so that customers can fit it into their homes.

IKEA has become a global leader in home furnishings and is renowned for its commitment to style, affordability, and sustainability. It is also famous for its wide selection of stylish yet affordable furniture, along with its clever and efficient use of space. Products are easily recognizable for their modern, minimalist design, and its reputation for providing quality furniture at a low cost has made it a favourite of consumers around the world.

Additionally, IKEA's flat-pack furniture, which is designed to be easily assembled by customers, has made it a popular choice for those who want to save money on furniture, as well as those who prefer to build their furniture themselves.

IKEA’s Psychological Tricks

IKEA, like many retailers, uses a variety of marketing techniques to attract customers and encourage them to make purchases. These techniques can include creating a visually appealing store layout, offering discounts and promotions, and using persuasive language in advertising and signage. Some specific psychological tricks that IKEA use are as follows

The IKEA Effect

The IKEA effect is a cognitive bias in which consumers place a disproportionately high value on products they partially created. It is named after the Swedish furniture company IKEA, which sells many do-it-yourself products. The effect implies that consumers typically place a higher value on products that they have invested effort into assembling or creating themselves, rather than products that are sold pre-assembled. This is because they feel a greater sense of ownership or pride in the product they have created.

The IKEA effect named after the Swedish furniture retailer IKEA, which sells many ready-to-assemble furniture products that require the customer to assemble them.
IKEA worldwide Retail Sales Share

Location

Store locations: Stores away from the town centre often have lower overhead costs due to the lower rent and property taxes. Store location is one of the key factors to attract more customers. This allows them to pass those savings on to their customers, resulting in lower prices and more competitive offerings.

Less Competition: Many stores located away from the town centre may have less competition, as most local businesses tend to be located closer to the town centre. This can benefit business owners as it allows them to have a more competitive edge in their local market.

More Space: Stores located away from the town centre often have more space for customers to move around and for the store to be laid out more attractive and organized, which can help boost sales.

Better Parking: Stores located away from the town centre often have more dedicated parking, making it easier and more convenient for customers to park their vehicles.

Better Customer Experience: Stores located away from the town centre may be able to offer a better customer experience with less rushed shopping as there may be fewer customers in the store at any given time.

It is through sales that customers are attracted to a company’s products and services, and it is through sales that a company can generate revenue and profits. It is through sales that a company can increase its market share and gain a larger share of the market.

The Long Maze

The IKEA stores are designed in a labyrinthine fashion, with customers having to pass through several sections of the store before reaching the checkout. This encourages customers to stay in the store longer, exposing them to more IKEA products. The layout of IKEA stores is often referred to as a "maze" design because it guides customers through a series of winding paths and corridors that lead them through the different departments and product displays.

The purpose of this layout is to encourage customers to spend more time in the store and to expose them to a wide range of products. One reason IKEA uses this layout is to create a sense of discovery for customers. By guiding them through different areas of the store, IKEA can showcase different products and create a sense of excitement and surprise as customers encounter new items.

Another reason for the maze design is to increase the likelihood that customers will make impulsive purchases. By leading customers through a series of twists and turns, IKEA can expose them to more products than they might see if they were able to walk straight to the items they came to purchase simply. This can increase the chances that customers will see something they hadn't planned on buying and decide to add it to their cart.

The maze design is also intended to create a sense of disorientation for customers, making it harder for them to keep track of where they are in the store and how much time they have spent there. This can make it more difficult for customers to make quick decisions and leave the store, encouraging them to spend more time browsing and potentially causing more purchases.

IKEA Global Retail Revenue

Guiding arrows

When you see directions, you relax and give your decision-making skills to the GPS. This is the same with IKEA. Its stores are designed to guide customers through a series of winding paths and corridors that lead them through different departments and product displays. To help customers navigate the store, IKEA provides a variety of directional aids, including:

Maps: IKEA stores typically provide maps near the entrance that show the layout of the store and the location of different departments and amenities. These maps can help customers plan their route through the store and find the products they are looking for.

Signage: IKEA stores use a variety of signage to help customers find their way around. This includes directional signs that point the way to different departments and product displays, as well as signs that indicate the location of restrooms, customer service, and other amenities.

Floor markers: IKEA stores often use floor markers or markings to help customers follow the correct path through the store. These markers may be arrows, dots, or other symbols that show the direction to follow.

Staff assistance: IKEA stores also have staff members who can assist customers with directions or help them find specific products. Customers can ask for assistance at any time if they need help navigating the store or finding a particular item. All these tricks help not only the customers to navigate but also the company to navigate to higher revenues.

Fully closed stores

Customers lose the sense of time while shopping at IKEA. The combination of the store's layout, the wide range of products, engaging displays, and customer amenities can all contribute to people losing track of time while shopping. The stores offer a wide range of products, including furniture, home decor, kitchen and dining items, and more.

This can be overwhelming for some customers and make it more difficult for them to stay focused on shopping goals. These stores often use visually appealing and interactive displays to showcase their products. Customers may be drawn to these displays and spend more time exploring them, which can cause them to lose track of time.

Listing help

Writing down a shopping list can be a useful psychological sales trick for retailers because it helps customers focus on their specific needs and goals and can encourage them to make more thoughtful deliberate purchases. Some specific ways that writing down a shopping list can be a psychological sales trick include:

Clarifying priorities: By writing down a shopping list, customers can prioritize their needs and focus on the items that are most important to them. This can help them make more targeted, efficient purchases and avoid unnecessary or impulse buys.

Creating a sense of commitment: When customers write down a shopping list, they are more likely to feel committed to sticking to their plan and making the purchases they have listed. This can reduce the likelihood of them being swayed by other items or promotions that they encounter while shopping.

Increasing perceived value: By writing down a shopping list, customers may perceive the items they purchase as being more valuable because they have taken the time to carefully consider their needs and make a plan. This can increase their satisfaction with their purchases and their loyalty to the retailer.

In-house Dining

IKEA offers free meals in its restaurant, which encourages customers to stay in the store longer, increasing the chance of them making a purchase. In-store dining is a common amenity offered by retailers, including IKEA, and it can be used as a psychological sales trick to encourage customers to spend more time in the store and potentially make more purchases. One way in-store dining can be used as a psychological sales trick is by creating a sense of comfort and relaxation for customers.

When customers feel comfortable and relaxed while shopping, they may be more likely to spend more time in the store and explore different products. This can increase the chances that they will make impulsive purchases or simply spend more time browsing and potentially making more purchases overall. In-store dining can also create a sense of community and socialization, which can be appealing to customers. By offering a place for customers to sit and relax, retailers can create a sense of belonging and encourage customers to stay in the store longer.

Another way in-store dining can be used as a psychological sales trick is by providing an opportunity for retailers to upsell or cross-sell products. For example, If a customer is dining in an IKEA cafe, the retailer may suggest that they purchase a particular item or offer them a special promotion while they are there.

Overall, in-store dining can be a useful tool for retailers to create a positive shopping experience for customers and encourage them to spend more time in the store, potentially leading to increased sales.

Mirrors everywhere

Mirrors are a common feature in retail settings, and they can be used for a variety of purposes. One psychological sales trick retailers may use mirrors is to create the illusion of more space in the store. By strategically placing mirrors, retailers can make a small space feel larger and more open, which can be appealing to customers. Another psychological trick retailers may use mirrors is to create the illusion of increased activity or interest in the store. For example, If a store has a lot of mirrors, customers may see reflections of other customers and perceive the store as being more popular or busy than it really is. This can create a sense of social proof, making customers more likely to feel that they should be in the store too.

Retailers may also use mirrors to influence how customers perceive themselves and the products they are considering purchasing. For example, if a customer sees themselves in a mirror while trying on clothes, they may be more likely to focus on their appearance and how the clothes look on them, rather than just considering the clothes themselves. This can make the customer more likely to make a purchase.

Overall, mirrors can be a powerful tool for retailers to use in their marketing efforts, as they can create the illusion of increased space, activity, and self-perception, all of which can influence customers' behaviour and purchasing decisions.


Interesting Facts about IKEA | IKEA Unknown facts
IKEA is a Swedish multinational company that sells online furniture. Know some of the interesting facts about IKEA that may not be known to you.

Colour Coding

IKEA color codes its products and store sections to reinforce brand recognition and make it easier for customers to find what they’re looking for. One way that color coding can be used to influence customer behaviour is by creating a sense of order and organization. By using different colors to indicate different categories of products, retailers can make it easier for customers to navigate the store and find what they are looking for. This can create a sense of calm and control for customers, which can make them more likely to make purchases.

Another way that color coding can be used in marketing is to associate certain colors with specific emotions or meanings. For example, Retailers may use the color red to indicate a sale or special offer, as it is often associated with feelings of excitement and urgency. Retailers may also use color coding to create a cohesive brand image by using specific colors consistently throughout the store.

Limited Edition Products

IKEA releases limited edition products to create a sense of urgency among customers and encourage them to buy the items quickly. The principle of scarcity is based on the idea that people value things more when they perceive them as being rare or hard to obtain. By creating a sense of scarcity around a product, retailers can increase its perceived value and encourage customers to make a purchase. They may look like these headings

Limited-time offers: Retailers may create a sense of urgency around a product by promoting it as a limited-time offer. This can make customers feel like they need to act quickly to take advantage of the deal, which can increase the likelihood of a purchase.

Limited quantities: Retailers may create a sense of scarcity by promoting products as being in limited quantities. This can make customers feel like they need to act quickly to secure the product before it runs out, which can increase the likelihood of a purchase.

Rare or hard-to-find items: Retailers may promote certain products as being rare or hard to find, which can increase the perceived value of the product and make it more appealing to customers.

Sold-out items: Retailers may promote products as being sold out or unavailable to create a sense of scarcity and encourage customers to purchase similar or related items.

Smells

IKEA uses the smell of cinnamon buns in its stores to encourage customers to stay in the store longer. It is common for retailers, including IKEA, to use various sensory elements, such as smells, as part of their marketing strategy. The use of pleasant smells in retail environments can be a form of sensory branding, which is the practice of using sensory elements to create an emotional connection with customers and strengthen the brand's identity.

In the case of IKEA, the use of smells can be an effective way to create a positive shopping experience for customers and influence their behaviour. Some specific ways that IKEA and other retailers might use smells in their marketing include

Creating a welcoming atmosphere: Retailers may use pleasant smells, such as the aroma of coffee or baked goods, to create a warm and inviting atmosphere in the store. This can make customers feel more comfortable and encourage them to spend more time shopping.

Enhancing the appeal of products: Retailers may use smells to enhance the appeal of specific products, such as by using the scent of freshly baked cookies to draw attention to a display of kitchenware.

Triggering memories and emotions: Smells have the ability to trigger memories and emotions in people, and retailers may use this to their advantage. For example, the scent of pine trees may be used to create a festive atmosphere during the holiday season, or the aroma of lavender may be used to create a relaxing atmosphere in a bedding department.

Conclusion

Business and sales can be used to attract customers, generate revenue, and increase market share. In order to be successful in business and sales, it is essential to understand the power of these two forces. Β IKEA uses a variety of psychological tricks to attract and persuade customers to make purchases. These techniques include creating a visually appealing store layout, using scarcity and loss aversion to create a sense of urgency, and leveraging the power of social proof to encourage customers to follow the lead of others. IKEA uses techniques to create positive shopping experiences and inform customer purchasing decisions, as part of their overall marketing strategy. These techniques are not deceptive or unethical.

FAQ

What is unique about IKEA's strategy to attract customers?

Using mono-segment, adaptive and aesthetic types of product positioning. The furniture retailer targets a cost-conscious customer segment that prefers to get value for the money they pay. Accordingly, IKEA has adapted as the unique selling proposition of the brand.

What is the Ikea effect in psychology?

The IKEA effect, named after everyone's favourite Swedish furniture giant, describes how people tend to value an object more if they make (or assemble) it themselves. More broadly, the IKEA effect speaks to how we tend to like things more if we've expended effort to create them.

What are the key factors for the success of IKEA?

At the heart of Ikea's success is value: You know what you're going to get when you shop at Ikea, and it's going to be affordable. In fact, price is so important to Ikea's strategy that the company first decided on the price of a piece of furniture and then reverse engineers the construction.

What is unique about IKEA's business model?

IKEA uses the services of around 1400 suppliers from over 60 countries. These suppliers form a big chain and also help IKEA in venturing into fresh markets. Additionally, it uses semi-skilled and skilled labour that becomes an integral component of its supply system.

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