During the 1980s, most U. S. department stores stopped carrying furniture because turnover was too slow and costs were too high. That created an opportunity for smaller, limited-line stores specidlizing in bedding, upholstery, or casual dining.Now the Ikea (pronounced I- KEY-ah) retail chain is, in turn, shaking up these traditional home-furnishings retailers. When Ikea opened its first U. S. store in 1985, it had already developed a low-cost, low- service strategy that was successful in Sweden (where it started) and other parts of Europe.{{U}} (9) {{/U}}.
It's difficult for small retailers to compete with Ikea's low prices or the 12,000-item selection it offers in each of its 200,000-square-foot stores.{{U}} (10) {{/U}}.But Ikea uses a clever store layout that helps consumers get information and make purchase decisions without costly help from salespeople. A couch, for instance, is displayed both in a real life setting and in a group with other couches so people can compare and make purchase decisions. A 200-page catalog—mailed to consumers who live within an hour's drive of the store—detail prices and specifications. Shoppers wheel the boxes of assemble-it-yourself furniture to the cash register themselves. The store doesn't offer delivery either.{{U}} (11) {{/U}}Ikea does offer some services. For example, it starts a children's playroom--because parents shop better when they don't have their kids in tow.{{U}} (12) {{/U}}.{{U}} (13) {{/U}}.But because Ikea's sales are so large, it designs its own quality furniture its customers will buy, and then contracts with a producer to make it. This also reduces distribution costs because the furniture is designed in a way it can be shipped disassembled.
As an Ikea manager explains, "If we offered more services, out prices would go up. Our customers understand our strategy, which requires each of us to do a little in order to save a lot. They value our low prices." He seems to be correct, and Ikea sales will probably continue to grow as it opens new stores in Europe and the United States. However, Ikea may need to adapt its strategy—including its service level—to consumer differences and evolving competition.{{U}} (14) {{/U}}.Some U. S. consumers, for example, complain that they have to wait in a long Ikea line only to find that a product is not in stock, and that there's no waiting list for the next shipment.
A To keep costs low, service is Spartan.
B Though successful, it still has room for improvement.
C The two most important features of the mass-merchandising format are great variety of merchandise and low cost.
D But most consumers can carry the "knock-down" furniture home in car.
E Most furniture retailers buy producer's product lines at big wholesale furniture markets.
F The same mass-merchandising format is proving very popular with price-conscious consumers in the United States.
G And a restaurant at the store offers consumers low-cost meals and a place to think over big purchase decisions.
H That created an opportunity for smaller, limited-line stores specidlizing in bedding, upholstery, or casual dining.