Case Study: Ikea finds local solutions for local issues

The story
With more than 5m visitors a year, Ikea’s Xu Hui store in Shanghai is one of the Swedish retail chain’s 10 best revenue generators worldwide, although the average spend per customer is relatively low. The smallest of its 11 stores in China, its city centre location means that 60 per cent of customers arrive by public transport.

Part of the Ikea concept is that the stores provide a spacious, clean location where customers can rest and eat Swedish-inspired meals and snacks. The restaurant is less of a marketing tool than a support to the customer service ethos.

The challenge
A dating club for older Chinese adopted Ikea Xu Hui’s restaurant as the venue for its twice-weekly meetings. The seniors were registering with the club online and paying Rmb10 to an unidentified organiser, who designated the restaurant as a meeting place.

The daters stood out from ordinary shoppers because they spent the day in the restaurant socialising, playing their radios, eating food they brought from home and drinking the free coffee to which they were entitled as Ikea Family Member cardholders (for which registration is easy and free).

Arguments sometimes broke out between dating club members, and one man threw hot coffee at a security guard when he tried to intervene. Ordinary Ikea customers were becoming upset that every Tuesday and Thursday there was no space for them to relax and eat in the restaurant.

Ikea staff were also unhappy. The store’s ambience was disturbed and sales suffered on dating club days: none of the club members shopped in the store and they spent very little in the restaurant.

The problem grew as club meetings became more and more popular. In 2009, when fewer than 250 seniors were participating, Ikea staff felt they could cope; but when numbers climbed to about 700 in 2011 it was clear that a solution was needed. However, efforts to identify the dating club’s organiser were unsuccessful.

Store manager Jerome Deloix proposed stopping the free coffee for all Ikea Family Member customers as a way to discourage the dating club. But this was firmly rejected by Ikea’s China head office. Mr Deloix had to find another way to balance the challenges of remaining true to Ikea’s firm ideas on customer service; minimising the dating club’s impact on customers and staff; and not alienating older people within its overall customer base.

The strategy
As Mr Deloix put it: “We have to manage it in the right way. It takes time to change people’s habits.” His team defined an area in the restaurant where the daters could meet alongside other Ikea Family Members who were drinking the free coffee only. The free coffee was now served in green cups.

Both measures were an effective way to manage these “free customers” without turning them away. Daters – with green coffee cups, their own food and no restaurant purchases – were more easily identified. Restricting them to a defined area helped reduce their numbers, thereby ensuring that paying customers had room to enjoy Ikea’s restaurant. Extra security guards kept order, while notices displayed at the restaurant entrance asked for good behaviour. Shouting, playing radios and knitting were banned.

The result
The number of dating club members using the restaurant as a meeting place fell. A year later, dating club members are still at the store, sharing the assigned section of the restaurant with other free-coffee drinkers. However, the numbers are now at a tolerable level.

The lesson
Although Ikea operates highly standardised stores in many countries, the behaviour of local consumers varies considerably.
- Financial Times, Apr 22, 2013