Since its founding in 1940s Sweden, IKEA has revolutionized the furniture industry by offering affordable, stylish home furnishings to the global masses. With over 400 stores across 60 countries, IKEA has become synonymous with the modern millennial lifestyle. But just who is the typical IKEA shopper, and how has the company so effectively captured this crucial demographic? Let‘s take a deep dive into IKEA‘s target market and the strategies that keep customers coming back.
IKEA‘s Core Demographic: Meet the "IKEA Generation"
IKEA‘s primary target market consists of young adults between the ages of 20-34, often referred to within the company as the "IKEA Generation." According to a report by Civicscience, over 24% of IKEA‘s customers are under age 30, compared to just 16% for the general population. These shoppers are typically college students, recent graduates, and young professionals who are furnishing their first homes on a limited budget.
Some key characteristics of IKEA‘s target audience include:
- Income: Most IKEA shoppers have a middle-class household income between $35,000 to $80,000 per year. While price is a major factor in their purchasing decisions, they‘re willing to pay a bit more for stylish, functional designs.
- Education: IKEA customers tend to be well-educated, with many holding bachelor‘s or advanced degrees. They‘re drawn to IKEA‘s reputation for Scandinavian design and innovative, space-saving solutions.
- Urban Living: A high proportion of IKEA‘s sales come from urban areas with large populations of 20-somethings, such as college towns and major metro areas. These consumers often live in apartments or small homes and need multifunctional, efficient furniture.
- Life Stage: Many IKEA shoppers are experiencing milestones like moving out on their own, starting a career, getting married, or having children. IKEA‘s wide product range caters to these different life stages and budgets.
Interestingly, IKEA bucks the trend of most furniture retailers by appealing equally to both men and women. A study by CivicScience found that 11% of both males and females had shopped at IKEA in the past 6 months, compared to a 7%/10% male-female split for Target and a 5%/3% split for Home Depot. This gender parity speaks to the universal appeal of IKEA‘s functional, affordable offerings.
IKEA‘s Regional Strongholds
While IKEA operates in 60 countries worldwide, its presence is especially strong in certain regions that align with its target demographics. Here is a breakdown of IKEA‘s market penetration in some of its key geographies:
| Region | Stores | Sales (Billions) | Percent of Total |
|---|---|---|---|
| Europe | 279 | €28.7 | 69.8% |
| N. America | 57 | €5.9 | 14.4% |
| Asia | 46 | €5.1 | 12.4% |
| Middle East | 20 | €0.7 | 1.7% |
Source: IKEA Annual Report 2021
As the table shows, Europe remains IKEA‘s dominant market, accounting for nearly 70% of total sales. Germany alone has 53 stores and generates 15% of the company‘s revenue. Meanwhile, the US is IKEA‘s second-biggest market with 50 stores and 14% of global sales.
What these regions have in common are favorable demographics that fit IKEA‘s target profile, such as large student and young professional populations. For instance, some of IKEA‘s top-performing US locations include Portland, Oregon and Salt Lake City, Utah, which have high concentrations of millennials and strong job growth. As IKEA plots further expansion, it will likely focus on up-and-coming urban centers that check similar demographic boxes.
The IKEA Way of Life
More than just a furniture store, IKEA has cultivated a distinct lifestyle brand that resonates with its target audience. From its product designs to store layouts to marketing messages, every element of the IKEA experience is tailored to appeal to young, city-dwelling consumers on a budget.
For instance, IKEA‘s bestselling KALLAX shelving unit encapsulates many of the brand‘s core values. Endlessly versatile, the simple cube design can be customized to fit almost any space and function, from a room divider to a media console to a home office filing system. Priced under $200, KALLAX is an affordable investment piece that can adapt along with the customer as their needs change over time.
IKEA‘s famous in-store experience is also designed with its target shoppers in mind. The sprawling showroom floor allows customers to test out products and envision how they might look in a small apartment or dorm room. Ample signage and free measuring tape make it easy for novice shoppers to navigate the buying process. And of course, the IKEA Restaurant with its signature Swedish meatballs has become a dining destination for young families and budget diners.
These signature touches have made IKEA not just a place to buy furniture, but a cultural force among the millennial set. As Leontyne Green Sykes, Chief Operating Officer of IKEA Retail U.S., explains: "We‘re really talking about the IKEA lifestyle, and how we help them solve that through our product range, through our stores, through our website, through all the touch points we have with our customers."
Keeping Customers Loyal on a Budget
Given that its core customers are notoriously price-sensitive, IKEA has devised several strategies to build loyalty and keep shoppers from defecting to cheaper competitors. The IKEA Family loyalty program, which boasts over 100 million members worldwide, offers perks like special discounts, free coffee and tea in stores, and 90-day price protection on purchases.
IKEA has also invested heavily in e-commerce and digital tools to make shopping more convenient for tech-savvy millennials. Features like augmented reality furniture placement, online product reviews, and the ability to save wish lists make it easy for customers to plan purchases at home. Click and Collect, which allows shoppers to order products online for in-store pickup, has been a hit with busy young professionals.
At the same time, IKEA has doubled down on its famously affordable prices in the face of online competition. In recent years the retailer has lowered prices on many popular items and run promotions like the IKEA Sustainable Living Shop, which offers discounts on eco-friendly products. While IKEA‘s prices are still higher than some discount retailers, its design edge keeps customers from trading down.
"We are not a luxury brand; we are a brand for the many people," says IKEA U.S. CEO Javier Quiñones. "Our commitment is to offer great design and function at an affordable price. That is why people love IKEA."
The Future of IKEA‘s Target Market
While IKEA‘s "20-something on a budget" target has served it well for decades, the company recognizes that it needs to evolve to stay relevant with the next generation of consumers. In particular, IKEA is making a concerted push to court younger Gen Z shoppers through initiatives like its streetwear-inspired SPÄNST collection and collaborations with designers like Virgil Abloh.
There are also signs that IKEA may shift its focus from suburban big box stores to smaller urban formats more suited to its increasingly metropolitan customer base. The company has already tested concept stores in cities like London and Paris, and plans to open around 30 such locations in the coming years. These stores emphasize IKEA‘s home furnishing expertise with design consultations and free planning tools.
However, IKEA must be careful not to alienate its core customers as it courts new audiences and expands into different formats. "IKEA needs to think about the next generation while still being relevant to the previous ones," cautions Ray Gaul, Vice President of Research and Analytics at Kantar Consulting. "It needs to retain that trust, which is easily lost and hard to gain."
As IKEA navigates this transition, it will be crucial to strike the right balance between innovation and affordability, trendsetting and time-tested appeal. But with a remarkable track record of giving its customers exactly what they want, IKEA seems poised to remain the go-to choice for stylish home furnishings on a budget well into the future. As Juvencio Maeztu, IKEA‘s Deputy CEO and Chief Financial Officer puts it: "Our curiosity and willingness to always find better ways of doing things will be key in staying relevant tomorrow among new customers."
