IKEA has invested heavily in cost-saving techniques

[sumonasumonakha.tu1]

Another advantage is the high barrier to entry that this situation creates for IKEA's competitors. They have a harder time finding a niche for themselves, because IKEA is already fully entrenched in the market, which means that they will spend more to acquire new customers (i.e. higher customer acquisition costs), while suffering from lower revenues and more limited access to new capital.


IKEA as a company has built its image and its entire business model as a budget-friendly alternative where people can buy furniture, kitchen appliances, home decor, and so on. They have achieved this in various ways, but it can mainly be described as the use of cost-saving techniques that allow the customer to enjoy lower prices. These techniques generally involve two major components; product and process innovation .

IKEA uses a flat-pack system that allows furniture to be shipped as disassembled pieces rather than band data as a whole. This saves space, reduces shipping costs and allows customers to choose custom-made pieces. They also have favorable agreements with their raw material suppliers, which allows them to buy in bulk at a significantly lower cost per unit thanks to economies of scale.