Will Ikea Hotels be a Success or a Failure?

Ikea is a clearly a beloved brand in the market with a very powerful connection to their consumer.  

But is an Ikea Hotel a good idea or bad? 

Consider me a fan of Ikea, and I’ve been perusing the Ikea catalogues and store aisles since I was 15.  It’s an exciting experience.  The innovative and youthful designs surprise you at every turn–kitchen tables, desks, cool chairs or wall-art.  The low prices make it a perfect fit for the University crowd or those starting out, or if you want something of a disposable need that you know you’ll replace in 2-3 years.  Where else can get an end-table for $14?

But if you have bought Ikea furniture, you have likely experienced the holy terror of their customer service.   You find the item, you write it down on a piece of paper and spend forever looking down in the warehouse section of the store.  You ask an employee and they have no clue and can barely be bothered to help you.   One of your items is in, but the wrong colour.   The other item is out of stock with a hand-written sign that says it will be back in stock in about six weeks.   You take your one item home, open it up.   The directions are simple–which is great–but so simple that you have to stare at the hand drawn object for 10 minutes before it makes sense.  You end up missing a bolt and this small piece of wood.  You can`t figure out if it`s crucial to the design or not.  So you drive all the way back to the store and get in line for customer service.  Oh the fun is just about to begin for you.  You take a number and wait.  Once it`s your turn, you are interrogated and questioned of what you might have done with the missing bolt.

Yes, I`m still a fan.  But I have had some really nasty experiences that makes me question why I stay a fan.  Ikea has a rich balance sheet in the brand equity world:  Amazing Innovation matched against Dreadful Customer service.  The biggest problem I have with Ikea`s customer service is after 30-40 years of bad service, they must surely know it by now.  There are websites called Ikeasucks.com and Facebook pages called I Hate Ikea. But what it really says me is `service isn`t really important to Ikea`.   It`s not really part of the culture.  They value the fun they get from the innovation more than the hard work it would take to fix the service.  And that`s ok, because as a loyal customer, I must have the same feeling.

Ikea has announced they are entering the budget hotel business.  Is that a good idea or a dreadful decision?  

When I first heard the idea of Ikea Hotels, I thought of the good side: great way to show off their furniture, perfect brand image against the younger target market and a great way to trial new products.  I imagined the hotels would be nice and clean, sleek, stylish design and maybe even a price tag dangling from the end of the bed.

But then I thought of the bad about Ikea Hotels: it would be an awful nights stay.  They would lose my reservation, they would forget to put numbers on the hotel doors, I`d have to deal with some cranky customer service person at the front desk and when I phoned for towels, the person on the end of the line would not know whether I could have them or not.  And of course, you would need an Allen Key to open your door, flush your toilet, set your alarm and turn on your shower.  Will the “somewhat disposable” furniture have the strength to withstand the wear and tear of a hotel or will staff be constantly re-building the desks in the hallway?

While I might be questioning why I keep coming back, it`s safe to say I might not be going to the Hotels.  While Ikea says they will outsource the hotel management, the lack of importance given to service must be cultural embedded deep in the DNA of Ikea.

If we analyse the focus of the brand using the Traecy Model (below), and if you map out Ikea on a high, medium or low for the three areas of Product Leadership, Customer Intimacy or Operational Excellence, it might become crystal clear on whether Hotels make sense.  If you do this on your brand, it`s important to be fully completely honest where you sit.

On product leadership in the discount furniture business, I would score Ikea the highest in the category.  As I said above, it`s the thing that keeps bringing you back.  On Customer Intimacy, I`d score it medium.  It`s a big schizophrenic, in that they know exactly the designs and innovation the customer wants, but they have failed to map out the buying experience to see where they are frustrating and even losing customers.  And finally, Operation Excellence would be very low.  It might an efficient low-cost way to get furniture tot he customer, but in terms of the consumer view we`d have to score them a complete disaster.   Does that mindset match up to a hotel experience you want?   Even if they outsource the operations to another hotel, I would expect their culture to still shine through the operations.

Will Hotels help or hurt the Ikea brand? 

About Graham Robertson: I’m a marketer at heart, who loves everything about brands. I love great TV ads, I love going into grocery stores on holidays and I love seeing marketers do things I wish I came up with. I’m always eager to talk with marketers about what they want to do. I have walked a mile in your shoes. My background includes CPG marketing at companies such as Johnson and Johnson, Pfizer Consumer, General Mills and Coke. I’m now a marketing consultant helping brands find their love and find growth for their brands. I do executive training and coaching of executives and brand managers, helping on strategy, brand planning, advertising and profitability. I’m the President of Beloved Brands Inc. and can help you find the love for your brand. To read more about Beloved Brands Inc, visit http://beloved-brands.com/inc/

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6 thoughts on “Will Ikea Hotels be a Success or a Failure?

  1. Dear Graham,
    You hit the nail on the head — on all counts. Thank you for your humorous analysis of a brand that is beloved despite its shortcomings.

    • I’ve used it with quite a few of my clients and find it a very useful tool to help decide “what business you are really in”. It usually creates a lot of good discussions at the table, and it can help frame the rest of the decision making. Later on, when making other decisions, you might hear someone say “wait a second, we said we were operationally driven…this doesn’t feel like it fits”.

      Deciding who you are is about being honest. Being happy with who is about being successful.

  2. One particular brand that comes in mind is Air-Asia, a low-cost budget airlines with themselves going into the budget hotel business (do take note the term “budget”). And although it may make sense with management to go into the budget hotel business due to the nature of their air-carrier business, venturing into a business that one does not have niche with can create problems such as service/product inconsistency and the effects on the actual reputation of the brand name and company.

  3. Very good analysis Graham. Also well written.
    You are right. Their business model has nothing to do with running hotels. That fact that furniture is a common thread is not enough. But if they would use the yellow line to direct you to your room after you’ve had a few, they could appeal students during frosh week.

  4. Love this article. I work in the conference and events business. Oftentimes the success of our work relies heavily on the success of a hosting hotel and or conference centre. The poor customer service experience would be deadly in our industry. But the novelty of guests staying at an Ikea Hotel might be fun and intriguing the first time round.

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