Uncovering the art of upselling: The secret of IKEA
In this blog post, we’ll dig in into the world of retail psychology, focusing on how retail giants like IKEA tempt us to purchase more. The best part? You can apply the secret of IKEA, full of tricks and strategies, to your own business, whether it’s in real estate or any other industry.
A very common sensation
Have you ever walked into a store with a short shopping list, only to leave with a cart full of items you never intended to buy? We’ve all been there, and it makes you wonder: Is it our spending habits or a clever strategy deployed by retail stores to make us splurge?
How IKEA masters the art of getting you to buy more
Every retail giant aspires to expand its profits, and the key to that lies in encouraging consumers to buy more. One such master of this art is IKEA.
IKEA has an extraordinary ability to turn your casual shopping trip into a full-blown spending spree, all without you even realizing it. How on earth do they manage to pull it off? Is it because of their low prices, their vast product range, or their top-notch marketing? Well, it’s a combination of all these factors and more.
IKEA store layout: Shopping labyrinth
Let’s start by dissecting their store layout. Have you ever noticed that it feels like a mission impossible to find your way out of that labyrinthine showroom? Imagine you’re hunting for a simple rug – to get there, you’ll need to navigate through a labyrinth of dishes, bedding, couches, and an array of other items you hadn’t even thought of buying.
We’ve all dreamt of being that person who walks into a store, grabs their target item, and heads straight for the checkout. But how often do we end up leisurely strolling and exploring every nook and cranny?
Another secret of IKEA: Breaking conventions
IKEA has a term for this layout: the “long natural path.” It’s a purposeful design that compels you to cover the entire store and inspect every single product. While most retailers aim for three key objectives when designing their stores—easy navigation, a simple floor plan, and adequate product exposure—IKEA boldly breaks these conventions. But they do it with a clear purpose in mind.
Think about it this way: at a regular retail store, you typically only see a third of the available items. In IKEA’s retail labyrinth, you have no choice but to peruse the entire product range. Surprisingly, even though this layout seems designed to upset shoppers, customers rarely get frustrated. Some even claim they could happily spend a lifetime wandering those aisles.
The secret of IKEA uncovered: Psychology and meatballs
Now, here’s where things get interesting. The retailer wants you to buy more, but let’s face it, most of us don’t enjoy the idea of spending more money. It seems like a paradoxical relationship, doesn’t it? So, what’s the secret of IKEA? Long story short: psychology and yes, you guessed it, meatballs. We’ll unravel the psychological tricks shortly, but for now, let’s satisfy your curiosity about those famous IKEA meatballs.
The IKEA meatball mystery, an unknown secret of IKEA
The power of food
Seriously, what’s the deal with those meatballs that everyone’s is talking about?
IKEA’s food offerings are not to be underestimated. In 2021 alone, they raised a remarkable amount of $2.5 billion in sales, accounting for 6% of their total revenue. However, food at IKEA isn’t just a profitable venture in itself; those infamous meatballs, play a pivotal role in your shopping experience.
At IKEA, they affectionately refer to their meatballs as ‘the best sofa-seller.’ And the reasoning behind it is simple, as explained by Gerd Diewald, former IKEA Food Manager, US: “It’s hard to do business with hungry customers. When you feed them, they stay longer, they talk about their purchases, and they make a decision without leaving the store.”
Conveniently far from everything
This strategy is particularly effective because many IKEA stores are located outside city centers, where finding good food can be a challenge. Even the founder of IKEA, Ingvar Kamprad, saw their mission as ensuring that no one left the store because of thirst or hunger. By providing a restaurant and cafeteria, they retain customers and enhance the overall shopping experience.
The unexpected shoppers
Here’s the truly surprising part: a staggering 30% of IKEA Food customers visit the stores solely to dine, despite IKEA being primarily known as a furniture store. As unbelievable as it may sound, IKEA stands as the 6th largest food chain globally.
The charm of their products, another secret of IKEA
But it’s not just the delectable meatballs that coax you into spending more. It’s also the products themselves. IKEA has an unparalleled understanding of human psychology and a knack for making you buy things you didn’t even realize you needed – be it a kitchen rug, a stylish mug, or a scented candle. We all leave IKEA with items not initially on our shopping lists, thanks to these impulse purchases.
In fact, Professor Alan Penn from University College London estimates that around 60% of everything people buy at IKEA isn’t initially on their shopping list; they’re simply impulsive purchases.
Why do we fall for these impulsive purchases? According to IKEA’s Creative Director, Richard La Graauw, “80% of our buying decisions are actually based on emotions.”
A piece of the secret of IKEA: The magic of psychology and other tricks
Without the psychology behind the brand, IKEA would only generate 20% of its current sales – an astounding testament to the power of emotional appeal. In addition to the obvious tricks, such as setting prices ending in 99 that give the idea of being cheaper than they really are, IKEA employs various other sophisticated tactics:
- Temporal distortion. Have you ever noticed that there are no working clocks or windows in IKEA stores? This clever strategy is known as “temporal distortion.” It’s similar to when you tell yourself you’ll spend just 15 minutes reading a book or scrolling through social media, and before you know it, an hour has slipped away unnoticed. The absence of clocks and windows makes it challenging to gauge how long you’ve been in the store, a technique also favored by casinos to make people lose track of time.
- Reflection and a sense of belonging. IKEA strategically places mirrors throughout their stores. When you catch your reflection in an IKEA setup, it fosters a sense of belonging. Beyond that, some people simply enjoy admiring themselves in mirrors.
- The magic of bright white. And have you ever realized that IKEA’s showrooms are uniformly white and bright? This design choice creates a feeling of purity and a clutter-free space, enticing clients uniquely, and reinforcing the brand’s image.
The secret of IKEA behind your shopping experience
While shopping at IKEA or any other retail store can be an enjoyable experience for some people, for others it is not. Shopping in a retail environment can be mentally exhausting because it bombards our brains with information and distractions.
Victor Gruen and the planned distraction
But here’s the twist: stores use these distractions to their advantage, employing a technique known as “The Gruen Effect.” This intriguing term takes its name from Victor Gruen, an Austrian architect who made his mark by designing shops and retail spaces in New York during the 20th century.
His crowning achievement was the creation of the first shopping mall, Southdale Shopping Center, located in Edina, Minnesota. Interestingly, Gruen’s career began during challenging times for the retail industry, when the economy was declining and people had limited funds for shopping.
The power of aesthetics
Gruen’s brilliance lay in understanding that well-designed window displays and interiors equated to higher profits. Beautiful surroundings enticed people to linger in a store, and the longer they stayed, the more they bought.
Aiming at a different shopping experience
His approach also aimed to redefine the shopping experience. Gruen envisioned a setup where customers could break from their daily routines and immerse themselves in a new world. Achieving this atmosphere involved combining sights, colors, smells, and sounds to create a sensory overload, causing shoppers to forget their original intentions and make unplanned purchases.
IKEA + the Gruen effect: The perfect marriage
IKEA has seamlessly integrated the Gruen effect into its stores. They combine an excessiveness of furniture displays, restaurants, cafés, and enticing bins filled with affordable knick-knacks. When you enter an IKEA store, you’re overwhelmed by the diversity, often losing track of your intended path.
Other tricks that are part of the secret of IKEA
But even if you’re one of those disciplined shoppers who stick rigorously to their shopping list, IKEA has more tricks up its sleeve:
One such strategy is “loss aversion.” This technique leverages the psychological principle that people are more concerned about avoiding losses than making gains. When IKEA offers a discount, the fear of missing out on a great deal frequently prompts people to make purchases they hadn’t initially planned.
IKEA is renowned for its use of the “decoy pricing” method. This clever approach aims to maximize the sales of a particular product by making choices easier for customers. Picture this: you’re eyeing a $100 chair, and right next to it are two more options—one priced at $90 with inferior quality and another at $180 with only a slight improvement in quality. This technique makes the $100 chair seem like the obvious choice, boosting its sales.
IKEA actively employs upselling, and you can see it in the ubiquitous container bins filled with a wide range of items at enticing prices. The sight of these bins alone can spark the desire to buy more. Combine this with IKEA’s already competitive prices, and you’re convinced that you’re getting a fantastic deal.
By now, you’ve delved deep into the captivating world of IKEA’s retail psychology. But here’s a valid question: how does IKEA manage to ensure that customers leave with positive impressions despite spending more than intended? The answer lies in the “peak-end rule.”
Have you ever noticed that the café is strategically placed right after the checkout counters? It’s a brilliant idea that naturally guides weary customers to a place where they can enjoy good coffee and affordable pastries. Even if you don’t step into the café, you’ll exit the store with the lingering aroma of cinnamon, sugar, coffee, and freshly baked goodies—a perfect ending to your shopping journey.
The “peak-end rule” suggests that people remember experiences based on their peak moments, whether those moments are good or bad. And customers are more likely to recall their initial and final impressions. Thus, leaving a customer content after they’ve paid their bill becomes the key to success.
The IKEA effect
Another secret in IKEA’s arsenal that fosters customer attachment is co-creation, often referred to as the ‘IKEA effect.’ While buying furniture at IKEA is just the beginning, the assembly process, although sometimes seen as a challenge, holds a hidden truth. Studies indicate that humans tend to value something more if they’ve put effort into it. In simpler terms, labor leads to love.
IKEA, always looking to cater to a broader audience, acquired TaskRabbit—an app that connects you with trusted contractors who can assist with furniture assembly, home repairs, cleaning, and more. This move reflects IKEA’s commitment to addressing the diverse needs of its customers.
IKEA’s tactics: Clever or manipulative?
Opinions about IKEA’s psychological tactics vary widely. Some view them as clever marketing strategies, while others see them as manipulative. James McQuivey, VP and Research Director at Forrester, aptly summarized IKEA’s approach: “IKEA’s success is a testament to their ability to use psychology to influence their customers’ behavior.”
Whether you’re a fan or not, there’s no denying that IKEA’s strategy is effective, driving remarkable growth. Today, IKEA boasts 460 stores in 62 markets, employs more than 230,000 people, and boasts retail sales exceeding $45 billion.
The outcome: Unstoppable growth and its human side
Yet, IKEA’s impact goes beyond the numbers. Numerous reviews highlight IKEA’s commitment to creating a healthy working environment for its employees. IKEA’s founder, Ingvar Kamprad, believed that the team is the heart of the business, as you can see in these words: “But if you are a good leader, you always ask your team.”
Even today, IKEA employees share positive work experiences on platforms like Reddit.
Applying IKEA’s tactics to your business
Now that you’re aware of the tactics that have propelled IKEA to success, you can implement these strategies in your own business, be it in real estate or any other product or service you offer.