apparel, the first major player to enter
the U.S. and have a major impact was
furniture and home furnishings retailer
Ikea in 1985. Ikea and the chains that
have followed, however, all share the
following common characteristics:
• The store is the brand and
establishes a very strong and
clear brand identity. They offer a
compelling and differentiated store
experience with store design as a
clear expression of the brand.
• Their merchandise is multigender—
men’s, women’s, and children’s—
accessories, and, increasingly,
home. (Ikea is the exception.)
• They follow a fast fashion
model, featuring in-stock,
on-trend merchandise with a
consistent flow of new goods.
• They offer value—good quality
for the price—and dominate/
differentiate on product and price.
• They possess advanced
• They are at the forefront in the
use of technology in all areas,
including back-end, information
technology, sourcing, market
research, and fabric technology.
• They have a multichannel
focus encompassing their
stores, e-commerce, mobile,
and social media.
• They have strong corporate
culture and DNA, and strong
commitments to corporate
citizenship and sustainability.
Beginning in the mid-1980s,
international retailers started to enter
the U.S. market in earnest as part of
their global expansion strategies. As the
largest consumer market in the world,
the U.S. represented a market that offered
almost unlimited potential for growth,
once these companies adapted their
products and go-to-market strategies
to U.S. consumers’ tastes and customs.
Ikea. Ikea was the first to expand into the
U.S., with a revolutionary take on clean,
modern furniture that was taking the
world by storm. Currently the second-
largest furniture retailer in the U.S., with
$2.5 billion in sales through 42 stores,
Ikea established itself in the U.S.
market by offering a supermarket
warehouse approach to home
furnishing, innovative marketing, a
cash-and-carry approach for flat-pack
products requiring assembly, a unique
store experience, and value pricing.
Its stores are chic and modern, and
feature a restaurant and a play area for
children. Its merchandise is exhibited
in room settings to drive multiple sales.
Ikea’s model continues to evolve as
the company responds to consumer
interest in delivery and assembly
services and higher-end products.
Who’s been hurt? Wickes Furniture,
Seaman’s Furniture, and Levitz
Furniture are all no longer in business.
Zara. Launched in New York City
in 1989, Zara is the largest division
of parent Inditex. Based in Spain,
Inditex is currently the largest
specialty retailer in the world, with
7,013 stores in 88 markets. Sales in
2015 were $22.7 billion and net profit
was $3.1 billion, according to Inditex’s
2015 annual report. Zara currently
operates 69 stores in the U.S.
Zara captivated American consumers
with a combination of fashion-forward,
off-the-runway style, and great quality
at affordable prices. Its customer-centric brand essence captivated
the new consumer who demanded
high-quality, value-priced fashion.
Zara’s pricing resulted from its efficient
and low-cost supply chain and its
laser-like focus on wringing out cost
efficiencies throughout the business.
New merchandise is delivered to
stores every two weeks, which brings
customers back to Zara stores more
frequently than to their U.S.-based
competition and lowers markdown
liability. The store experience is a
reflection of Zara’s brand, with the
clean, modern aesthetic of its product
reflected in the store design and
visuals. Zara demonstrated its major
commitment to the New York market
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New York I Los Angeles I Boston I San Francisco I Chicago I Sydney I Perth I Melbourne I Brisbane
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