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Huge crowds, inventory troubles cloud IKEA honeymoon
by Jeff Horwich, Minnesota Public Radio
October 18, 2004

After one last trip to return some items and pick up a bookshelf, grad student Nicole Courneya says it might be her last IKEA visit for a while. "The fact of the matter is, I lived without IKEA before," she says. "And I was OK." (MPR Photo/Jeff Horwich)

Some of the luster has worn off one of Minnesota's major shopping destinations. When the Swedish furniture chain IKEA opened across the street from the Mall of America in July, the buzz about its sleek, low-cost furniture had preceded it to the Twin Cities. But the new IKEA has left some customers disgruntled and even angry -- suggesting the store has faced more than routine challenges in its first three months.

Bloomington, Minn. — When IKEA opened its blue and yellow doors in Bloomington this summer, IKEA fans -- and would-be fans -- celebrated. The local press was there to roll out the red carpet. Local television, newspapers, and radio all ran features in the lead-up to the opening.

It was a phenomenon. The new store was a major water cooler topic. The Bloomington IKEA enjoyed a free word-of-mouth campaign most retailers can only dream of. It's partly the foreign mystique, and partly the fact that IKEA rarely enters new markets. But it is also, undeniably, the IKEA products.

	"I Love IKEA"

"My first impression of IKEA was the furniture in my friend's apartment," says Nicole Courneya, a graduate student at the University of Minnesota. "I really liked it, and when they told me how much everything cost, it seemed that much more appealing."

Courneya let Minnesota Public Radio walk the aisles with her when she went back to IKEA this month.

"Even though I was frustrated by shopping here, that I had wanted IKEA furniture for so long -- I was determined to buy IKEA furniture. Which is sick. It's not rational whatsoever. And by the end of it, I was just like, 'Whatever, I just need a bed.'"

One of Courneya's biggest headaches, she says, was the large number of out-of-stock items. On this day, Courneya is returning to IKEA for a bookshelf that was out of stock when she first came in August. At the time, she also scouted out a bed she was told was in-stock in large numbers.

The next day, she sold her old bed and came to pick up the new one. No luck -- overnight, the store had run out. Walking through the bed section two months later, it's clear there are still inventory issues -- Courneya points out "oversold" tags on a number of items, including the ones she had trouble finding in August.

"Of course we're aware of it, and it's unfortunate, but we are working hard to improve that," says store manager Max Hedberg. Hedberg says IKEA stocked the Bloomington store based on what customers buy at IKEAs in Chicago, College Park, Maryland and Paramus, New Jersey.

	IKEA Bloomington store manager Max Hedberg

But when the store opened, Minnesotans came in larger numbers than expected -- from far beyond the Twin Cities. And they had different tastes. Hedbergs says the store has made big changes to accommodate the different demand.

"We have adjusted so we are not out of stock, and we will not have the same challenges with top-selling articles that were selling better than we expected," Hedberg says. "That's an ongoing, big job -- we did that, and big changes (will come) after a month when we start getting into our own sales statistics. It is something a new store needs to go through."

IKEA has been stung by the combination of wall-to-wall crowds and a very thin supply chain, according to retail expert Dave Brennan at the University of St. Thomas School of Business.

"Their expectation -- in terms of what kind of business they were going to do -- they overshot it," Brennan says, and "in terms of their supply chain, I mean, it's very long -- like from here to Sweden."

IKEA makes all of its furniture itself. If there's a shortage the company can't turn to other suppliers. The Bloomington store is served by two distribution centers on the east coast and one in Canada. The IKEA structure is far from the "just-in-time" inventory systems of retailers like Wal-Mart, which have largely made oversold items a thing of the past.

Much of the challenge of shopping at IKEA has been -- paradoxically -- a product of its own success. Here's how Max Hedberg, the store manager, puts it: "The first two months have been overwhelming, I would say. We've had many visitors, somewhat more than we had expected."

For retail professor Dave Brennan, the most telling image during his visits to IKEA has been checkout lines that stretch deep into the store. As he moved ahead with his family, he says it was common to see carts full of items, sitting abandoned.

(If) it's taking you 45 minutes to get to the cash register, some people just say, 'The heck with it, it's not worth it.' - Prof. Dave Brennan, University of St. Thomas School of Business

"(People) just walk out," Brennan says. "If you've got an hour or maybe two hours in (during the trip), and it's taking you 45 minutes to get to the cash register, some people just say, 'The heck with it, it's not worth it.'"

One line lasted two hours for Justine Forsythe, a law student in the Twin Cities.

"I think that they were incredibly understaffed," she says. "I don't know if they didn't hire as many people as they could (have), maybe they just weren't prepared for the deluge of Minnesotans who would arrive."

On one occasion, Forsythe came to return a defective dresser. She says she hurt her back wrestling it out of the car, and needed help.

"I couldn't find an employee to help me lift the dresser out of my car to get into the store to return it, so I asked several employees, and they're like, 'That's not my job.' Finally another customer helped me get it into the store."

Forsythe echoes other customers we spoke with who say help was hard to come by.

"At the times when I was waiting to be served, I could see employees just standing around in the front of the store. I think they were higher-up employees, but they never offered to help, particularly when I was trying to carry the heavy boxes."

Store manager Max Hedberg says Forsythe's experience should not have happened.

"There will and should be service if you need it, that's the bottom line," he says. "If you need help to put something on your cart or load your cart, there will be service provided for you."

Hedberg says the store is still busy, especially on weekends. But traffic has finally, in his words, "calmed down" (actual statistics are not public information).

Since the store opened, the number of employees has grown from 450 to more than 500. And many employees have undergone what he calls "cross-functional training." That is, they should be ready to handle requests for help no matter where they are -- even when they're roaming outside their department.

"We are both better prepared and better able to meet the expectations from customers," he says.

"Also, if we can set the expectations of the customers in a clear way -- how they take part in this -- that together, I can almost promise, will give a greater shopping experience now."

That last part, about setting expectations, alludes to something many U.S. retailers don't need to think much about, but IKEA does: customer education. For example, you don't walk through IKEA like a typical store -- there are a few shortcuts, but for the most part a defined path takes you on a trip past every one of the 330,000 square-feet. It can feel claustrophobic, but that's how it works.

And even though IKEA promises help will be there if you need it, at the heart of the concept is the notion of a "self-service" furniture store. The company calls it "self-choice."

Retail expert Dave Brennan says what might seem to some Minnesotans like skimpy service is part of how the chain keeps its prices so low.

"People are not used to having a regular retail store where you see the model, then you have to go downstairs and pick it up yourself in flatpack boxes, and you need to have a dolly to put it on. That makes it a lot more confusing for a first-time or even second-time customer there."

Customers like Nicole Courneya feel plenty educated about the IKEA experience. The trouble is, she's not sure she likes it. On this visit she finally got the dresser she'd been waiting for, but now the IKEA binge is over.

"If IKEA is the only option to provide something, then I could see myself coming back here," she says. "But the fact of the matter is, I lived without IKEA before. And I was OK."

IKEA wants customers like Courneya to come back. And when they do, the store manager says, please fill out a comment card.

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