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More Than Market Research - Gain The Information Advantage

Tom H. C. Anderson - Next Gen Market Research™ header image 6

IKEA Food Fail

February 18th, 2012 · 35 Comments

Should Micro Segments Matter? (Random Waxing on Text Analytics and Brand Equity)

In 1638 the New Sweden Company established a colony on the Delaware River. Between 1846 and 1930 roughly 1.3 million people, about 20% of the Swedish population at the time left the country, the majority for the USA. By 1900, there were close to one million Swedes in Chicago alone.

Skip forward to 2012, according to US Census data adult Scandinavian language speakers in the US total around 150,000, only about .05% of the population (of which 43% are Swedish speakers). A majority of these are concentrated around the New York and Los Angeles areas. If you expand to include Americans claiming Scandinavian heritage that percentage goes up to about 4% or just over 11 million.

While Swedes living abroad have long taken pride in brands like Volvo and Saab, which were until recently Swedish, arguably nothing is closer to the heart than a people’s food. IKEA, perhaps inadvertently at first, seem to have stumbled upon this in their marketing. I believe for IKEA the Scandinavian (especially the Swedish) global Diaspora have played a small but important part in IKEA’s global conquest and current brand equity. While maybe not significant as a total proportion of sales; this groups unwavering positive advocacy for the brand, even as it has struggled to gain a foothold in more challenging markets like the US in 1985, has certainly helped IKEA.

Nationality as a branding strategy has been on the wane recently it seems. According to a study my firm did in 2007, only 38% of US college students knew that IKEA was a Swedish brand (24% assumed it was American). Amazing considering that IKEA is a very relevant brand among this segment and IKEA stores all fly the Swedish flag, are painted blue and yellow, all products are named after Swedish words, and most stores have a Swedish Food Market.

Today I’m not going to talk about whether or not product country of origin is important in branding. For several brands (especially luxury brands) I’ve found that at least among many of its most important customer segments it is. Instead I’d like to talk about micro segments in general.

IKEA recently decided to stop carrying Swedish food brands; about 150 products in total including Swedish brands from Abba seafood to Marabou Chocolate have been eliminated. These quality brands have been replaced with lower cost products all carrying they IKEA store brand name.

This change may not be very noticeable for the majority of IKEA customers who come to IKEA mainly for their furniture needs. For all I know the Food Market may have been a loss leader for IKEA which it has decided it no longer needs.

While I know the Swedish expatriate community around the world is extremely disappointed about the decision, and many have voiced their opinion on social media including Facebook and Twitter; because it is such a small group, their voice is drowned out by business as usual.

I’m not unrealistic - I do expect businesses to do what is most profitable for them. I wonder though not just about how we as marketers choose to measure brand equity, but how we choose to create and market to our customer segments. Most companies have 3-6 important customer segments that they pay attention to and market to differently. With the advent of Big Data, will it soon be possible or reasonable to pay attention to segments smaller than 1%?

Text Analytics now allows us the ability to record and monitor discussions of even a minority online that would have been dismissed as outliers and ignored in traditional marketing research. However our priorities on how to deal with these data have not changed.

Will firms like IKEA ever switch from traditional market segmentation only strategy and pay attention to ‘micro segmentation’ and listening - or would this be a waste of time? Curious to hear your opinion.

@TomHCAnderson #IKEAfoodFAIL (Hungry in CT)

[Note: My post today may be somewhat biased. I realize the opinion stated may be held only by me and a very small customer segment. However I believe for marketers it raises questions on how we define segments. How large should a segment be for it to warrant special consideration? Also, should segments be measured only based on pure economic potential, or should we as marketers also consider the more difficult to measure influence a small segment may make in ongoing brand advocacy? Finally, with text analytics capabilities now available to measure online sentiment, do we have an obligation to also pay attention to the ‘outliers'?]

[Post to Twitter] 

Tags: Anderson Analytics · Branding · Customer Satisfaction · Datamining · IKEA · Loyalty Marketing · Market Research · Marketing · Marketing research · Odin Text · OdinText · Positioning · Retail · Segmentation · Sentiment Analysis · Social Analytics · Social Analytics Summit · Social Media · Social Media Marketing · Text Analytics · Twitter · global market research · sweden · text mining

35 responses so far ↓

  • 1 Robert // Feb 18, 2012 at 8:03 pm

    While IKEA’s decision is annoying, longer-term it actually creates new business opportunities.

    In the UK, the “other” stores that sell Swedish food has seen a great upswing following IKEA’s announcement. And they’re usually easier to get to than IKEA.

  • 2 Peter "tha swede" // Feb 18, 2012 at 8:48 pm

    So if I understand the article, the problem isn’t that IKEA has switched food but suppliers?

    If I may speak for my fellow countrymen here (which I of course in reality cannot say I for certain can) I would say that Swedish food does not have it’s base in brands but the peculiar kind of foods that are traditionally prepared here.

    If you can pickle herring correct it does not matter if it´s ABBA or any cheaper brand (by the way pickled salmon is weeey better!!). I mean here in the “motherland/fatherland” most people buy cheaper brands than ABBA.

    What would be more interesting is to talk about how fast traditional Swedish food is going out of style back in Scandinavia.

    Kebab/Shwarma and pizza is more of a diet together with steak now in Sweden.

    I mean sure, meatballs and “lingonsylt” is still great and I love it but as the demographic of Sweden is changing I’m afraid old traditional foods like pickled herring, “pitepalt/kroppkakor”(potato and flour balls with pork in) and lye fish is soon just a memory.. Sad? Not for me to decide..

    By the way Ingvar Kamprad should get a medal from the Swedish gov, he and his company have put more young Swedes to work than any other gov-program.

  • 3 Hans Sandberg // Feb 18, 2012 at 10:21 pm

    Worst Thing Since the New Coke - Flat-Packed Swedish Food at IKEA
    http://sandberghans.blogspot.com/2011/11/worst-thing-since-new-coke-flat-packed.html

    Västerbottenskris i USA
    http://hanssandberg.blogspot.com/2011/12/vasterbottenskris-i-usa.html

  • 4 anders berg // Feb 18, 2012 at 10:25 pm

    Wrote abt this during the fall. Posted on Abba’s, Cloetta’s, Marabou fan pages on FB. No response. They must be losing quite a bit of money. Thought they didn’t like that.

  • 5 Joel Andersson // Feb 19, 2012 at 1:40 am

    IKEA stores in both Geneva and Singapore still carry the traditional brands so this came as a bit of a surprise.

    I’m quite sure that the IKEA food stores will fail if they insist on changing the brands. When it comes to the food Swedish expats buy the brand is all that matter as this is what reminds them of home.

    An IKEA branded caviar is not Kalles Caviar and thus nobody will buy it.

  • 6 Jonas Vesterberg // Feb 19, 2012 at 2:45 am

    I think it’s very disappointing and negative for IKEA’s identity in the long run. The Swedish food market is more of a “service” to expats and will probably never be a revenue generator. Eating at IKEA used to be a quite pleasant experience — now the meatballs are super processed and taste like rubber, the salmon is of the lowest grade and the staff is rude and uneducated. This type of pennychasing is becoming visible and is also illustrated by the low wages IKEA pays its workers in for example the U.S., as well as the highly publicized conflict at the Swedwood plant in Virginia some time ago.

  • 7 Susan Brudvig // Feb 19, 2012 at 9:21 am

    I’m not sure when this started, but I was very disappointed in the selection during my pre-Xmas visit to an IKEA store. For me, this annual 100-mile trek is to stock-up on Scandinavian food for the holidays. For the most part, only IKEA private label food products were available, and the quality & selection was a huge disappointment. The crisp breads that were available could be found in any urban area … and at our local Trader Joe’s and Sam’s Clubs. I doubt I spent more than $20 when I had planned to spend upwards of $200.

    It will be a long time before I go back to an IKEA — it’s a 100-mile trek, and the food products are (were!) the only products that IKEA carries (carried) of personal interest. Next year, I’ll order from my favorite Norwegian deli in Minneapolis … and stick with local Trader Joe’s and Sam’s.

  • 8 Melinda Jansson // Feb 19, 2012 at 9:55 am

    I used to live in Ireland up until a year ago (when I moved back home to Sweden again) and any time anyone was going up to Dublin, they would ask everyone what food they wanted from IKEA and they would always make a stop at IKEA on the trip, regardless if they needed anything else there or not.

    Also a lot of people I know, who have been to Sweden and taken a liking to specific Swedish food, will drive to IKEA just to pick some up.

    I even have a friend (Swedish) in Osaka, Japan, who used to buy gifts in the form of food for people, at IKEA specifically because he could get the good brands there.

    All of these groups know the difference between the good brands and the generic ones now at IKEA and not one of my friends or ex-coworkers are now as inclined to go to IKEA, as the food has lost nearly all is appeal.

    If you ask me, that is a lot of people (or groups of people) who all of a sudden are not going to IKEA as much as they used to. That can’t have been a good idea from IKEA’s point of view.

  • 9 Sylvain Houde // Feb 19, 2012 at 10:02 am

    My wife used to drag me to Ikea when we lived in Canada to get her comfort food. Now we live in Sweden so we don’t have that problem but still it’s like who would buy a Mercedes if it was built Romania kind of defeats the purpose of going after a German car. Ikea should build on Swedish food products they would sell more. The worst in this is that Kraft Foods owns Marabou and Gevalia… My wife also wondered why they didn’t have the Paradis and Aladdin chocolate boxes, they would make a fortune with them.

  • 10 Florin Staniloiu // Feb 19, 2012 at 10:06 am

    All super / hypermarkets are doing it. I work in sales and marketing for a log time now and also I am upset of this tide. Problem is the “house brand” is usually an so called “ex-independent” brand and by activating under the new hypermarket umbrella the old quality vanishes.

    We all when acting as buyers should discourage this habit by not buying. Those hypermarkets have the tendency of “eating” all around…

    IKEA, stand out from the crowd and make a real difference !

  • 11 Sven Muller // Feb 19, 2012 at 12:44 pm

    Once this is reversed I hope whomever was responsible for the decision gets fired. How idiotic!

  • 12 Tom H. C. Anderson // Feb 19, 2012 at 2:43 pm

    I forwarded this post to IKEA Customer Service. Here is the response I received today:

    ————-
    Hello Tom,

    Thank you for taking the time to contact us.

    The decision to sell IKEA branded food products was taken several years ago and the first products were launched in 2006. Since then, a gradually increasing share of the total range has become IKEA branded. Now, as the range becomes 100% IKEA branded, the gains are many.

    It allows us independence and freedom from demands and boundaries set by suppliers. We fully control the production and all other relevant processes such as quality requirements and sustainability issues. We can create unique products with a unique IKEA identity and secure capacities. We can build a “smart” range with many combination and add-on possibilities as well as clear links between the restaurant and Swedish Food Market.

    Thank you for taking the time to share your thoughts with us. We appreciate your feedback and value your opinion.

    Best Regards,
    IKEA Customer Care Center

  • 13 Kris // Feb 19, 2012 at 3:06 pm

    Responses like this which are just towing the company line make me wonder how much they really “appreciate your feedback and value your opinion”.

  • 14 Anna Fredricsson // Feb 19, 2012 at 3:41 pm

    I too have been frustrated by the change and by not having products available at the IKEA market. At the same time, I am not completely stuck to a brand. I don’t stick to all of the brand name items in a traditional grocery store. I hope that IKEA will take a great amount of responsibility in ensuring high quality foods as they proceed. Also, they really need to make sure that they aren’t eliminating items or not communicating with customers. I guess that is what they really need to learn from this experience — the loyalty of their customers is important and they need to engage us if they want all of us to remain loyal and to speak well of the virtues to others. I grew up with IKEA so I am not throwing the baby out with the bathwater. I will continue to go and I will try things. If it doesn’t taste good, I will not buy it.

  • 15 Tom H C Anderson // Feb 19, 2012 at 4:30 pm

    @Anna So you haven’t tried the ‘IKEA’ products yet? I tried to eat the chocolate, yuch! The bread is lower quality too, everything… It’s simply not acceptable.

    The point is that this is a huge inconvenience to most of us who unlike @Robert above do not have other viable local options. Many like myself I bet would even be willing to pay a premium for the quality brands.

    I think this is a shameful breach of trust to an important segment that has been helpful to the brand for many years (and I’m speaking as a marketer as well as a previously loyal customer).

  • 16 Tom H C Anderson // Feb 19, 2012 at 5:45 pm

    Anyone know someone at any of the companies which were dumped (Cloetta, Abba, Marabou/Kraft etc.)?

    I’d love to hear the inside story on how this happened, what products IKEA is using now, and whether the rumor about IKEA reversing the decision is true or not.

  • 17 Lisa E. // Feb 19, 2012 at 10:42 pm

    So glad that you brought this up, Tom. I have so often referred friends and family to IKEA with specific requests to bring home food products - for my benefit and theirs - and was shocked to see at Christmastime how inadequate and, really… depressing the food selection had become. All the vibrancy has gone out of that department.

    How do they plan to entice new consumers of classic Swedish food with their dismal offerings?

    How do we convince them to bring back the previous assortment?

  • 18 John Riddick // Feb 19, 2012 at 10:44 pm

    I agree with Lisa. I worked in Sweden in the 1990’s and since, returning back to the UK have regularly shopped at IKEA for Mazarins, Marabou, Hjortronsylt, Japp and Daim bars. And now IKEA no longer stock them! They are a really big miss.

  • 19 Johan Skanor // Feb 20, 2012 at 12:46 am

    I bought herring (matjessill) and kaviar and lots of other stuff at IKEA Moscow last year for a big Midsummer party in Siberia. When we opened both the many cans of matjessill and the kaviar tubes it was all a runny mess! It appeared that somewhere along the transport chain, in the military in Sweden we call it “the refrigerated chain” (kylkedjan) had been broken and the food had been warm and allowed to ferment (hey - the matjes became surstromming (rotten herring - also a delicacy) but at the wrong time of the year!). It was a great disappointment for all and a bad image of IKEA! It has happened other times here and there as well.

    I also agree that the food in many IKEA restaurants in many countries is now really bad! Many years ago when IKEA started in the US (early ’80s) the food was also bad but Ingvar Kamprad himself tried it and then saw to it himself that the meatballs became true Swedish and the lingon berry and gravy too! Hope he gets involved again!!!

  • 20 Irene Hahn // Feb 20, 2012 at 1:01 am

    Just saw their - probably canned -response above. Hahahah!

  • 21 Arik Johnson // Feb 20, 2012 at 1:51 am

    Thanks for the heads up on this Tom - it’s been a few months since I’ve visited IKEA, although 1/4 Swede myself (5/8 Norwegian+ 1/8 Dane… Long and sordid story) but if ever laid over in Minneapolis almost always take the tram over for a lunch of meatballs and lingonberries, often bringing home a jar or two for our Saturday Swedish pancake ritual wi the munchkins. Now that we’re growing our own I probably won’t do so much of that.

    Anyhow, it all boils down to whom their customer is, or at least, primarily is.

    As an American descendent of Swedish heritage, I quite candidly don’t know the “old country” brands… But I do know the traditions, so I think it’s probably smart for IKEA… if I’m their customer. Give me something I can experience that takes me and my family back to the old country (my dad always said our ancestors tried so hard to get the hell out, why would I want to go back?!) so I can connect with that ancestral tradition. Even share it with my kids…

    In short, micro segments or not, it’s about why a customer buys, what does that buying (and consumption) experience DO for them, which no one else can?

    Crack that and it probably doesn’t matter where you get your OEM stuff from.

  • 22 Sara // Feb 20, 2012 at 11:20 am

    I want my cloudberry jam back!!

  • 23 IKEA Responds // Feb 20, 2012 at 12:15 pm

    [...] ← IKEA Food Fail [...]

  • 24 Tom H C Anderson // Feb 20, 2012 at 12:21 pm

    IKEA Responded again today and denied the rumors that they have decided to return to the traditional food brands.

    Here is their explanation: http://www.tomhcanderson.com/2012/02/20/ikea-responds/

  • 25 Arthur T. Larsen // Feb 20, 2012 at 12:26 pm

    Why aren’t people complaining about national grocery chains “replacing” national brands with store generic brands. How about Costco’s Kirkland branded articles, or Wal-Mart’s or Albertson’s? All stores are promoting their own brand and this keeps the brand name suppliers on their toes to offer their product at a competitive price. You get the drift.

    Some of the product is actually produced by the same manufacturer as the “popular” brand.

    IKEA is certainly doing investigations as to the profitability of their food products, and if people stop buying their IKEA generic brand, then IKEA might return to offering a brand name product. I agree with the comment that you can get the “real” brand name product in other stores and supporting these stores will surely have positive impact on which brands they choose to stock.

    If only 1 out of 1000 IKEA shoppers have Scandinavian heritage or ties, then the battle against Ingvar Kamprad’s Trust Company will be near futile.

    Lev väl med det du har. Keep on strömmin’,

    ATL

  • 26 Sara Magdalena Goldberger // Feb 22, 2012 at 4:32 am

    IKEAs new food is a disappointment to say the least. It has nothing to do with quality - the comment above about the Romanian Mercedes is an excellent way of putting it. And as with som many, my only reason to actully visit IKEA is now gone. I can buy wardrobes somewhere else.

    Which brings me to the next item - IKEA is no longer Swedish. In fact it even says so in interviews lately. And honestly, should you visit their stores (and why indeed without proper food) you see what I mean. There is not one ounce of Swedish left, IKEA should take the consequences and paint their stores grey.

  • 27 Michael Sandström // Feb 23, 2012 at 5:36 am

    For those who cannot live without all the great Swedish food, visit our webshop Butik Hemlängtan.

    Of course, prices are higher than IKEA and shipping is added, but it may be worth it :)

  • 28 Johan Wallentin // Feb 24, 2012 at 10:21 am

    IKEA might change their view according to the newsp paper article and unfortunate it is in Swedish, see link below. It might be that all the noise regarding this may make IKEA change a little.

    http://www.svd.se/naringsliv/ikea-backar-om-leverantorer_6791231.svd

  • 29 Tom H C Anderson // Feb 24, 2012 at 10:24 am

    Unfortunately no Johan, see the follow up on this post here:

    http://www.tomhcanderson.com/2012/02/20/ikea-responds/

    IKEA responded and said that article is not true, they do not have any intentions of reversing the decision.

    Looks like IKEA is the Walmart of Sweden

  • 30 Anna Decker-Wilson // Feb 28, 2012 at 1:46 pm

    As a Swedish expat living in the US, my issue with the IKEA food store is that the selection used to be pretty good, but now the food section is expanded, only the selection is smaller - more of each food item. And they no longer carry some of the items that I would plan to get there (and invariably pick up too much stuff on the furniture side too once I was in the building :) ). I’m thinking of nyponsoppa (rose hip soup), hjortronsylt, and matjessill, for instance.

  • 31 Jessica Eile Keith // Feb 29, 2012 at 10:09 am

    IKEA sells their own brands only, why would they not do so with the food? In a few years this change will be forgotten and those of us who buy Swedish food in their food market have either gotten used to the IKEA flavors or buy our stuff elsewhere. Here in Florida I find most of my Swedish favourites such as crisp bread (WASA), lingonsylt (Felix), coffee (Melitta), marzipan for the princess cake (Odense), ginger cookies (Annas), pickled herring from Canada at the grocery chain Publix. I haven’t seen cloudberry jam or Kalles Kaviar at our Tampa IKEA store for a long time and hope these brands will be offered by Publix as well, oh I forgot to mention, I can also get Stockholm Beer at Publix. IKEAS’ food and furniture should not be used alone but mixed with other high quality stuff. I think IKEA does excellent in marketing the Scandinavian food and offers opportunities to those who want to sell high end Scandinavian foods.

  • 32 Philip // Apr 28, 2012 at 4:48 am

    Just seen this posting. As one of the comments mentioned, while irritating to many consumers, this decision has been rather good for those smaller companies selling Swedish food. One such company is my wife’s, http://www.totallyswedish.com, with two shops in London and a webshop delivering throughout the UK. She sells all the usual favourites from Abba Sill (the fresh stuff she sells is way better) to Djungavel.

  • 33 KHX // Aug 2, 2012 at 3:13 pm

    They took a guess that non-Scandinavians are not that interested in Scandinavian food when visiting Ikea. Boy they are wrong, but then again they don’t listen to customers, anyway.

  • 34 Tom H C Anderson // Aug 7, 2012 at 12:56 pm

    I have it from a relatively reliable source at IKEA that they are now planning to reverse the decision. I suppose it will take some time to renegotiate their contracts as I’m sure they have burned some bridges with their suppliers.

    Hope to hear more news on this soon. Would be nice to return to Ikea some day…

  • 35 James Koenig // Aug 17, 2013 at 10:40 am

    It’s disappointing— because it feels somehow more coldly “corporate” and less connected to people. Even if the food section isn’t a big “money maker”– it’s branding. It’s that old adage about “the way to someone’s heart is through their stomach.” It’s not just ex-pats that associate the Swedish food-products with IKEA. And the company benefits from the idea of Swedish quality and practicality. But I’m all for the “little guys” moving in on the food market. But I do think IKEA made an unfortunate decision– and hope they’ll reconsider.

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