to drive future growth (see Exhibit MC5.2). Finding
new sources of supply to support more store openings,
however, is a challenge. Although demand for IKEA’s
low-cost home furnishings increased during the global
financial crisis as more customers became price conscious,
IKEA’s annual store growth has slowed to less
than five new stores a year. This is because its supply
chain has become a bottleneck. IKEA has difficulty
finding suppliers that are a strategic fit with its
highly efficient operations. Related to this issue is the
fact that wood remains one of IKEA’s main input factors,
and the world’s consumers are becoming more
sensitive to the issue of deforestation and its possible
link to global warming. In the near future, IKEA must
find low-cost replacement materials for wood. In
addition, powerful competitors have taken notice of
IKEA’s success. Although IKEA is growing in North
America, it holds less than 5 percent of the homefurnishings
market. In some European markets, IKEA
holds 30 percent market share. To keep IKEA at bay
in the U.S., Target has recently recruited top designers
and launched a wide range of low-priced furnishings.
Kmart, likewise, has enrolled Martha Stewart to help
with the design of its offerings of home furnishings.