Founded 80 years ago by Ingvar Kamprad, IKEA has grown into one of the largest and most recognisable furniture and homeware brands in the world. The retailer operates around 500 stores in more than 50 countries, its blue and yellow buildings a familiar sight in out-of-town retail estates near major population hubs across the globe.

Since the early 90s, when its global expansion first began to ramp up, these large brick and mortar retail outlets have been a core part of IKEA’s unique proposition. Combining sprawling showrooms with a huge self-service warehouse space filled with flat pack furniture enabled the company to keep a wide range of more than 12,000 products in stock, whilst significantly reducing transportation, storage and packaging costs.

These operational savings are in turn passed onto the consumer, enabling IKEA to beat most other furniture retailers on price. Their Scandinavian aesthetic of minimalist and functional design is also calibrated to appeal to the widest possible market, and helped to establish the business as a commercial behemoth.

So, this raises the question: why have so few competitors managed to successfully copy IKEA’s concept in more than 30 years of relentless growth? There are several competitors in the market that differentiate themselves through design, price, product range, store layout or self-assembly, but this combination of factors is uniquely IKEA.

An instructive comparison is the Danish retailer Jysk, which positions itself as a more upmarket, luxury version of IKEA. While it uses more expensive materials in its products and commands a higher price point, many of the other elements of Jysk’s business model are the same. The company opened its first UK stores in 2008 with a targeted marketing campaign that made no secret of its similarities to the Swedish incumbent.

Globally, Jysk has actually opened far more stores than IKEA – more than 2000 compared to 468 as of this year – and has been expanding rapidly in the past few years. However, even record revenues of €5.2bn for the last financial year are still only a fraction of IKEA’s €44.6bn.

That remains a successful retail business by anyone’s measure, yet it illustrates the delicate balancing act that makes IKEA so extraordinarily successful. The combination of utilitarian quality at an affordable price point (made possible by low overheads on distribution and storage) depends on the confluence of several factors. Everything – from carefully selected store locations to smart material and manufacturing decisions – is geared towards maximising revenue.

When a competitor moves even slightly away from this model to differentiate itself, it will struggle to match IKEA’s numbers. Jysk, along with other major bricks-and-mortar competitors like Kartell and Williams-Sonoma, have chosen to pursue more expensive materials or pre-assembled furniture, which has had a significant impact on the financial equation.

Ultimately, the biggest long-term challenge to IKEA may not come from competitors directly copying its model. As more consumers migrate to online platforms like Wayfair for affordable homeware, the company has had to refocus its strategy on e-commerce channels. Like many other sudden shifts in the business landscape, the Covid-19 pandemic has played a big part in the change.

At the height of the 2020 lockdowns, online sales of flat-pack furniture surged, with IKEA itself experiencing a 45% increase in e-commerce revenue as people needed to quickly and affordably adapt their homes into workspaces. In the years since, footfall in showrooms has slowly dropped as online shopping and delivery has become more normalised in customers’ minds. To protect its market share into the future, another radical rethink of the furniture retail business model might be in order.