DOES NITORI’S ROAD LEAD TO THE WORLD?
-COMPARATIVE ANALYSIS OF NITORI AND IKEA-
KAORI AYABEDepartment of Regional Development StudiesSchool of Regional Development StudiesToyo University
Introduction
Furniture is one of necessary items for living our life. “Brown” and “square” were old image of furniture .Recently furniture becomes more stylish.Nitori is one of well-known furniture company, and will start their business in the U.S in 2013.I wonder if Nitori can make success in the U.S..
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Statement of the Problem
1. Will Nitori be a good global company like IKEA?2. How is the state of Nitori's balance sheet?3. Nitori has enough strategy to defeat rival
companies in the U.S?
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Research Methods
1. Financial Analysis of Nitori2. Ratio analysis between Nitori and IKEA3. Porter’s five forces analysis4. Specialized Strategy
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Overview of the Recent Trends of Furnishing Industry
Japanese Furniture IndustryThe Furniture Industry is classified into one of the Interior Industry segments. The home furniture market had been decrease with the decrease of demand for newly built homes and new families.
Furniture Industry Scale Ranking Based on Sales (Source: Yuho! Industry Ranking)
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Name Sales1 Nitori Holdings Co.,Ltd 3312 Nafco 220.33 Shimachu 159.54 Otsuka Kagu Co.,Ltd. 54.45 BALS Co.,Ltd. 33.36 CASSINA IXC. Ltd. 3.4
Billion Yen
Global Furniture IndustryThe European Union (EU) furniture industry accounts for about half of the world's furniture production.The world furniture industry has been growing.The furniture industry is expected to grow by 20 per cent a year especially India, Brazil and Russia
Global Trade in the Furniture Sector (Source: Furniture, 2012)
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Overview of Nitori
Founder: Akio Nitori from HokkaidoEstablished: in 1967 in SapporoStore: 212 stores in Japan, 5 stores in Taiwan and will start
business in LA, the U.S in 2013 Vision: To present Japan and the whole world with the abundant home decoration that is as splendid as that of Europe and the U.SSPA (Specialty Store Retailer of Private Label Apparel): meaning a company conducts all processes in-house from acquisition of raw material to manufacturing, distribution, sales and consumption 7
Overview of IKEA
Founder: Ingvar Kamprad from SwedenEstablished: in 1943 in AgunnarydStore: a total of 287 stores in 26 countriesVision: to create a better everyday life for the many peopleFlat-Packing System:
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1. Financial Analysis of Nitori
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Ratio of Nitori and Japan Furnishing Industry Average in 2011 (Source: Nitori’s Annual Securities Reports of 2012, Zenkoku Zaimu Shohyou Bunseki Toukei)
2. Ratio analysis between Nitori and IKEACompare these ratios: profitability, liquidity, and solvencyProfitability Niotri ≒ IKEASolvency Nitori ≒ IKEA Big difference in Liquidity ratio (Current ratio) Possible reasona)IKEA keeps currents assets to deal with the risks and issues coming upb)Europe financial system lead the global company to have current assets (Ex: H&M)
11Nitori 91.82% 82.01% 70.75% 88.85%IKEA 169.55% 177.20% 176.47% 196.09%
3. Porter’s Five Forces AnalysisFive Forces
Bargaining Supplier’s Power
Bargaining Power of Buyers
Threats of New Entrants
Threats of Substitutes
Rivalry within the Industry
LOW
HIGH
HIGH
LOW
HIGH12
Generic Strategy Cost Leadership and Differentiation
Nitori: SPA IKEA: Flat packing system
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4. Specialized Strategy
Logistics:6 distribution centers→ 78 delivery centers→ stores
Quality Control:PDCA cycle
Sales Floor:
Wide, open space
Logistics:28 distribution
centers and 11 customer distribution centers in 16 countries.Design:
Scandinavian style Sales Floor:
Like a big labyrinth
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• Nitori • IKEA
5. Conclusion
How to compete with IKEA in the U.S?
Logistics system
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Thank you for your attention.
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18Location of Nitori’s Distribution Center in Japan (Source: Home Distribution and Tourism in Japan)
19IKEA Sales floor (Source: Intelligence of IKEA’s Furniture)
Nitori IKEA
Vision (Roman)
To present Japan and the Whole worldwith the abundant home decoration
that is as splendid as that of the Europe and the USA
To create a better everyday life for the many people
Layout of storeWide open space
Shopping time average 20 mins
Like a labyrinth with one primary pathResutaurant
Play room for kids
WarrantOffering 1-year or 5-years
quality assuranceOffering 5-years, 10-years, 15years,
and 25-years quality assuranseDesign Nitori head offi ce IKEA head offi ce
Designer Designers from Nitori FreelanceRight of Design Nitori is Holder IKEA is holder
Producer Nitori Partner Company
Country of OriginIndonesia, Vietnam,
China, JapanCountries of the world
Sales methoddisplay in the store and delivery
customer also can take away
Cash and Carry*(Some countries, including Japan, are able
to deliver to the customers)Assembling Finished Furniture Do It Yourself
Online Sale 〇×
(Some countries, however, sale online)
Distribution basesShanghai → 6 distribution centers in
Japan
28 distribution centers and 11 customer distribution centers
in 16 countries*Cash and Carry= buy product at the store and take away the purchase from the store
Summary of Nitori and IKEA (Source: Imura, 2012 and from This Study) 20