DOES NITORI S ROAD LEAD TO THE WORLD -COMPARATIVE

DOES NITORI’S ROAD LEAD TO THE WORLD? -COMPARATIVE ANALYSIS OF NITORI AND IKEAKAORI AYABE Department of Regional Development Studies School of Regional Development Studies Toyo 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. . 2

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? 3

Research Methods 1. 2. 3. 4. Financial Analysis of Nitori Ratio analysis between Nitori and IKEA Porter’s five forces analysis Specialized Strategy 4

Overview of the Recent Trends of Furnishing Industry Japanese Furniture Industry Scale Ranking Based on Sales (Source: Yuho! Industry Ranking) The 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. 5

Global Furniture Industry The 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 6 Global Trade in the Furniture Sector (Source: Furniture, 2012)

Overview of Nitori Founder: Akio Nitori from Hokkaido Established: in 1967 in Sapporo Store: 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. S SPA (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 Sweden Established: in 1943 in Agunnaryd Store: a total of 287 stores in 26 countries Vision: to create a better everyday life for the many people Flat-Packing System: 8

1. Financial Analysis of Nitori 9

Ratio of Nitori and Japan Furnishing Industry Average in 2011 (Source: Nitori’s Annual Securities Reports of 2012, Zenkoku Zaimu Shohyou Bunseki Toukei) 10

2. Ratio analysis between Nitori and IKEA Compare these ratios: profitability, liquidity, and solvency Profitability Niotri ≒ IKEA Solvency Nitori ≒ IKEA Big difference in Liquidity ratio (Current ratio) Possible reason a) IKEA keeps currents assets to deal with the risks and issues coming up b) Europe financial system lead the global company to have current assets (Ex: H&M) 11

3. Porter’s Five Forces Analysis Five Forces Bargaining Supplier’s Power LOW Bargaining Power of Buyers HIGH Threats of New Entrants HIGH Threats of Substitutes LOW Rivalry within the Industry HIGH 12

Generic Strategy Cost Leadership and Differentiation Nitori: SPA IKEA: Flat packing system 13

4. Specialized Strategy • Nitori Logistics: 6 distribution centers → 78 delivery centers → stores Quality Control: PDCA cycle Sales Floor: Wide, open space • IKEA Logistics: 28 distribution centers and 11 customer distribution centers in 16 countries. Design: Scandinavian style Sales Floor: Like a big labyrinth 14

5. Conclusion How to compete with IKEA in the U. S? Logistics system 15

Thank you for your attention.

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Location of Nitori’s Distribution Center in Japan (Source: Home Distribution and Tourism in Japan) 18

19 IKEA Sales floor (Source: Intelligence of IKEA’s Furniture)

Summary of Nitori and IKEA (Source: Imura, 2012 and from This Study) 20