The DJ Model of IKEA
Value innovation as a growth platform
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*The image above is actually a spoof by IKEA Australia. IKEA’s collaboration with Kanye never happened.
The DJ model of growth is when a company uses collaborations to increase its relevancy and revenue. This model addresses the challenge of growth in mature markets.
The DJ model is used by mass retailers who sell products that are easily commodified, like Swatch or Uniqlo, and also by legacy luxury retailers with a global footprint, like Louis Vuitton, Moncler or Mini.
The strategy behind the DJ model of growth is a remix: the DJ model keeps reframing a brand for customers in a new context.
The DJ model reintroduces a brand in the market by remixing it with different parts of culture, community, technology or natural environment. A constant stream of new brand associations and attributes keeps a brand image fresh and a brand visible among consumers and cultural commentators alike.
For example, despite being founded in 1970’s, Uniqlo keeps its brand fresh through collaborations with a range of fashion and streetwear designers, artists, furniture designers, and restaurants. Keith Haring, Jil Sander, Eames, Undercover, Lemaire, a series of Japanese ramen shops and J.W. Anderson all made the cut.
Or, MINI invites each year different designers to create a new interior for its cars. Past designers included DVF, Roberto Cavalli, Versace, Tumi, Dsquared2, Diesel, and Calvin Klein. Mini also collaborated with Airstream on S Clubman Airstream Concept and The Woolmark Company.
Just like a DJ remixes music, DJ model of growth lends a brand a trendy positioning, removes the barrier to a brand’s image and extends a brand’s appeal to multiple audiences. People who’d never consider a brand before line up to get a collaboration, which can lead them to re-evaluate their brand perception and become curious about products from a brand’s core range.
Thanks to brand remixes, the DJ model achieves multiple business goals. It uses brand extensions to diversify into different product categories and to cost-effectively attract different customer segments, increasing sales and margins. It gives halo effect to the core collection. It provides a permanent thrill to design-conscious curators through novelty and limited-edition collections. By inspiring consumers to pay more, the DJ model increases a brand’s market not only in volume, but also in value.
Customers pay premium for innovation in value. The growth motor ceases to be price, and becomes taste, thrill and desire. Growth comes from trading in aspiration and from social, cultural, and environmental value that brand remixes create.
The DJ model is powered by a dual brand management: one of the exclusive, selective, and premium-priced collaborations, and other of the accessible, mass, core collection.
Example: IKEA
Rumor has it that one in ten Europeans is conceived in an IKEA bed. According to the IKEA website, one BILLY bookcase is sold every five seconds somewhere in the world. With 433 stores in more than 50 countries, IKEA is one of the biggest global furniture retailers. In 2019, the company’s global revenue was $48.5bn.
With its massive scale and ubiquity, IKEA can easily fade away from the cultural and consumer consciousness. Instead, the company successfully sells commodities while preserving its brand equity and capital.
The formula behind IKEA’s success is twofold.