Based on article below, Which distribution channelstructure was adopted by IKEA in Russia? Please provide evidence tosupport your answer.

(word limit: 250)

IKEA is a leading home furnishing company with around 340 storesin 40 countries, selling a range of some 10’000 articles and havingmore than 150’000 employees. The company was founded in 1943 byIngvar Kamprad in Småland, a province in Southern Sweden wherepeople are renowned for working hard, being thrifty and innovative,and achieving big results with small means. Today, the IKEA groupis controlled by a private foundation and the company is thus noton the stock market. Ingvar Komprad’s innovative idea was to offerhome furnishing products of good function and design at prices muchlower than competitors by using simple cost-cutting solutions thatdid not affect the quality of products. This is a prominentphilosophy at IKEA, which is now realizing its ambitious plans inRussia. IKEA opened its first store in Moscow, Khimki, in March2000, followed by one more in Moscow in 2001, one in St Petersburgin 2003, and one in Kazan in March 2004. In 2012, IKEA had 14stores in Russia and some of them in distant places such asNovosibirsk (2007) and the newest ones in Ufa (2011) and Samara(2012). All Russian operations are controlled as fully ownedventures by the IKEA group. IKEA is characterized by a strong brandbased on its vision to create a better everyday life for manypeople. A set of explicit values is linked to the vision and playsa guiding principle in the strategy development. The values are thefoundation of a culture called internally the ‘IKEA Way’, which isan expression of lKEA's history, the product range, thedistribution system, the management style, the human resource idea,etc. Brand and cultural values coincide and affect the strategy,organizational processes product development and customerrelationship. Thus the key value of cost-consciousness that lies atthe heart of IKEA's flat-package concept dictates the necessity ofglobal sourcing, define the customer relationship where 'IKEA doesa half and customers do a half' and guides the product design,choice of material and logistics. The value of simplicity isreflected in the fast planning process, behaviours and routinegoverned by common sense, straightforward relationships withsuppliers and customer as well as in the product developmentprocess. By linking vision and values, IKEA thus create a firmplatform for entering a new market. In each new market lKEA entersit must recreate its company culture from scratch. In Moscow thatincluded the replication of the store design and layout inaccordance with the latest version of the existing store andextensive cultural education that was implemented by the team ofexperienced IKEA people. It was the overall company vision thatguided the desire to establish business in Russia; mostparticularly, the impression that few companies in Russia focusedon solving the needs of the many people by offering attractiveproducts at reasonable prices. However, knowledge of the Russianmarket when IKEA initially decided to open its first store inMoscow was very scarce. No special market research was carried outbefore setting up the store. IKEA’s basic strategy is to neitheradjust the style of products to local needs nor follow thecompetitors’ products development was central as the cornerstone inpreserving the IKEA concept and image: ‘The range is supposed to beIKEA – unique and typical IKEA’. All products are divided into fourmajor categories or styles – Scandinavian, Country, Modern, andYoung Swede – which are clearly distinguished in all business areasacross the store. One of the reasons why IKEA was successful withits standard product ranges in Russia was the fact that several ofthese IKEA ranges emphasis the modern style, which is verydifferent from the traditional Russian style but is attractive andfresh for the Russian customers because it symbolizes change. Animportant factor in the market approach was to identify needs thatare not fully recognized and to teach customers what IKEA is about.IKEA's retail proposition is based to a large extent on its Swedishroots and history, which is, in turn, very different from Russiantraditions. Therefore, learning as much as possible about the localculture and customer needs was considered essential. For example,lKEA made home visits to customers to talk to people, see how theylived and used their homes and to identify potential needs andwants not fully acknowledged by customer themselves. Understandinglocal family conditions and furnishing traditions then provided abasis for the effective introduction and marketing of the IKEAconcept. As exemplified by a store manager, the main priority forRussians is normal living costs; then comes the car and TV; andafterwards maybe a trip abroad. The idea of changing people'spriorities by explaining to them that a beautiful home does nothave to cost a fortune and they can afford both the wardrobe and atrip abroad is an essential leitmotif of the marketing campaigns inRussia. The importance of aligning the IKEA concept with thedesired image was critical from the very beginning. The intentionwas to build an image with a low price brand that also guaranteedattractive and modern products of good quality. To achieve this,IKEA has faced many challenges such as: high customs fees; therequirement to purchase more from the local producers; difficultiesin finding and developing suppliers in Russia; still lowbuying-power of Russian customers etc. For IKEA, it was critical toassociate the low price with the desired significance. An increasedcapacity and bigger volumes by the Russian suppliers will allow thecompany to cut costs and reduce prices in Russia as well as toexport the Russian made furniture to its other markets. As a matterof fact, IKEA prices are still very high for many ordinaryRussians. For example, even in St Petersburg, the second-largestcity, shopping power is, according to different estimate, 30 to 50per cent lower than in Moscow, where an average purchase valueequals that in Stockholm. But for Russian customers low price wasvery strongly related to unattractive products of poor quality, andone challenge has been to overcome this and explain how it ispossible to offer good product at low prices. Therefore, it hasalso been an ambition to provide the Russian market with the bestand most attractive IKEA products. Marketing communications becamean important tool in creating the right image of IKEA in Russia.The ways to communicate the image were many: the outdoor productads (price), image ads in the glossy magazine, TV (though IKEA hasused this very restrictively due to high cost), and articles in thenewspapers (press coverage has become very broad and quite positivetowards the IKEA culture and philosophy). Another very importantcommunication means in Russia is the buzz network or word-of mouthcommunication that works very effectively. In addition, IKEA had anopen and friendly approach towards Russian journalists. This was insharp contrast to most other large organizations. IKEA wascompletely open to the journalists and introduced them to the IKEAway and values by organizing press trips to Älmhult in Sweden tolearn how the range is created. The result was that the presscoverage of IKEA in Russia became much more positive. In the springof 2009 IKEA thus had 11 stores operating in Russia. Most of theselocations were mega mall shopping complex operated by IKEA. Theshopping complex at the Tyoplyi Stan site in Moscow for exampleaccommodate around 210,000 square meters of retail space and 240retail outlets. The mega malls were treated as a separate business,and were an addition to IKEA's core concept. Normally, IKEA doesnot manage or develop shopping centres but this was considerednecessary in Russia due to its lack of an existing structure oflarge branded stores and external as well as central shoppingcentres of a Western kind. Previously, many Russians have shoppedfor furniture as well as other products in outdoor markets or atsmaller, local stores. From IKEA’s perspective developing a wholemega mall was part of attracting Russian customers to the stores.As a whole, IKEA has made substantial investments in Russia, andturnover is increasing rapidly. However, a major principle has beenthat monetary returns are needed to back up further expansion: ‘Assoon as we make a profit, I can see at least ten years ahead whenwe will need all the money that is generated in Russia. So, the daywhen we will start to take out profit from Russia and use it inother countries is perhaps 15 years away'.