How Ikea’s Ingvar Kamprad changed the way we think about furniture (and Swedish meatballs)
Analysts say Ikea has been successful in not only getting shoppers to linger for hours, but also getting them to come back, over and over, whether for mattresses or meatballs
There’s the Billy bookcase, the Malm dresser and, who could forget, the no-nonsense Lack coffee table.
Ikea, the Swedish furniture giant – founded by Ingvar Kamprad, who died this weekend at age 91 – has come to embody simple, affordable furniture for the masses.
Since its founding in 1943, the company has transformed the way we think about how we shop for furniture (out: catalogues, in: mazelike warehouses), how we put it together (ourselves) and how it looks (sleek, not stodgy.)
With its clean lines and practical pieces, Ikea has outfitted millions of college flats and brought a Scandinavian aesthetic into everyday homes.
“Few people can claim to have genuinely revolutionised retail,” said Neil Saunders, managing director of the research firm GlobalData Retail.
“Ingvar Kamprad did.”
The company, which has 412 locations in more than 40 countries including China, has become an international empire.
Its sprawling stores with their tortuously winding routes have continued to thrive in an era of hurried online shopping.
Analysts say Ikea has been successful in not only getting shoppers to linger for hours, but also getting them to come back, over and over, whether for mattresses or meatballs.
“Before Ikea came along, furniture shopping was a laborious task that a lot of people dreaded because they felt like they were making a decision they had to live with for 30 years,” said Warren Shoulberg, a consultant to the home furnishings industry.
“Then Ikea showed up and said, you can buy something and use it for a couple of years – or you can keep it longer – but this isn’t necessarily something you’re going to pass down to your kids or your grandkids. That was a remarkable transition.”
The retailer has also been successful, he added, in creating a shopping destination. Traditional furniture stores may line up all of their sofas in one section and beds in another, but Ikea displays items by room, so shoppers can see how different pieces might look together.
“They provide an experience – the displays, the decorating ideas,” he said.
“And you could stop by the cafe for a lunch of Swedish meatballs while you’re there.”
That is not to say the shopping experience is always positive: visits to Ikea sometimes come with their share of marital spats and couples’ disagreements.
“The store literally becomes a map of a relationship nightmare,” clinical psychologist Ramani Durvasula told The Wall Street Journal.
Kamprad started the company as a mail-order business at age 17. He sold pens, picture frames and nylon stockings before expanding into armchairs and other types of furniture, according to Ikea’s website.
The business model quickly caught on: it turned out shoppers were willing to pick up their own furniture, take it home and assemble it in exchange for lower prices.
The company was also able to cut costs by packaging large pieces of furniture in compact cardboard boxes that could be easily transported.
Ikea “gave rise to the revolutionary idea of flat-pack furniture,” Saunders said.
“Distributing flat-pack was much more efficient and economical than shipping fully made items. It also divided the effort. Prices were lower because the customer had to assemble the product – that was the trade-off or compromise.”
In 2016, the company had annual sales of US$37.6 billion, making it the world’s largest furniture retailer. Its success has also given way to a cottage industry of businesses that specialise in assembling Ikea furniture.
Ikea itself has got into the fray: in September, it bought TaskRabbit, a start-up that providers contractors for odd jobs, to appeal to a generation of time-strapped consumers who want Ikea furniture without the hassle of assembling it.
“Ikea made good design accessible to people of all incomes,” said Milton Pedraza, chief executive of the Luxury Institute, a research firm in New York.
“Before that, furniture was bulky, it was expensive, and it took forever to arrive. You’d have to wait six to eight weeks and spend a fortune to get what you wanted.”
Flat-pack empire: five things to know about Kamprad and Ikea
What does Ikea stand for?
Ikea, one of the most ubiquitous acronyms in the business world, stands for Ingvar Kamprad, Elmtaryd and Agunnaryd.
Elmtaryd is the name of Kamprad’s family farm in Smaland, a small southern Swedish province known for its thrifty attitude and hard-working people, and Agunnaryd is the town where Kamprad grew up.
Ikea’s value has tripled since 2000 and is now worth US$18.5 billion, according to global brand consultancy Interbrand’s 2017 rankings – two spots behind fellow Swedish giant H&M.
Trouble with taxes
After founding the company at 17, Kamprad’s own wealth grew to an estimated at 37.3 billion euros (around US$46 billion) in 2017, according to the Swiss economic magazine Bilan.
Despite his enormous success, Kamprad’s modest spending habits bordered on the obsessive and in 1973 he fled Sweden’s higher tax structure for Denmark, before seeking even lower taxes in Switzerland.
He returned to Sweden in 2014, paying six million kronor (US$760,000) in taxes. Most of his wealth was held in other assets.
Last year, the European Commission announced that it had launched an investigation into Ikea’s tax deals in the Netherlands.
Ikea insists that it complies fully with tax regulations, saying in a 2017 report: “The tax we pay is an important part of our wider economic and social impact.”
First distributed in 1951, Ikea now sends 250 million copies of its catalogue to more than 50 markets in 30 languages, putting it alongside the Bible as one of the world’s most popular books.
The 2018 edition was sent to three million households in Sweden, which has a population of 10 million.
Ikea sparked controversy in 2012 when women and girls were airbrushed out of pictures in its Saudi Arabian catalogue, prompting a strong response from Swedes, who pride themselves on egalitarian policies and a narrow gender gap.
Billy, the star bookcase
Ikea’s revolutionary self-assembly model was conceived in 1956 after an employee suggested table legs be removed so the package would fit into a car.
Using the same principle, the iconic Billy bookcase comes in a flat pack along with an assembly guide and the necessary tools.
Designed by Gillis Lundgren in 1979, tens of millions of Billy bookcases have been bought – and Ikea still sells one every 10 seconds.
The food portion of Ikea’s empire, which includes in-store restaurants and grocery stores, generated 1.8 billion euros in sales last year.
The company’s trademark item is traditional Swedish meatballs, but it also serves 100 million cups of coffee each year.
Additional reporting by Agence France-Presse