IKEA

IKEA has become a name synonymous with modern home décor since its founding in 1943. The company has become a global force in home furnishing and decorating; however, IKEA came from humble beginnings.

Ingvar Kamprad was born in 1926 in Småland, a small town in southern Sweden, and he was raised on his family’s farm Elmtaryd near the village Agunnaryd. From an early age an entrepreneurial spirit arose, as he sold matches to nearby neighbors. By the age of 7, Ingvar was buying matches in bulk cheaply and selling individually at a low price to villagers.

This spirit continued as Ingvar went to school; he became educated and continued to sell products to his neighbors. He later established IKEA in 1943, using his initials and the first letters of Elmtaryd and Agunnaryd. As Ingvar did, IKEA began selling pens, wallets, picture frames, table runners, watches, jewelry and nylon stockings.

Five years after the founding, IKEA began producing and selling furniture. By the 1950s a catalogue was developed and in 1953 the first showroom opened. It was the first time customers could see and touch the company’s home furnishings before ordering the product.

Joseph Roth, public affairs manager for IKEA locations in the United States, explains Ingvar grew his business on the belief that everyone should have access to home furnishings that were designed well and priced fairly.

“It’s a reflection of the Swedish culture,” says Roth. “IKEA helps ensure everyone has equal access to good design.” Roth goes on to add that the founder also realized many traveled long distances to IKEA locations; Ingvar’s realization led to the addition of a café and play area for children.

“We offer everything for the home all under one roof,” says Roth. “Ingvar started serving food so customers did not have to leave during the middle of the day and could complete their shopping experience. All these elements just enhance the shopping experience.”

Global Entity

IKEA now has 38 locations in the United States with two additional stores in the making; in total there are more than 340 stores in 41 countries offering an array of 10,000 items for every aspect of the home. Roth reports IKEA is constantly working with municipalities around the globe to secure prime locations that will make products available to those in and around greater metropolitan areas.

The $35 billion company now uses television commercials to offer concepts to homeowners. IKEA designs and produces all of its products and creates families of furniture that produce ready-made design concepts customers can use.

In recent years, IKEA has worked on developing kitchen design offerings. The company’s stores have models of kitchens set up so customers can see what their kitchen could really look like while standing in the middle of it, not just looking at a catalogue. Advertising campaigns are being ramped up to show customers that IKEA offers cabinetry, countertops, fixtures, lighting, furniture and even appliances. To go along with the kitchen, IKEA is also in the process of developing a bathroom offering with mirrors, sinks and cabinets to be stylish and functional, all while maximizing organization spaces as much as possible.

Roth explains having modules set up in the store helps customers realize the potential of the products. It also helps customers see families of products that work together. One product line that has been IKEA’s most popular is Ektorp. “It is a family of sofas where you can get a big chair, loveseat, sofa, sectional or sleeper sofa,” says Roth. “The products come in leather, fabric or with slipcovers. It’s modular, flexible and very family-friendly.”

Conscientious Company

With production plants and stores scattered across the globe, IKEA is putting out an effort to make the company’s complex operations slightly more environmentally friendly. “Renewable energy is a big deal,” says Roth. “We’ve been rolling out solar panels on top of the roofs of all of our buildings. Our plan is to install solar panels on 90 percent of our buildings. It’s a significant cost savings and a sustainable business model.” This is an effort the company is putting into consumers’ hands, as well with a goal to sell only LED lights by 2016.

IKEA also works with local resources to obtain materials; manufacturing plants around the world receive materials from nearby resources. The company has 31 distribution centers in 16 countries supplying goods to all the stores. IKEA has worked to develop close relationships with more than 1,350 suppliers in 50 countries.

The company also continues to work at keeping costs low for consumers. A lot of this has to do with IKEA’s innovative flat box packaging. IKEA products are shipped in boxes and require assembly once received by the consumer. Roth explains this packaging system allows for more affordable transport, reducing the overhead and ultimately the final product price. “We have a little saying,” he says. “You do a little, we do a little, and together we save a lot.”

Perks of Private

Being a privately held company, IKEA didn’t sustain a big hit during the economy’s recent recession. In fact, Roth believes when the economy takes a turn more consumers look toward IKEA’s reasonable prices for modern design. The company also doesn’t find itself relying on other market aspects.

“The nature of our business is unique,” he says. “We’re able to make long-term decisions and make investments without having to worry about the stock market. We’re vertically integrated and we design all the products and sell the products.”

Even as other companies struggle to recover, IKEA is looking for gaps in store locations. “We’re focused on bringing IKEA closer to other large metro areas in the U.S.,” says Roth. “Our biggest challenge as we expand, though, is to maintain the uniqueness of our culture. That’s not easy to do.”

IKEA management is continually referring back to Ingvar’s humble beginnings for its direction in the future. The company will continue moving forward and offer affordable solutions without sacrificing style so that people can be surprised when a proud homeowner can say, “Yes, I got that at IKEA.”

For more information about IKEA, please visit: www.IKEA-USA.com.