History & Company Profile

Ingvar, the first name of the founder of Ikea.

Kamprad, the last name of the founder.

Elmtaryd, the farm in Sweden where Ingvar Kamprad grew up.

Agunnaryd, the name of the village in which Ingvar Kamprad lived. (25)

IKEA'S VISION

"TO CREATE A BETTER EVERYDAY LIFE FOR THE MAJORITY OF PEOPLE"

According to the Ikea website, the IKEA vision is to offer a wide range of home furnishings with good design and function at prices so low that as many people as possible will be able to afford them. And still have money left! (28)

"If people see Ikea as a company that is polluting the environment, creating wastes or emissions, or wasting resources, then we are not living up to our mission."--Ingvar Kamprad (27)

INGVAR KAMPRAD

He was born in Sweden in 1926 to wealthy landowners whose parents were German immigrants. At the age of 5, he began selling odds and ends like boxes of matches and Christmas cards and wall hangings. As he grew older, he sold fish that he caught himself, then lingonberries that he picked himself. Later on at age 11, he made money by selling garden seeds. At 17 years old, Kamprad began selling pens, wallets, picture frames, table runners, watches, jewelry, and nylon stockings. From then on, selling things became Ingvar's mission in life. (25)

BIRTH OF A CORPORATION

In 1947, he began selling furniture that was manufactured from the local forests near his home. By 1951, Ikea published its first furniture catalog in response to positive customer response. Soon after, Kamprad decided to stop selling any other products besides furniture. He opened the first Ikea showroom in Sweden in 1953 where customers could actually touch the furniture before they ordered in from the catalog.

Kamprad ran the company for decades and was notorious for cost cutting (25). He forbade first-class flights and forced managers to find the cheapest hotels. In 1955, after a supplier boycott, Ikea begins manufacturing their own brand of furniture. In 1956, he experiments with flat packaging and saves shipping space, leading to the Ikea way of business.

Ikea expanded in the 1960s with stores in Norway and Denmark. The 1970s and 80's brought stores to European countries such as Switzerland, Germany, Australia, France, the Netherlands, and Belgium. Also, outside of Europe, stores began popping up in the US (first store was in Plymouth Meeting, PA), Canada, Singapore, Saudi Arabia, and Australia. Ikea now has stores in 33 different countries (5). For more information, see the Ikea Timeline.

FACTS & FIGURES

Sales for the IKEA Group for the financial year 2004 (1 September 2003 - 31 August 2004) totaled $15.5 billion (5). Ikea employs a s a total of 84,000 co-workers in 44 countries. T he chain sells tens of thousands of different items in each of their 201 retail locations (5) per year. They distributed 145 million catalogs in 2004 which contributed to the greater than 400 million visitors that same year. Ikea's products range from simple cheese graters to large-scale home organization units. Their merchandise is manufactured by 1,500 suppliers scattered over 55 different countries (4), many of which are impoverished (i.e. Laos). The materials required to make these products include but are not limited to paper, wood, plastic, glass, leather, textiles, ceramic, metal, particleboard, and natural and synthetic fibers. Ikea requires vast amounts of building materials and energy to construct and maintain its huge retail stores. It also requires a significant amount of resources to transport the products across oceans and continents from the suppliers to the retail stores. Ikea also generates large amounts of waste.

THE IKEA EXPERIENCE

A typical Ikea store consists of a very large two-story 275,000 square-foot building and over 1,500 parking spaces. As customers walk in the door they can drop the kids off at Ikea's supervised play area, grab a paper measuring tape, order form, and tiny pencil so they can write things down as they walk through the Showroom upstairs. The Showroom is a maze of little decorated rooms that are so inviting that they make visitors feel like they're in a close friend's home. They can sit on the furniture, lay on the beds, and open drawers and cabinets. Ikea's famous Swedish meatballs are served in another part of the upper level where customers dine cafeteria-style in the Ikea Restaurant. Baby feeding stations and changing areas are also available to make it easy for parents to shop with small children. Somewhere on the upper level is also a cappuccino bar where they serve coffee and other small snacks.

The lower level is where customers can find Ikea's Market Hall. Here, shopping baskets are filled with non-furniture items directly from the shelves. The lower level also hosts the self-serve warehouse, checkout lanes, and yet another eating area called the Exit Bistro. In the warehouse, customers fill their flatbed carts with unassembled furniture that has been carefully packed as flat as can be. After they check-out, customers who purchased large items have to wait for their number to be called and employees wheel the items out.

HOW IKEA SATURATED CULTURES AROUND THE WORLD (26)

"• Offer furniture at three price levels, with quality ascending with price, keeping those prices 30 to 50 percent below those of competitors.

• Place restrooms strategically in the showroom so that decisions are not made on full bladders.

• Bank on customers' being willing to assemble their furniture in the spirit of "we do a little, you do a little" to save money.

• Create instructions with pictures only - no words - so that they can be used in any country.

• Name furniture designers in the catalog and on price tags to create a sense of connectedness.

• Keep volume high to keep prices down.

• Build a playground inside the store for kids so that parents can shop unhindered - but only for 30 minutes.

• Be daring in advertising. For example, Ikea was the first to use a gay couple in an ad. A recent campaign, dubbed Unboring, directly challenges the consumer to throw out old furniture.

• Keep functionality in mind. Ikea kitchen cabinets can be used horizontally or vertically and are equally at home in a bathroom.

• Sell meatballs, lingonberry sauce, jars of herring and onions, or some other quirky Viking noshes.

• Lower the price of an item as it sells more."