The success story of Ikea lies in its low pricing and people-first policy. One of the world’s most popular brands, Ikea began as a simple store that sold household items in 1943 in Sweden. Slowly, but steadily it grew into one of the biggest success stories, with over 466 stores across the world, as of April 2022.
The business model is built on the golden rule that problems are opportunities in disguise. The furniture brand aims to provide quality furniture at low prices while staying true to its Swedish roots.
The success story of Ikea has been built store-by-store over 80 years, and is one of the top brands in the world. Ikea is known for innovation and ingenuity.
Swedish beginnings: The Success Story of Ikea
According to the company website, IKEA is named after the initials of founder Ingvar Kamprad, Elmtaryd, the farm where he grew up, and Agunnaryd, the nearby village.
Kamprad started Ikea when he was just 17, but he became an entrepreneur at five. To start his first business, he bought matches in bulk before selling them individually for profit. At 10, he was selling pens and plant seeds. He would offer a free cup of coffee and a bun to attract customers to his store.
By the time he hit 17, he had collected enough money to launch Ikea. Kamprad’s grandmother influenced his work ethic as she saved the family business from going under. She taught him that willpower and perseverance can help one get over any hurdle.
Ikea started out as a small store and it was only five years later that it started selling furniture, which eventually turned it into one of the world’s most enduring success stories.
Ikea: Assembling Your Home
The entrepreneur once said, “If you work and do not feel incorrigible enthusiasm, consider that at least a third of your life has gone down the drain.”
After starting the furniture segment, Kamprad focused on sourcing goods from local manufacturers. In 1951, we distributed booklets called Ikea News, which contained details about his business that eventually became a precursor to the Ikea catalog. He also made the mail-order catalog a part of the Ikea business concept.
Later, as competition heated up, he started looking for ways to reduce costs. One of the ways he did this was by sending items in a ready-to-assemble format, to save shipping costs. Shipping and packaging bulky furniture were expensive and time-consuming. But even during lean times, he prioritized quality. His vision for Ikea furniture was to offer “good design and functionality at low prices.”
As the furniture brand’s catalog listed products for cheap prices people were doubtful about their quality. This led Kamprad to open a store where people could come in to check out Ikea products before they placed their orders. His first Ikea store was a repurposed workshop that displayed furniture in 1953.
The company’s traditional colors were red and white but today the Ikea network is recognized by yellow and blue, the colors of the Swedish flag.
Disruption and Innovation: Ikea products
In the 1950s, to offer better value to customers, Kamprad bought an old factory to set up a production line. This would make the production costs cheaper and Ikea furniture could be made in a shorter period of time. But such a move was frowned upon by others in the industry as furniture was always considered an expensive commodity.
Kamprad’s peers boycotted him and the incensed Swedish Federation of Wood and Furniture Industry stopped loggers from collaborating with him. The tenacious Kamprad did not let this stop him and saw it as just another obstacle he must overcome. He sought out Polish suppliers and arranged to import furniture components for Ikea products at a cheaper rate.
What ties together the success story of Ikea is Kamprad’s unwillingness to let failure deter him.
In 1963, Kamprad opened his first international store in Oslo, Norway, followed by Denmark in 1969. Throughout the 1970s, he opened Ikea stores across Europe. Germany, with nearly 53 stores, is Ikea’s largest market. In the 2010s Ikea entered Latin America.
Ikea opened its biggest store yet in November 2021 in the Philippines. Spread out over 65,000 square meters (700,000 sq ft) it is located in the Mall of Asia Complex.
The Digital Transformation: A Modern Furniture Brand
Taking note of the rise of online shopping and digitization, Ikea introduced e-shopping to its customers in 2000. For nearly 80 years, Ikea had helped customers build their dream workplaces and homes using analog catalogs. But the company recognized that it will have to adapt to the changing shopping culture to survive.
Furthermore, online sites are open 24 hours a day, while traditional stores are not. A digital presence is key for a successful business.
Ikea started offering features that let customers plan their living room on ikea.com and then follow it up with a visit to a brick-and-mortar store. This enhanced visual and tactile experience drew in more customers. On the app, in some countries, customers can also scan and pay for products, while skipping the checkout line. The digital transformation helped Ikea furniture triple their e-commerce business in three years. Revenues went from 7% to 31% within these three years.
The company is also constantly training people to enhance people’s experience. They also use data analytics to understand what their customer wants while staying true to foundational principles.
Ikea’s Principles to success
As Kamprad learned from his grandmother, Ikea has continued to persevere in the face of adversity. The furniture brand faced multiple challenges while exploring different markets but has managed to create success stories that speak of its relentless pursuit of customer joy. At the time of his death in 2018, Kmaprad had a net worth of over 42.5 billion.
While change is hard, Ikea recognizes that it is important to change with the times. Their digital transformation is a testament to Ikea’s willingness to adapt to changing customer needs. From offering traditional catalogs to allowing people to plan their homes online, Ikea puts the customer first.
Reinventing for the future is embedded into Ikea’s DNA. The company is also known for its adherence to sustainable practices.
On the employee front, Ikea is one of the most famous success stories as the firm insists on reskilling a lot of people. The company cares about the well-being of its customers and keeps exploring ways to improve and grow.
Quality. Kamprad’s emphasis on quality is proper even today as the company focuses on sourcing quality Ikea products for its customers. Despite rising costs and other issues, the furniture brand refuses to compromise on the one thing that sets its brand apart from the competition, reinforcing the success story of Ikea.
