Ikea : Company Profile

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Ikea is the world's biggest furniture retailer, as well as arguably its most successful privately owned brand. Founder Ingvar Kamprad took the affordable design revolution of the 1960s and 1970s and made it a worldwide phenomenon. The Swedish retailer now offers its "affordable solutions for better living" through 375 stores in 47 countries. These welcomed more than 771m visitors through their doors in 2015, and Ikea's cleanly designed, space-conscious furniture units, as well a bewildering array of accessories from kitchenware to candles, can be found in well over a billion homes and offices around the globe. According to the New Yorker, one out of every 10 Europeans is conceived in an Ikea bed. From flat-pack boxes to self-service warehouses, from the Swedish cafeteria to its miniature free wooden pencils and measuring tape, even the Ikea shopping experience has a unique style all of its own.

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Adbrands Company Profiles provide a detailed analysis of the history and current operations of leading advertisers, agencies and brands worldwide, and include a critical summary which identifies key strengths and weaknesses. Adbrands Account Assignments tracks account management for the world's leading brands and companies, including details of which advertising agency handles which accounts in which countries for major markets. Subscribers may access the following website links:

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Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 13th Jul 2017: Ads of the Week: "Lion Man". Here's the latest from Mother for Ikea in the UK. What a life a house lion must lead if his only job is to look after the kids from time to time! The ad is pretty good, if not perhaps a minor classic like those t-shirt birds or the revolving kitchen. This has been an immensely productive relationship over the years, so we hope Mother has a few killer concepts up its sleeve for Ikea in the Autumn to maintain the momentum. We'd wager they wouldn't want a review of the business in the wake of the Boots loss. 

Adbrands Weekly Update 8th Jun 2017: Ads of the Week: "The Blue Bag". Ikea's familiar blue shopping bag - the Frakta, as it is known - is truly enjoying its moment in the sunshine in 2017. Balenciaga's unexpected homage earlier this year, with a designer version priced at over $2,000, has inspired the Swedish furniture giant to look at its humble tote with new eyes. This new marketing campaign from Swedish agency Acne and Ikea Creative Hub elevates Frakta into a symbol for all Ikea's egalitarian ideas about design for the masses. Very nice, though perhaps some tweaks were needed to the English language script. Never trust a voiceover that starts "Wow..." 

Adbrands Weekly Update 16th Mar 2017: Ads of the Week: "The Best Day Is The Everyday". Now for a little bit of advertising magic courtesy of Australian indie The Monkeys for the local arm of Ikea. It's said that the first task assigned to newly recruited animators at Disney was to learn how to give human characteristics to an inanimate object. The production team on this spot have that skill down to a fine art, so much so that you'd hardly believe these rugs (and stool) aren't real people. More impressive still is the fact that the accompanying credits suggests most of the hard lifting was done not by computer animators but traditional old-school puppeteers. We are charmed and so will you be. 

Adbrands Weekly Update 8th Dec 2016: Ikea reported another strong year in 2016, with profits jumping 20% in the period to August to E4.2bn. The group said sales rose in all but one of its 28 global markets, with combined revenues up 7% to E35.1bn. (That final figure was slightly higher than preliminary figures released previously). The strongest-performing markets were China, Australia, Canada and Poland. Sales from retail were E34.2bn, and the group has set itself a target to raise that to E50bn by 2020. Online ordering is expected to quadruple from E1.4bn this year to over E5bn.

Adbrands Weekly Update 24th Aug 2016: Ads of the Week "Poang Chair". Further proof that Ikea is one of those sought-after clients who consistently inspire (and no doubt require) uniformly fine work from all creative teams with whom they work. It's rare indeed that any Ikea ad fails to impress. Here's a lovely, slow-burning tale of friendship and product design, in this case from the furniture group's own inhouse communications team, Icom, working with prodco Bacon. It's the story of two mismatched designers who came together to invent a modern design classic. It's a very small story, but filmed with immense care, feeling and attention to detail. We have just one minor reservation: we won't give it away upfront, but you'll no doubt feel the same mild disappointment yourself when you see the closing credits page.


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Background

Free for all users | see full profile for current activities: Ikea was founded in 1943 by 17-year-old entrepreneur Ingvar Kamprad. As a child he earned pocket money by buying matches cheaply in bulk and selling them door to door. Later he expanded his range to include fresh fish, Christmas trees, pens and pencils, and in 1943 his father set up a company for him to manage his expanding business, run from "Elmtaryd", the family farm in the village of Agunnaryd, southern Sweden. The Ikea name was formed from the initials of his postal address (Ingvar Kamprad, Elmtaryd, Agunnaryd). He sold whatever he would make a profit, and the range quickly stretched to wallets, picture frames, table runners, watches, jewellery, even nylon stockings. By 1945 the business had grown too big to be handled door-to-door. Kamprad began a mail order operation, advertising in local newspapers and delivering goods via the county milk van.

The key development in the growth of the company came in 1947 when Kamprad began selling a small range of furniture produced by local craftsmen. This proved enormously popular with customers, and in 1951 Ikea suspended all of its other product lines to concentrate on furniture alone. The first Ikea catalogue was published the same year. Two years later the company opened its first showroom in the town of Almhult, southern Sweden. But while Ikea's new customers liked the shop, its competitors were very unhappy about this brash young upstart. They began putting pressure on suppliers to boycott the new business. In 1955 Ikea got around the problem by recruiting its own in-house team of furniture designers. Another brainwave inspired one employee to remove the legs from a table so that it would fit in his car. In 1956 the company began adapting all of its designs so that they could be packed flat for shipment, saving space, labour costs and transport damage. It also allowed the company to greatly increase the number of products it could sell, and in 1958 Ikea opened its first superstore in Almhult, at the time the biggest furniture retail space in all of Scandinavia.

In 1963 the company opened its first foreign store, in Oslo, Norway, followed by a massive new flagship store in Stockholm in 1965, containing almost 46,000 square metres of selling space. Because of the huge number of customers the store could serve, it was virtually impossible to use traditional selling methods. Instead, Ikea borrowed a technique from American-style supermarkets and encouraged customers to serve themselves from a huge open warehouse adjoining the display showroom. Meanwhile international expansion continued as Ikea made inroads into Denmark (1969), Switzerland (1973), Germany (1974) Australia (1975), Canada (1976), Austria (1977) and The Netherlands (1979).

In the 1980s, France, the USA (1985), the UK (1987) and Italy all became part of the Ikea family, until the company had stretched across 25 countries by 1993. In 1986 Kamprad himself stepped down as chief executive, to be replaced by Anders Moberg, who had previously launched several of the company's international operations. However Ikea was also beginning to experience problems. By 1991, despite almost six years of operations, the US business was still losing money. The store was always busy, but sales were low because many customers left empty-handed. To fix this, Ikea had to abandon one of its core practices, that of selling the same merchandise the same way in every store worldwide. Although this had proved successful in Europe, Americans were confused by the Swedish branding, the European styling, and especially the metric measurements. They hated the queues and couldn't understand the non-delivery policy. As a result, the US operations were adapted, sourcing over half of their goods from local suppliers and designed to comply with local taste. Within three years, US sales had tripled in response.

In 1992, Kamprad oversaw the acquisition of home furnishing chain Habitat from troubled British retail group Storehouse for around £50m. Founded in the 1960s by design guru Sir Terence Conran, Habitat introduced Britain to simple but stylish home furnishings, just as Ikea was making its first forays into other Scandinavian countries. Habitat style had a distinctive French flavour and revolutionised home decor in the UK. However, the company's launch into the French market proved even more profitable, effectively re-introducing urban French consumers to a provincial style they had previously abandoned. By the early 1990s, the 36 French stores were Habitat's most profitable, while the British outlets merely broke even. Kamprad set about boosting the performance of the British chain, already the closest high street competitor to Ikea's suburban warehouses. 

In 1994 Kamprad publicly apologised for having associated with pro-Nazi groups in Sweden during the 1940s and 1950s. The resulting media circus led to the group taking steps to open its first store in Israel (albeit via a franchise). The company moved into China in the late 1990s, and opened its first store in Russia in 2000. This has proved to be one of the group's most successful international operations, as well as the busiest, generating sales of over $100m in its first year. In a country where customers were already used to queuing, some Russians were occasionally prepared to stand in line for up to 12 hours to get into Ikea. There are similar reactions in other countries, sometimes with tragic results. In 2004, three shoppers were trampled to death and 16 injured in a stampede to claim discount vouchers at the opening of the first store in Jeddah, Saudi Arabia. A year later the opening of a new store in Edmonton, a deprived suburb of London, led to a near-riot after more than 6,000 people tried to enter the store as it opened. Fights broke out inside the store and six people were hospitalized. The group was subsequently criticized for its marketing tactics which included huge promotional discounts on some items for the launch. See full profile for current activities


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