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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Recent stories from Adbrands Weekly Update:

Adbrands Social Media 16th Jan 2019: "The Nightclub". Mother's latest for Ikea in the UK is not perhaps the agency's best work for the brand, but still better than much of the competition. To promote the retailer's beds and mattresses, Mother takes the idea of a nightclub at face value as a place not to stay awake but to go to sleep in the company of like-minded individuals. There are some cute gags along the way: the cereal bar, toast kebabs and milky tea cocktails, but this feels more like the enhanced record of what was presumably an experiential event than a fully scripted commercial. We still have fond memories of Mother's beds-in-the-sky ad for Ikea four years ago with Prospero's closing monologue from The Tempest as the voiceover.

Adbrands Weekly Update 29th Nov 2018: Ikea reported a sharp fall in profits for its most recent financial year to August as a result of investments in ecommerce and smaller city centre outlets. Declared retail sales were €38.8bn, up around 4.5% on the year before in comparable terms, but below the rate needed to reach the group's previously stated target of €50bn by 2020. Direct comparisons are complicated by a restucturing of the group over the past year, but parent company Ingka Group said full-year profits had fallen by 40% to €1.47bn as a result of an investment of almost €3bn in stores, distribution and customer fulfilment networks. The addition of 19 new stores during the year, including the first in India and Latvia, brought the total number of outlets to 422 in 50 countries. That included smaller-format showroom outlets in the centres of London and Madrid. New such showrooms are planned for New York and Paris in 2019 and Tokyo in 2020.

Adbrands Social Media 27th Nov 2018: "Magic Man". Ikea takes a rather more low-key approach to the Christmas holidays in its new campaign from indie agency Rethink. It's a charming little film, offering unexpected restraint in its holiday message. You could buy both the ad's featured items - the coffee table and the star - and still get change from $100. The idea, we guess, is to win over the audience with general good feeling not an explicit sales pitch. An interesting sidenote is the decision to focus on would appear to be an ethnically East Asian family. That's great, and not something you see very often in general market ads from most other Western economies, compared to black or mixed race families. Yet as anyone who's visited, for example, Vancouver or Toronto may have observed, Chinese and other people originating from East Asia make up the largest ethnic sub-group by far in most Canadian cities. It's one of things that adds to the country's attractive cosmopolitan character.

Adbrands Social Media 4th Sep 2018: "Idol". All you workaholics may want to examine your own behaviour in the light of this well-observed spot from Ikea's Swedish agency Akestam Holst. A Dad's 24/7 working life has begun to interfere in his relationship with his son without him even noticing it, until he sees their life reflected through the mirror of his son's drawings. The ad is absolutely right of course in its intentions. When you're home, you should be at home. However, if we're being honest, Ikea might also want to start developing a line of one-handed furniture as well. So any executives who *don't* have kids to pay attention to can carry on using their mobiles to their hearts' content and still enjoy their furniture.

Adbrands Weekly Update 9th Aug 2018: Ikea opened its first store in India this week, in the city of Hyderabad. The Swedish furniture giant hopes to have 25 stores in operation in that vast country by 2025, including several smaller-format outlets. As a result of six years of planning, including research visits to around 1,000 Indian homes, the company has adapted its traditional offering to suit local tastes. There is very little of the untreated pine furniture familiar in other Ikea markets, because it doesn't last in the humid temperatures of Southern India, and all furniture has additional risers to lift it off the floor to accommodate the local habit of washing floors with water. There is also a much wider selection of low value items priced at less than 100 rupees (around $1.50), including some items priced lower here than in other countries. To accommodate local entertaining and dining habits, Ikea offers a much wider range of pop-up seating for visitors as well as cutlery sets with spoons rather than knives. Countertops and cupboards are lower to reflect the fact that Indian women are generally shorter than their Western counterparts. And the instore cafe sells biryani and samosas alongside vegetarian Swedish meatballs, and seats as many as 1,000 customers, more than any other Ikea store. More here from the New York Times.

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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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