According to Forbes, as of October 2012 Ikea had $34.5 billion in sales. The company has been growing and expanding since its inception. Ikea has over 330 stores in 38 countries, and its revenue, net income, and total assets, have increased every year for over ten years. Ikea dominates the affordable furniture market. But how did a small Swedish furniture company become a worldwide retail phenomenon and one of Forbes top 50 most powerful brands?
Self Sufficiency
In 1955, twelve years after Ingvar Kamprad founded Ikea as a 17-year-old, furniture suppliers began to boycott Ikea. Other furniture stores were upset that Kamprad was selling furniture so cheaply in his stores. But Kamprad stuck to his initiative: to sell furniture that as many people as possible could afford. Instead of giving up on selling furniture, Ikea began designing its own products. By designing their own furniture, Ikea was able to cut costs, and created a unique style that has developed into a powerful brand today.
Thinking Inside the Box
A year after the company began designing their own furniture, they started considering packing their furniture into flat and portable boxes. The story goes like this: an employee could not fit a fully assembled table into the back of a car, so he removed the legs and slid the table and legs into the trunk. That way, the customer could reassemble the table later. Now, Ikea packages all of their furniture in pieces inside flat boxes.
This requires some work on the customer’s end, but allows Ikea to cut assembly and shipping costs– savings that passes onto the customer. The flat-box concept is just one way Ikea uses creative thinking to move ahead.
The Shopping Experience
When you go to Ikea anywhere in the world you can expect a similar experience. You’ll find furniture pieces and other goods, many of which named after Swedish towns, at low prices. You can stop in for a refreshment at the café or grab some famous Ikea Swedish meatballs. Shopping at Ikea is not a hassle, but rather a lovely experience. The unique Ikea shopping experience is another creative reason why Ikea is a dominant brand today.
Brand Expansion
Brand expansion does not only refer to the fact that there are hundreds of Ikea stores worldwide, which in total see over 600 million annual customers. It also refers to the expansion of products, shipment methods, and service techniques. The company is constantly adjusting and expanding. Ikea has become one of the foremost supporters of environmental sustainability in the business world. It is clear that Ikea focuses on constantly improving the brand – whether that means packaging things more efficiently, or making things less expensive.
Commitment to a Goal
Ingvar Kamprad set out to sell good furniture so that as many people as possible could afford it. Today, Ikea is an inexpensive option for modern, well-made furniture. Ikea has not strayed from this goal, and the brand’s loyalty to its original intent is what keeps Ikea a dominant furniture force.
Ikea sets a new standard for affordable, high quality furniture stores. It has the success and worldwide domination of a fast-food chain, but the image of an upscale retailer.
The above five principles set Ikea apart from the herd, and make it a multi-billion dollar company.