IKEA - A company that I love

IKEA, the company’s name is derived out its four letters that are initials for Ingvar Kamprad who grew up in a small farm; Elmtaryd in the parish of Agunnaryd in Smaland situated in Sweden. The company is the world's largest furniture retailer. In Småland, although the soil is thin and poor, the people have a reputation for working hard, living frugally and making the most out of limited resources. Ingvar as a small boy always dreamt big and had very strong business acumen. He applied his experience and In 1943 when Ingvar was all of 17 years, the first commercial business began in the name of IKEA, originally a mail-order business selling pencils, postcards, and other merchandise.

It is only in 1948 that Furniture was introduced in the IKEA business as an addition to the general merchandise.  This was a success at the onset and Ingvar Kamprad started exploring novel solutions like furniture design, self-assembly and advertising. 

By 1951, the first annual catalogue of IKEA furniture was published in Sweden. IKEA published 212 million catalogues in 2012, in twenty languages and sixty-one editions. It is measured to be the most important marketing instrument of the retail giant, consuming 70% of the company's annual marketing budget.

Two years later in 1953, the first of IKEA showroom’s opened in Almhult where the customers could experience and see the products and then order them. This gave Ingvar an opportunity to meet his customers and learn from them.

The IKEA business started designing its own furniture by 1955 and with time the flat packs and self-assembly became part of the IKEA concept. The first fully fledged store of IKEA opened in 1958 in Almhult. There was scepticism attached around the idea of people travelling long distance to a small village in the deep forest to buy furniture. But, a visit to IKEA store became a concept that is prevalent till today. It became a day out for the whole family where one could buy furniture and need for opportunities like self serve restaurant and supervised children’s playroom were created. All IKEA stores are located outside the main towns.

A revolution was created by Ingvar Kamprad whereby he tried to influence both the factories and customers. He offered customers products at low price with good design and function and offered the factories large orders. Orders of large size meant low purchasing price thus enabling low sales price, more customers and larger sales volumes.

The IKEA business is organised into four divisions, with the Franchise Division as the most vital.

The Franchise Division with Inter IKEA Systems B.V., the proprietor of the IKEA Concept, franchises systems, systemizes and solutions to franchisees across the globe for marketing and sale of IKEA products under the IKEA trademarks. The division has complete accountability to safeguard the constant success of the IKEA Concept, so as to benefit the many people over generations. Inter IKEA Systems B.V. certifies that IKEA Concept know-how is continuously developed, transferred, and made obtainable to all IKEA franchisees.  

The Retail Centre Division – Inter IKEA Centre Group – expands and administers retail places anchored by IKEA stores. The division attempts to produce exclusive retail and entertainment destinations in which the IKEA stores and tenants profit from the harmony formed by their shared site, which eventually adds to the customers’ shopping experience.

The Property Division attempts to generate long term worth through property investments. The keystone of the process is administration of portfolio properties and development of commercial real estate.

The Finance Division comprises of investment activities as well as treasury management.

The company is known for its contemporary architectural designs on different kinds of appliances and furniture, often connected with a simplified eco-friendly interior design. The firm is famous for the attention it gives to cost control, operational details and continuous product development, permitting it to lower its prices by an average of two to three percent over the decade to 2010, whilst progressing its global expansion plans.

The world's five largest IKEA stores are:

1.      Stockholm Kungens Kurva, Sweden: 55,200 m2

2.      Shanghai, China: 49,400 m2

3.      Shenyang, China: 47,000 m2

4.      Tianjin, China: 45,736 m2

5.      Berlin Lichtenberg, Germany: 45,000 m2

On October 2012, IKEA clocked 338 stores in 38 countries. On February 17, 2011, it declared its plans for a wind farm in Dalarna County, Sweden, promoting the furniture giant's aim of operating on 100 percent renewable energy. By mid-August 2012, the company proclaimed that it will launch a chain of 100 budget hotels in Europe but, unlike its small number of existing hotels in Scandinavia, the chain will neither carry the IKEA name nor would they use IKEA furniture and furnishings.

The vast majority of IKEA stores are located outside the main city, primarily because of land cost and traffic access. IKEA stores are typically very huge blue buildings with yellow accents and few windows. They are usually planned in a one-way layout, leading customers counter clockwise along what IKEA calls "the long natural way" planned to push the customer to observe the store in its totality. Newer IKEA stores, utilizes glass, both for aesthetics and functionality. Skylights are also now widespread in the self-serve warehouses; natural lighting decreases energy costs, develops worker’s confidence and gives a superior notion of the product.

The layout includes of a series which involves first going through furniture showrooms making note of particular items. The consumer then gathers a shopping cart and carries on to an open-shelf "Market Hall" warehouse for minor items, then visiting the "Self Serve" furniture warehouse to accumulate formerly noted showroom products in ‘flat pack’ form. Occasionally, they are directed to gather products from an outer warehouse on the same site or at a site close by. At length, customers pay for their products at a cash register.

Rather selling pre-assembled products, most of IKEA's furniture is intended to be self-assembled. The company asserts that this aids in reducing costs and use of packaging by not shipping it by air; the size of a bookcase, for instance, is significantly less if it is shipped unassembled rather than assembled.

Although the IKEA products and furniture are planned in Sweden, they are mainly manufactured in developing countries to cut the costs. With suppliers in 50 countries, almost ⅔ of purchasing is done from Europe and about ⅓ from Asia.

IKEA products are recognized by single word names. Ingvar Kamprad, who is dyslexic in nature realised that naming the furniture with proper names and words, rather than a product code, made the names easier to memorize. Most of the names are Scandinavian in origin. For example:

1.      Upholstered furniture, coffee tables, rattan furniture, bookshelves, media storage, doorknobs: Swedish placenames (for example: Klippan)

2.      Beds, wardrobes, hall furniture: Norwegian place names

3.      Dining tables and chairs: Finnish place names

4.      Bookcase ranges: Occupations

5.      Bathroom articles: Scandinavian lakes, rivers and bays

6.      Kitchens: grammatical terms, sometimes also other names

7.      Children's items: mammals, birds, adjectives

 

Today, the IKEA trademark stands for the leading home furnishings brand in the
world with 338 stores in 40 countries and close to 154,000 co-workers. Essential activities such as eating, sleeping, storing items and socialising form a demand for furniture and practical products that answer necessary human needs. Furthermore, the large mainstreams of people have inadequate budgets and restricted space in their homes.

The IKEA product assortment meets these requirements by offering a wide assortment of well- designed, functional home furnishing products at prices so low that as many people as probable will be able to afford them. The IKEA variety comprises of products for every division of the home. IKEA designers start the design process with a practical need and a price tag, to secure the lowest possible price. IKEA designers are forever looking for new ways to develop people’s lives - without emptying their wallets. IKEA customers also add in keeping prices low. They choose and pick up the products themselves, transport them home and then assemble them themselves.

The IKEA store is where the IKEA range comes to life. Visitors are encouraged to take their time and get comfy with IKEA home furnishing solutions and products in practical room situations and real-life homes.
To sit, lie down, open and close drawers. To compare styles. Compare prices. And
imagine the possibilities!

The IKEA Concept relies on customers to select, collect, transport and assemble IKEA products themselves. All products in the store carry price and product information that is visibly marked on large, easy-to-read tags. This makes it simple for visitors to serve themselves. There are knowledgeable co-workers existing at IKEA for customers when needed. The aim is to make the IKEA experience and enjoyable one for the whole family. If the kids do not want to shop, they can play in the supervised play area.

During the year 2012, more than 776 million visits were made to IKEA stores across the globe. And the aspiration to offer home furnishing solutions that are applicable for diverse markets around the world carries on to drawing people to the stores. It has 9,479,500 square metres of retail space. There have been 5,745,000 of ‘IKEA catalogue’ application downloads. There has been a sales turnover of 27.5 billion Euros in 2012. The IKEA website consists of about 12,000 products and is the closest illustration of the entire IKEA range. It had a total of 1.1 billion hits in the same year. They browse the IKEA range from the comfort of home and plan their next trip to the IKEA store.