What are some mind-blowing facts about IKEA? by Lawrence Kurniawan
Answer by Lawrence Kurniawan:
1. The Americans hesitated to buy IKEA beds because they didn't know what numbers like "160 cm" meant on the label. Sales more than doubled when IKEA finally introduced king and queen-sized beds.
2. The famous IKEA restaurants, which now make IKEA the biggest exporter of Swedish food, originates from humble free buns and coffee offerings on the opening of their first store at Älmhult. Ingvar (IKEA founder) himself was terrified when he saw an enormous army of customers lining up in front of the shabby building. They must had been more than a thousand people! Would the floor hold, and would everyone get the free bun and coffee promised? Both turned out to be yes, and the idea of serving food at the store has evolved over the years to become what it is today. In fact, one of IKEA's mottos now is "you can't do good business on empty stomach."
3. Price wars and the consequent decline in quality gave birth to the concept of catalogue and IKEA stores. The catalogue with the entire product range offered would tempt the customers to come to the store. They then would be be able to see the difference in quality between the cheap (and bad) ironing board and the slightly more expensive one, and promptly order the latter. This combination of mail-order and furniture exhibition as one business was a revolutionary concept in 1952. Previously people could only rely on the description on the advertisement of mail-order companies and could not touch/see the products they ordered.
4. The biggest irony: the dynamic and rising IKEA was boycotted by its competitors & the National Association of Furniture Dealers in Sweden (a supposedly free market and democratic society). IKEA had to go to Poland, a communist country, to fulfill the furniture orders from customers in liberal country.
5. The second biggest irony: the boycott and attempts to destroy IKEA made IKEA even stronger. People could not be bothered with the industry affairs and sought IKEA who had cheap and quality goods. IKEA also came back from Poland with even lower prices thanks to the ridiculously low production cost, thus solidifying further its dominance in Sweden. Now, more than 50 years later, Poland is one of the biggest manufacturers of IKEA products.
6. Swedwood, an IKEA subsidiary company which supplies IKEA its own products, still has to compete in price with other suppliers for orders. This is to ensure constant effort in maximising efficiency without compromising price and quality. The fact that Swedwood's only client is IKEA confirms its outstanding performance.
7. IKEA's headquarter is not in Sweden, but Netherlands.
8. IKEA was known for its low price, not quality products — until the study done by the magazine Allt i Hemmet. It was revealed that many of IKEA products had equal or better quality than their counterparts sold by more expensive competitors. This propelled IKEA's status in the minds of the mainstream middle class. Five years later, IKEA began putting testing machines at the entrance of the stores to demonstrate the robustness of IKEA chairs.
9. IKEA second store in Kungens kurva had 18,000 customers on its opening day. It was so hectic that the first IKEA store in Älmhult had to close early and all its staff was sent to help the staff in Kungens kurva store. Even with double the manpower, the mob's rampage was still uncontrollable — some took the goods without paying. The manager even caught a carpet thief at the parking lot.
10. Umbrellas at IKEA are sold at half price on rainy days and double the price on sunny days.
11. When IKEA was branching out to the rest of Europe, a lot of unorthodox tactics were used to increase market share. For example, customers would be handed a Swedish wooden shoe and told that the other shoe could be collected at other stores. During Christmas, IKEA would sell Christmas trees which could be refunded post-Christmas.
12. The "hot dog" strategy. IKEA sells a few items at ridiculously low prices. The origin? Ingvar's idea to sell hot dogs at a price almost as low as the cost to make it. Most people know how much a hot dog costs on a street vendor (more expensive by a big margin compared to IKEA's), and thereby associate IKEA with good value for money.
13. IKEA has child care and playground because "who can do vital shopping with the kids yelling all around their feet?"
14. IKEA owns all of the properties it uses and it does not borrow money. Ingvar once joked "They could have accused me of murder, but not of borrowing money!" Thus, IKEA is a privately-owned company and has no intention of going public. They believe that going public would hamper their ability to focus on the long term.
15. IKEA was originally a mail-order firm.
16. STØR, an American copycat of IKEA, went down after its much applauded break into the market. STØR was only able to mimic the superficial characteristics of IKEA (store layout, restaurants, childcare), but not its pricing, distribution, and so on.
17. To reduce staff turnover, an IKEA store in Seattle distributes the whole sales on one Saturday in a year to its employees. The longer the staff has been employed, the bigger chunk of pie he/she would have gotten. This 'bonus' could go up to $10,000 for someone who has been with the store since its inauguration.
18. A consultant that Ingvar hired to give advice resigned after one day of work. He said something along the lines of "If prior to me coming here you had asked whether a furniture company in a run-down building and isolated place like this could thrive, I would have said no. Yet, here it is and it is successful. I can't be of any help to you."
ABOUT INGVAR KAMPRAD (IKEA founder)
1. Ingvar is half German heritage-wise. His grandparents came to and settled down in Agunnaryd, Sweden without knowing a single word of Swedish.
2. Ingvar was infatuated by Nazi in his teenage years, thanks to the influence of his father and grandmother who were pro-Nazi. His involvement with the Nazi group in Sweden would later on came back and bit him hard in the 90s, long after he stopped supporting Nazi and Nazism.
2. Initially the young Kamprad was only selling pens, watches, erasers and other trinkets. IKEA only started selling furnitures to imitate its competitors. After the first batch of furnitures were sold in no time at all, Ingvar started focusing on furnitures.
3. Ingvar did not have the vision of the current IKEA, or anything resembling it, when he started IKEA. To him, creating profit was all there was in business.
4. In the 50s, Ingvar was bankrupt on paper while IKEA was soaring. This was due to the exorbitant wealth tax and because most of his wealth was locked in the company.
5. For its first decade, IKEA was Ingvar Kamprad.
6. Ingvar was still working full-time at 85 and with a pace maker.
The IKEA Story: Ingvar Kamprad Talks to Bertil Torekull (2011 edition).