How Ikea took over the world

It took some time to figure out just the right shopping complex, off just the right highway interchange and at just the right distance from Seoul, to accommodate a 635,000-square-feet store. It took more time to solve certain mysteries, such as how to showcase kitchens that incorporate kimchi refrigerators—a uniquely Korean appliance—and even more time to untangle nuances of the market, such as the South Korean’s preference for metal chopsticks.

It took about six years for Ikea to unveil its inaugural store in South Korea, from the initial scouting trip to the opening in December 2014.

The lag was quintessentially Ikean. “The more global, the more complex it gets,” says Mikael Palmquist, theregional manager of retail for Asia Pacific. “It’s essential for us to get these things right or we’ll never be taken seriously.”

Even with careful planning, Ikea managed to get a few things wrong. It misjudged the number of parking spaces needed, and a map for sale upset some customers: the body of water east of Korea was labeled the “Sea of Japan” rather than the “East Sea”, as South Koreans prefer.

“The Ikea model is based on volume, which helps it secure a low price from suppliers.”

But the Koreans seem, for the most part, to have forgiven the Swedes. The Gwangmyeong store, which is the company’s largest in the world by shopping area, quickly became one of Ikea’s top-performing outlets.

Ikea is genius at selling Ikea—flat packing, transporting, and reassembling its quirky Swedish styling all across the planet. The furniture-and-furnishings brand is in more countries than Walmart, Carrefour and Toys R Us. China, where Ikea has eight of its ten biggest stores, is the company’s fastest-growing market. An outlet in Morocco opened in March last year, and there are hints that Brazil may not be far off. Meanwhile, in India, Ikea plans to invest about £1.6 billion over a decade to open ten stores.

Getting it right in markets such as China and India, where Ikea is well-positioned to capitalise on a growing middle class, is a key factor in its goal of hitting £40 billion in sales by 2020. That’s up from £23 billion in 2014. Today, the Ikea Group has 318 stores, not including the brand’s some four dozen franchised locations; it’s aiming for around 500 by 2020.

The Ikea model is based on volume—producing a lot of the same stuff over and over, which helps it secure a low price from suppliers and in turn charge a low price to customers. One Billy bookcase, a classic Ikea product, is sold every ten seconds. 

For the company, this isn’t just a business model, apparently. It’s a mission: helping “the many people” and those with “thin wallets”. “We’re guided by a vision to create a better everyday life for the many people,” says Ikea Group CEO Peter Agnefjäll. “That’s what steers us, motivates us—that’s our role. We feel almost obliged to grow.”

“The more far away we go from our culture, the more we need to understand, learn, and adapt,” says Mikael Ydholm, who heads research. Rather than focus on differences between cultures, it’s his job to figure out where they intersect. 

For example, Ikea carried out a study of 8,292 people in eight cities, examining morning routines. People are the fastest out the door in Shanghai (56 minutes) and the slowest in Mumbai (2 hours, 24 minutes). New Yorkers and Stockholmers are most likely to work in their bathrooms (16 per cent). 

The problem with surveys is that people lie. Ydholm puts it more delicately: “Sometimes we’re not aware about how we behave,” he says, “and therefore we can say things that maybe aren’t reality. Or it could be that we consciously or unconsciously express something because we want to stand out as a better person.”

Ikea researchers get around this by taking a first-hand look themselves. Recently they placed cameras in homes in Stockholm, Milan, New York and Shenzhen, China, to better understand how people use their sofas. What did they learn? “They do all kinds of things except sitting and watching TV,” Ydholm says. In Shenzhen, most of the subjects sat on the floor using the sofas as a backrest. “I can tell you we certainly haven’t designed our sofas according to people sitting on the floor,” says Ydholm.

“The company put cameras in people’s homes to understand how they used their sofas.”

The aim of gaining all this cultural knowledge is not to adapt products for each market. Instead, Ikea has become awfully good at showing how the same product can mesh with different habitats.

Witness the full-size sample rooms that Ikea sets up in stores. The rooms play an essential, if secret, role—showing consumers how to fit Ikea pieces into their lives. Displays in Sendai, Japan and Amsterdam could feature the same beds and cabinets. But the Japanese style may feature tatami mats, and the Dutch room will have slanted ceilings, reflecting the local architecture.

Ikea’s catalogues also come in 32 languages and 67 versions, each reflecting local customers and customs. For every room set-up, there’s an Ikea employee tracking any element that needs to be switched—making sure that glass products produced in mainland China don’t show up in Taiwan’s catalogue, or removing Persian rugs from the Israeli version.

Ikea hasn’t always got these local nuances right. The company came under fire for photoshopping women out of its catalogue in SaudiArabia and for removing a lesbian couple from its magazine in Russia. “We’ve made mistakes,” acknowledges Kajsa Orvarson, communications officer at Ikea Communications, the home of the catalogue, “but we’re becoming more and more aware of how to improve and to share our values.”

In the furniture world there’s an oft-cited statistic that we have our sofas longer than our cars and change our dining room tables as frequently as our spouses. Furniture can be its own kind of ball and chain. It’s passed down from generation to generation, or it’s so expensive that people feel it’s forever. From the start Ikea shook up that paradigm.

It kept its prices down with an obsessive focus on costs. Ikea might skip an extra coating of lacquer on the underside of a table that people never see. It has also pushed tasks that were once done by traditional retailers onto the customer. Flat-packed furniture made it easier for customers to take purchases with them, cutting out the expense of stocking and delivery. (Ikea figured out flat-packing in 1956, when a designer took the legs off a Lövet table to get it in his trunk.)

“Products that take too long to put together are called ‘husband killers’.”

Nearly two-thirds (64 per cent) of Ikea’s goods are made in Europe, 33 per cent in Asia, and the rest in North America. Some 12,000 products comprise what Ikea calls the range, but in reality it’s more like 50,000 because of variations in elements such as plugs for different countries. To pack it all up, the company uses more than a billion square feet of cardboard every year. “I’m not proud of it,” says Allan Dickner, deputy manager of packaging. “We try to minimise it.”

The magic of flat-packing allowsmore goods to fit into shipping containers. Wasted space meanswasted money and isn’t good for the environment. “I hate air,” says Dickner. 

But he admits that sometimes Ikea does put too much burden on customers. To ensure it doesn’t take three hours to put together a tiny inexpensive item, the instruction-manual team is called on to give input. New employees who aren’t yet accustomed to the ways of the Allen wrench are brought in to do assembly tests. Products that take too long to put together are called “husband killers”, Dickner says.

The company has accomplished this modest feat in large part through improving its product design. Design manager Marcus Engman’s team come up with 2,000 new products every year. Products in development go through rapid prototyping in the pattern shop to provide a sense of what they’ll look like in the flesh—or at least in plastic. 

One of the oddest things Henrik Holmberg, who manages the department, has ever worked on was a lamp made from the same material as egg cartons. “I thought that was crazy,” he says, “but we proved the technique was possible.”

If air is the enemy in shipping, it’s the ally in design. “The more air in our products, the better,” says Engman, who started working at Ikea when he was a teenager, pushing trolleys. In the design centre, Engman points out a table under development that consists of two trays cobbled together. Its hollow centre means the use of fewer materials. Its legs even attach without screws—part of a general move at Ikea to simplify assembly.

Ikea’s designers look well beyond the furniture industry for expertise when it comes to trimming production costs. They’ve commissioned a shopping-cart manufacturer, for instance, to mass-produce a new table, and a bucket maker to punch out a chair.

So, too, design inspiration comes from everywhere. Engman points out a folding table that he saw in bars and restaurants throughout China. “It costs near to nothing,” he says. “It’s the smartest table. It has the construction of an ironing board.” 

He’s also excited these days about acacia wood, which Ikea sources primarily from Southeast Asia. Normally used in outdoor furniture, acacia has the properties of teak but the price of pine.

Walking through the design centre is a bit like seeing into the future. Some of the designers are already working on products for 2019. There’s an electric bike on the horizon in some markets, as well as products that, Engman says, will encourage social interaction and play. 

Socialising through devices such as smartphones is eroding togetherness, he says, and that togetherness is an essential part of home life—and therefore vital to Ikea.

Indeed, electronic technology is one area where Engman says Ikea won’t go. “We weren’t any good there,” he says. A venture into televisions was one of the company’s great failures. “We’re world champions in making mistakes,” adds Engman. “But we’re really good at correcting them.”

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