A Retail Revolution Built o Furniture for the Masses

The little girl on Page 19 of IKEA’s European catalog has a problem. She splits her time between the households of her divorced parents, and her father’s two-room apartment is too small for another bed.

Not a problem but a challenge, say the writers of the “solutions manual” that finds its way into 80 million households around the world each year.

Pitching to the millions of joint-custody customers with similar housing puzzles, IKEA suggests the collapsible Moss mattress and frame, which folds down to store under the father’s bed, and two shallow wicker baskets in which to tuck away the linens.

The global masters of space management have their work cut out for them these days, with reassembled families and multiplying singles reinventing the concept of “home” in the West, and the tiny living spaces of the emerging East demanding multipurpose ingenuity.

“It’s not so much a marketing technique as a mirror of the reality of our society today. It’s not always two parents, two kids in every household anymore,” says Ulrike Englesson, a spokeswoman for the company that has its registration in the Netherlands, its headquarters in Denmark, its biggest market in Germany and its soul in this southern Swedish hamlet.

From Swedish Hamlet to Worldwide Network

The evolutionary sense of home in the latter half of the 20th century has been the fuel for IKEA’s growth from a humble mail-order shack on founder Ingvar Kamprad’s family farm here to a world-encircling network of 142 stores in 29 countries that drew 150 million customers last year.

“There are many people in the world who dream of a better life, and I believe we are just getting started,” says Anders Moberg, IKEA’s chief executive, who runs the sprawling empire from Humlebaek, Denmark.

Having cornered the European market for low-cost furnishings and elbowed into a modest niche in North America, the company is training its sights on the densely populated urban centers of Asia. China became the latest IKEA venue in March, with a store in Shanghai.

And at least three stores are on the drawing board for Russia in the first years of the new millennium, despite the country’s financial turmoil.

“We don’t expect short-term profits in Russia, but we believe we should take positions that will allow us to profit in the next generation,” says Moberg, an Almhult native.

In an interview in his humble, IKEA-decorated office, Moberg explains that the company experimented with a furniture factory in the Siberian city of Krasnoyarsk earlier this decade, only to abandon it because of Russia’s “many legal and illegal problems.”

Armed with that experience and nonetheless committed to solving Russians’ infamous living space woes, IKEA will invest in more Russian production to avoid the myriad import pitfalls, Moberg says.

IKEA development has long been a study in innovation. Kamprad got the idea for producing build-it-yourself items to reduce delivery costs when the milk wagon that once dispatched his small orders changed its route in the early 1950s. Opening up warehouses for self-service pickup was an inspiration born of the overwhelming demands put on his stock clerks on opening day of the Stockholm store in 1965, when 30,000 shoppers thronged the sales floor.

The success of IKEA throughout its 55-year existence can be tied to the vision and elbow grease of its founder, but the controversial Kamprad presents an unlikely model for emulation. A legendary tightwad who exiled himself and his business to evade Swedish tax and inheritance laws, he recently conceded that he has abused alcohol for almost 40 years and in 1994 admitted that he sympathized with the Nazis during his youth.

He so feared that technology would dehumanize his designers that he prohibited computers from IKEA premises until 1968, recalls company historian Leif Sjoo. Until a few months ago, mobile telephones were likewise forbidden as “elitist.”

But in the vital early decades, Kamprad was instrumental in shaping the light, lively design that has come to be known as Scandinavian.

“Until Ingvar created IKEA, there was a tradition in Sweden to use the living room only for very formal gatherings on Christmas or Easter. The rest of the year it was dark and empty,” says Sjoo, an Almhult native, like Kamprad and most other senior managers. “Ingvar tried to teach Swedes to live in their living rooms and make them as comfortable as possible.”

IKEA, founded in 1943, was “born at exactly the right time,” the historian says. Swedes were emerging from farms and villages to set up households in the bigger cities. They wanted affordable decor, not the costly antiques that furnished their parents’ homes. The postwar generation had other uses for its money, such as entertainment and travel.

Stockholm journalist Thomas Sjoeberg, the first of three writers to come out with a full-length book about Kamprad and IKEA this year, sees the company as a parable for modern Sweden.

Just as Sweden’s social democracy strove to raise every citizen to the same dignified living standard, so has the furnishings giant sought social leveling in home comfort.

“Working for IKEA is working for a cause. They have an official mission to make life better for the masses,” Sjoeberg says. He compares the furniture empire with other message-oriented manufacturers, such as Britain’s Body Shop and Italy’s Benetton, in its emphasis on environmental and political correctness as much as the bottom line.

Consumers say they like the relaxed atmosphere in IKEA stores, where stretching out on a bed to see how it feels is not only OK, it’s encouraged.

“I like that you can try everything out, sit in the sofas and touch things without some salesperson getting bothered about it,” says Anne Schiffer, a 31-year-old hairstylist shopping with her husband while their toddler son played in the supervised children’s center at the store in Godorf, Germany.

Lifelong customers such as Roswitha Lenz, a Bonn housewife, likes the light woods and perky fabrics that typify IKEA’s collection, but she concedes that her husband gets irritated when the do-it-yourself kits turn out to be missing a piece and a second trip to the store is needed.

With net worth estimated at $13 billion and double-digit sales growth to $6.6 billion in the latest fiscal year, IKEA ranks among the world’s top privately held companies.

The reclusive Kamprad, who does not give interviews to the media, was forced by Dutch law to step down as board chairman when he turned 72 this year. But as “senior advisor,” he still directs the company by telephone from his home in exile in Switzerland.

IKEA has swelled to 40,000 employees and 2,400 suppliers for its 11,000 products, but no thought is given to a shares offering.

“Ingvar is against the stock market, as it is very short-term-oriented,” says Moberg. “When you are going into challenging markets like Russia and China, it’s too difficult to explain to shareholders why we should take such risks.”

Thrifty Habits Lead to Innovations

Kamprad founded IKEA when he was 17, after having sold matches, Christmas cards and fish netted in this region’s bounty of lakes and rivers. He needed a company to win a contract to sell pencils, and he concocted the name from his initials, IK, and the first letters of the family farm, Elmtaryd, and its surrounding county, Agunnaryd. Contrary to prevailing American practice, it is pronounced ee-KAY-ah.

Sjoeberg ascribes Kamprad’s notorious thriftiness--the billionaire always flies economy class or, better yet, takes the bus at pensioner’s fare--to his upbringing in this traditionally poor Swedish region called Smaland.

Kamprad’s grandfather killed himself with a shotgun when he couldn’t pay the mortgage on the family farm in 1897, three years after moving his wife and three children to Sweden from the Sudetenland. Kamprad’s widowed grandmother, Franziska, brought the farm back from bankruptcy through sheer willpower and hard work. It was she who nurtured Nazi sympathies in the young Kamprad, portraying Adolf Hitler’s seizure of her Sudeten homeland as liberation.

Kamprad set up a mail-order firm and printed his first catalog in 1949, sending wares out with the daily milk truck. When the route ceased to pass by his farm in 1953, he bought an idle factory in Almhult and opened his first store. Five years later, he opened a bigger one on the site of today’s flagship sales center, cleverly adding car roof racks to the store’s inventory so customers could take their purchases home.

While upscale furniture stores were located in fashionable urban centers, Kamprad set his stores in cheaper suburban outskirts, guessing that the consumer’s growing fondness for the automobile meant ample parking would be a winning attraction.

Supervised playrooms for children and inexpensive cafeterias serving Swedish delicacies at cost encouraged shoppers to take their time--and spend more money.

Stores are laid out so that the shopper is encouraged, if not forced, to trek through every showroom, bombarded with ideas for pulling products together into a decorating scheme.

Along the sales route, “hot dog products,” or HDPs--ultra-low-cost items such as thread, coffee mugs, extension cords and, well, hot dogs--enticed customers into buying a little something.

But Kamprad’s cut-rate strategies infuriated the furniture sales cartel that once prevailed in Sweden. The exclusive shops of Stockholm and Malmo imposed a boycott on IKEA in the late 1950s, threatening to stop doing business with suppliers who sold to IKEA.

It was then, in 1960, that Kamprad ventured into Eastern Europe. Shut out in his own country, he made contact with Polish producers and secured deliveries of inexpensive components that could be packaged flat for home assembly.

It was also at this time, after the breakup of his first marriage, that Kamprad fell into heavy drinking with the Polish factory and government officials for whom no deal was discussed without liberal doses of vodka.

In the sole authorized biography of Kamprad, author Bertil Torekull discusses the founder’s excessive drinking and how he keeps doctors at bay with occasional drying-outs. In his interviews with Torekull, Kamprad expressed regret for his “misguided” involvement with fascists during World War II, when he was studying at a trade school in southern Sweden and became acquainted with a local Nazi leader. He attended meetings with Hitler Youth supporters but soon left the political circles behind as he concentrated on starting his business.

Kamprad publicly outlined his mission to do good deeds while doing business in his “Furniture Dealer’s Testament,” delivered in a rare public appearance before Stockholm bankers in 1976. It still serves as the company bible, complete with commandments: “No method is more effective than a good example.” “Waste of resources is a mortal sin at IKEA.” “Happiness is not to reach one’s goal but to be on the way.” “Only while sleeping one makes no mistakes.”

Titles and privileges are taboo at IKEA. Suits and ties are absent, from the loading docks to Moberg’s office. Everyone is a “co-worker” and on a first-name basis with Anders and Ingvar. And a business meeting between an “IKEAn” and a stranger of the same generation is more likely to end with a hug than a handshake.

Although true to his budget-conscious nature at every juncture, Kamprad pioneered the concept of “the team that plays together stays together” in 1957 when he bankrolled a weeklong trip to Majorca, Spain, for all 80 employees and their families as a reward for their hard work.

Catering to the American Market

IKEA first expanded beyond Sweden in 1963 with a store in the Norwegian capital of Oslo. It took another decade to venture outside Scandinavia to the Zurich suburb of Spreitenbach, chosen by Kamprad on the theory that if he could learn to operate profitably, without changing the store’s stock, amid the strict business laws of Switzerland, he could succeed anywhere.

That was true until IKEA entered the U.S. market in 1985 with a store in Philadelphia and a dozen others soon after, including four in the Los Angeles area. The company had to customize its merchandise for the American market, despite a pledge in Kamprad’s manifesto to keep products uniform.

“We had a joke among the U.S. team that ‘size matters,’ ” says Josephine Rydberg-Dumont, who oversaw the opening of the L.A.-area stores. “Americans want to sleep in big beds and sit in big sofas. We didn’t have those things in our range, so we had to add them. When we first opened, we had no glassware big enough for our customers. We had people drinking out of our vases because they were the only things we had that could accommodate 15 ice cubes.”

Even the cornerstone of IKEA decor, the expandable wall unit, had to be redesigned to meet American tastes.

“In Europe, the wall unit always begins with a bookshelf, and then cabinets and drawers are added on. But in America, the first thing the customer wants is a TV cabinet,” says Rydberg-Dumont, explaining that a deeper, sturdier component had to be made.

Crossing Borders With Style

Cultural clashes also have occurred in France, where employees insisted on wine with their cafeteria lunches and customers demanded special shelves to hold shoes. In Germany, the company ran afoul of labyrinthine advertising laws when it offered a traditional Swedish brunch to shoppers without including eggs--one of several items mandatory to meet the meal’s German legal definition.

In Britain, IKEA has embarked on a cheeky campaign to lighten up the chintz and mahogany monotony of the typical household with its advertising slogan: “Stop being so English!” Former Prime Minister Margaret Thatcher and other Conservatives were provided with IKEA furnishings for use at their Bournemouth party conference this month as part of the promotion.

Erik Linander, an Almhult design executive clad in baseball jacket and jeans, embodies the IKEA spirit with his enthusiastic musings on the cross-border recognition of function and value.

“This is where we find our satisfaction, coming up with solutions--smart, simple things that help you with your life,” says Linander as he demonstrates a baby-changing table that accommodates both European and American practices. In the United States, changing tables are relatively narrow compared with their squarish European counterparts, which enable babies’ feet to face the diaper-changer.

“We have to try to stay ahead of the customer, who may have different ideas about how to use something,” he says.

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Putting It Together

Ikea, the world’s largest furniture retailer, is expanding its do-it-yourself empire into China, where it opened a store this year, and Russia, where it plans several more in the next millennium. A look at the 55-year-old furniture giant:

Headquarters: Denmark

Founder and chief executive: Ingvar Kamprad

Where it got its name: IKEA is an acronym that combines Kamprad’s initials with the first letters of Elmtaryd, the family farm in Sweden where he grew up, Agunnaryd.

Employees: 40,000

Stores: 142 in 29 countries on three continents

1997-98 sales: $6.6 billion

1997-98 earnings: $931 million

Sources: Times and wire reports