Waste of resources is a mortal sin. ~ Ingvar Kamprad
The brand I am writing about is known for its innovative and stylishly designed flat pack furniture. Yes it is IKEA, the largest furniture retail chain with more than 300 stores globally.
The early years of IKEA
Founded in Älmhult, a place surrounded by dense forests in Sweden in 1943, by 17-year-old entrepreneur Ingvar Kamprad, who started with selling pens, wallets, picture frames and watches at reduced prices, Ikea became an amazing success story in post-war European business.
The name IKEA is formed from the founder’s initials (IK). The letters E and A stand for Elmtaryd and Agunnaryd, the farm and village where he grew up.
IKEA’s initial journey was not without hurdles. When furniture was introduced into the IKEA range, competitors felt threatened by the low prices of quality furniture and so they forced the raw material and furniture suppliers to boycott IKEA. To stay in business, IKEA started designing its own furniture. The company bought raw material from new suppliers in Denmark and Poland, and created its own exhibitions.
Incidentally, the concept of flat packs and self-assembled furniture, for which IKEA is widely known, came into being accidentally when one of co-workers removed the legs of the LÖVET table to fit it into a car and avoid damage during transit.
Coming up with creative responses to difficult problems, IKEA developed an intuitive way of doing business, and invented new ways of dealing with logistics, sourcing and retailing. Many of these innovations are now industry standards.
Different designs in different markets
In the 1980s, IKEA forayed into new markets such as USA, Italy, France and the UK. The size of beds, closets and other furniture used by people in the US are larger than in other places. So the products were tailored to suit the local needs of the US customers.
In contrast, when IKEA started its retail operations in China the late nineties, it created functional, modular solutions that could fit into small Chinese apartments.
Though its prices were low in Europe and North America, in China the prices were comparatively higher than the average prices charged by the local stores. The higher than average price point proved to be one of the biggest barriers for Chinese people to purchase IKEA products.
By starting to produce locally in a number of factories built in China and by increasing local sourcing of materials, helped in lowering the prices. Additionally a change in positioning was adopted. Whereas IKEA was targeting the mass market in other parts of the world, in China they realized the need to target the young middle-class population, with higher incomes and exposure to western sensibilities. With the use of Chinese social media and micro-blogging website Weibo, IKEA targeted the urban youth of China.
Though IKEA has been sourcing products from India since the last 28 years, it is only now that the global furniture retail giant has identified Hyderabad to open its first India store. Though IKEA has launched its ‘Make More In India’ initiative to boost things, yet the rollout is expected to be slow.
The IKEA way
What makes IKEA so different is its distinctive work culture with a straightforward, no-nonsense approach to problem-solving that is strongly reflective of the Swedish culture.
Collaborative working is stressed upon, hierarchy is not emphasized, mistakes are seen as part of learning, and co-workers (as employees as called) are encouraged to come up with frugal, cost effective solutions. IKEA recruits its co-workers based on their values and beliefs, rather than only on the basis of experience and skills.
Want to work here? Well, first assemble your chair !!!
In 2013, IKEA made a cultural faux pas when it removed the picture of a woman from an catalog in Saudi Arabia in a bid to localize their advertisement. In Thailand, some of IKEA’s product names did not augur well with the customers, and were changed subsequently.
Learning to be sensitive to cultural issues, IKEA has cultivated an environmentally responsible image, and claims to use sustainable raw materials. With the goal of improving customers’ everyday lives, the brand launches around 2,000 new products each year.
After it launches its store in India, it will be interesting to see how we Indians take to the do-it-yourself concept of IKEA.
Image credit: Website of IKEA (ikea.com)
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