Ikea unpacked
Ingvar Kamprad has died at the age of 91. He was miserly, and a genius and what we would nowadays refer to as a disrupter. He was the founder of cheap, chic furniture retailer Ikea. What Kamprad did for retail, product design and distribution through the Ikea brand was nothing short of revolutionary. The company spans 411 stores in 49 countries.
Its catalogue is said to be “twice as widely distributed as the Bible”, and the company once claimed one in every five British children is conceived on an Ikea mattress. Kamprad, who wanted to sell smart products on the cheap, pioneered a concept called “flat packing”. Customers buy Ikea furniture in piece form, from warehousetype stores in largely out-of-town locations and assemble it themselves.
He got the idea during a catalogue photoshoot in 1953 when the photographer, moaning about a table’s legs taking up too much space in a storage room, pulled them off and tucked them away. To Kamprad, an offering like that would save money on transport, storage and sales space.
Assembling furniture together with an Allen key is widely considered a rite of passage for modern, urban couples — research psychologists, behavioural experts, and family therapists have at one time or another weighed in on Ikea-related power struggles and how they test relationships. Comedian Amy Poehler once joked that Ikea was Swedish for “argument” because of the tendency of couples to row when assembling the items.
The name Ikea is made up of the founder’s initials and the first letters of the Elmtaryd farm and Agunnaryd village where he was raised. At age 5, Kamprad started his entrepreneurship life by selling matches to neighbours.
In his relentless drive to bring down costs, what Kamprad achieved was the democratisation of design by making it affordable and bringing it to the masses. The layout of Ikea’s showroom-esque stores, now emulated by other retailers, was down to Kamprad’s commercial genius in getting customers to make impulse purchases. The maze-like structure which guides shoppers, acts as gentle encouragement to get people to buy more by following a zig-zag, almost labyrinthine trail. That shoppers are prevented from seeing around the next corner creates a subconscious sense of mystery, making them more inclined to keep walking. One survey showed that 60% of products people buy in Ikea are not even on their original shopping lists.
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Monastic frugality
Kamprad in the 1980s created a complex tax structure to avoid Sweden’s high tax regime, splitting his sprawling furniture empire in two and creating a franchise system. Inter Ikea looks after the brand and concept and Ikea Group is the main retailer. The structure has meant that the Sweden-based company stays outside the direct control of Kamprad’s three sons — a move he put in place to secure the longterm independence and survival of the Ikea concept.
Though he stepped down from the Ikea board in 2013, the company’s corporate culture is said to mirror his frugality. Management travel economy when flying and stay in budget hotels. Kamprad, who was exposed for being a Nazi sympathiser in his early life, drove around in an old Volvo and was known for reusing tea bags, turning up to meetings with documents in plastic bags, and taking home little packets of salt and pepper from restaurant visits. He spent over 40 years living in Switzerland as a tax exile, and was at one point the eighth wealthiest person in the world.