IKEA is one of the most iconic and innovative retail brands in the world, offering affordable, functional and sustainable furniture and home furnishings at accessible price points. But what exactly is IKEA, and why has it become such a global retail phenomenon? This extensive 2500+ word guide will provide expert insight into all things IKEA.
A Brief History of IKEA and its Founder
IKEA originally started as a mail-order business in Smaland, southern Sweden back in 1943. It was founded by then-17 year old Ingvar Kamprad, who began selling pens, wallets, picture frames, table runners and more out of a makeshift mail order catalog to local farmers.
The name “IKEA” is an acronym comprising of Ingvar Kamprad’s initials along with Elmtaryd and Agunnaryd, the farm and village he grew up in as a boy. By 1948, Kamprad had moved into selling furniture made by local manufacturers in addition to the small household items and useful goods that had originally made up his humble mail order catalog range.
The very first IKEA store opened its doors in 1958 in Almhult, Sweden. In 1963, IKEA expanded internationally with its first store outside of Sweden in Oslo, Norway. Today, IKEA has grown into one of the most successful furniture retail operations in the world. However, Ingvar Kamprad’s deeply frugal roots and emphasis on affordability, functionality and customer value remain at the very core of IKEA some 70 years later.
As of February 2023, IKEA now has over 474 store locations spanning across over 50 countries and territories globally. According to Statista, IKEA was the largest furniture retailer worldwide based on sales in 2021, generating around $44.6 billion USD annually.
Uncovering the IKEA Business Model – What Makes It Different?
IKEA has an extremely unique retail business model that drives both its profitability and affordability for customers. Rather than positioning itself as solely a furniture store, IKEA aims to provide an inspirational, budget-friendly solution for furnishing an entire home under one roof. But what is it specifically about IKEA’s operations that allow it to keep prices so low? There are a few key factors:
IKEA designs products in-house: Unlike many retailers, IKEA employs its own in-house design and product development team spanning across every category from living and bedroom furniture to kitchenware and textiles. This vertically integrated structure gives IKEA much greater control and efficiency across the entire supply chain.
Focus is on modular, flat pack furniture: A vast majority of IKEA‘s furniture offerings are flat pack products designed for modular, DIY style assembly at home. This approach vastly reduces transportation, shipping and warehousing costs. It also allows more products to be stacked and transported per shipment container compared to pre-assembled furniture items.
Product and supply chain innovations enhance efficiency: From product materials to manufacturing techniques, IKEA is constantly innovating to enhance efficiency across production and the wider supply chain. Strategies range from utilizing eco-friendlier resources like recycled materials through to re-engineering products to minimize waste. These measures help lower IKEA’s input costs.
Square footage maximized for display: IKEA store layouts meticulously organize living room settings, bedroom furniture displays and fully decked out kitchens in compact room box formats across a maize of floors and departments. This visual, lifestyle-focused floor merchandising style requires less retail space per room setting yet provides customers far richer inspiration than typical furniture showrooms.
Lower operating costs passed as savings: IKEA maintains lower operational expenses across utilities, services and store labor costs compared to traditional retail rivals. These overhead savings translate into lower price tags for customers. For example, rather than providing instant delivery and assembly, IKEA packs components for convenient DIY assembly at home.
IKEA‘s Extensive Furniture and Home Goods Range
IKEA boasts an impressively vast product catalogue spanning every room of the home. While IKEA has become globally iconic largely for its furniture, kitchen and organizational solutions, the breadth of items available both online and in-store is far more extensive. Some of the main departments customers can browse include:
- Living room furniture – Sofas, lounge chairs, TV units, shelves, coffee tables
- Bedroom furniture – Beds, mattresses, wardrobes, chest of drawers
- Dining furniture – Tables, dining chairs, buffets, bar stools
- Home office furniture – Desks, filing cabinets, office chairs, desk accessories
- Kitchen and appliances – Cabinetry, countertops, appliances, cookware
- Bathroom furniture and accessories – Cabinets, mirrors, laundry, organization
- Lighting – ceiling, wall, spot, smart lighting solutions
- Rugs and flooring – Carpets, vinyl plank, rugs, door mats
- Home decoration – Art, ornaments, artificial plants, textiles
- Children’s range – Furniture, toys storage, bedding
- Outdoor – Patio furniture, BBQs, gazebos, planter boxes
- Storage solutions – Shelving units, drawers, closet systems, bins
This vast range covers pretty much every home furnishing category imaginable beyond core furniture. However, classic IKEA products like the popular BILLY bookcase along with newer designs continue resonating strongest with shoppers.
According to IKEA‘s 2021 financial report, top selling products across the year included mainstay collections like BILLY, MALM, POÄNG along with newer hits like the TOMMARYD modular storage combination and GLADOM tray tables.
The Iconic IKEA In-Store Shopping Experience
Perhaps what IKEA is most famous for, even beyond its furniture range, is the unique shopping experience offered across all IKEA stores globally. While many retailers simply line aisles with products or set up individual display rooms, IKEA leverages its enormous warehouse store formats to effectively showcase room settings you’d expect in real homes.
Rather than a typical shop layout, IKEA leads customers on a continuous path through inspirational room setups filled with fully styled IKEA furniture, accessories and products. You can gather ideas while seamlessly adding desired products to your shopping cart along the way. This showcase concept immerses customers into realistic living environments showcasing how IKEA furniture and products can work together in their own home.
IKEA stores also feature special experience zones like mock studio apartments along with kid’s play areas to provide a more engaging visit. There are even shortcuts that let you bypass certain sections if you‘d like. Of course, no trip to IKEA is complete without a stop to the Swedish Food Market café!
The Iconic Swedish Food Market
After browsing furniture displays, most IKEA visitors conclude their trip with a meal or treat from the in-store Swedish Food Market. Signature menu items include:
- World-famous Swedish meatballs with lingonberry jam – An estimated 1 billion meatballs are consumed across IKEA annually!
- Hot dogs and soft serve ice cream – Over 100 million hot dogs sold per year
- Sandwiches and pasta salads – For quicker lunch and snack bites
- Soups – From Swedish pea soup through to veggie options
- Salmon plates – Gravlax and smoked salmon options
- Desserts and pastries – Cakes, cookies plus marabou chocolate
- Lingonberry juice, sodas and hot drinks – To quench your thirst!
While the Swedish Food Market initially began more as an extra customer perk, food sales now make up around 5% total revenue across global IKEA store locations today. It‘s a treat many customers happily factor into their IKEA trips. Those wanting to recreate the cuisine and flavors from home can also purchase IKEA‘s iconic Swedish Food Market branded items from the self-serve department.
IKEA’s Focus on Sustainability and Social Values
While low prices and a vast catalogue are central to IKEA’s global success, social responsibility and environmental sustainability are also fundamental pillars of the IKEA value system today. Some of IKEA‘s key focus areas include:
Sourcing sustainable raw materials – IKEA has strong targets to significantly ramp up use of renewable, recycled and recyclable materials in manufacturing and packaging. Today over 60% of IKEA‘s total product materials are renewable or recycled, with a goal to hit 100% by 2030.
Product innovation and designs for disassembly – IKEA works to develop products optimized for recycling and re-use as raw materials once retired. New furniture ranges also increasingly use recycled materials as inputs rather than virgin materials.
Energy reduction across operations – Stores utilize renewable electricity sources while efficiency upgrades continue minimizing overall energy usage. Solar panel installations at facilities also help IKEA inch closer towards carbon neutrality.
Ethical working conditions – IKEA conducts regular audits of supplier factories to ensure acceptable living wages along with workplace health, safety and rights. Over 200,000 workers have been upskilled through IKEA anchored training programs.
Reducing food waste – Beyond recipe innovation to creatively transform food ‘waste‘ into affordable meals across IKEA restaurants, unused raw ingredients get recycled into renewable biogas energy to power IKEA facilities.
Today, IKEA is one of the retail world’s sustainability champions. But making sustainable living affordable and desirable for the many people will continue fueling IKEA’s corporate vision.
IKEA Ownership, Leadership and Continued Expansion
IKEA ownership structure is controlled by the nonprofit INGKA Foundation based in the Netherlands. INGKA Foundation oversees INGKA Holding B.V., the ultimate parent company for IKEA‘s retail operations and franchises globally.
While IKEA founder Ingvar Kamprad passed in 2018, he established a clear succession plan ensuring IKEA’s legacy and cultural values live on. Jesper Brodin took over the reins as CEO of INGKA Holding and the IKEA Brand in 2017. Brodin actually began his career with IKEA back in 1995, bringing over 25 years of service and insider perspective to his current leadership role.
Under Brodin’s tenure, IKEA growth continues full speed ahead, both online and across new store markets. 2022 saw over 20 new IKEA store openings spanning China, US, UK, Poland, Mexico and more. Flags are already staked for additional store launches across North America and Europe in 2024 alongside online expansion tailoring the IKEA experience into extended catchment areas.
IKEA is also ramping up omni-channel retailing capabilities to bridge in-store and online shopping. While nothing fully replicates that classic wander through IKEA’s inspiration rooms, virtual showrooms along with robust eCommerce deliver added customer convenience.
With strong financials, passionate franchise partners and an evolving experience across all customer touchpoints, IKEA’s growth trajectory remains vibrant.
Interesting IKEA Facts and Stats
- IKEA product names are all based on Swedish words from an encyclopedia purchased by Kamprad back in the 1940s. Furniture names like MALM, HUSLOV, TOMMARYD pay homage to IKEA‘s Swedish roots.
- The iconic IKEA Stockholm cable armchair inspired the vintage look of Disney’s Wall-E animated robot main character
- Every year, IKEA uses over 1% of the world’s total wood supply across its 10,000+ stock keeping unit catalogue range
- The IKEA restaurant famously sells around 150 million meatballs globally per year – that’s close to 2000 meatballs consumed every 60 seconds!
- IKEA’s 2022 Word Cup advertisement centering on the inconvenience customers endure to assemble IKEA furniture scored over 105 million views across YouTube and social media
Conclusion – Why IKEA Maintains Its Global Appeal
At its core, IKEA is more than merely a furniture retailer. It offers inspiration for stylishly furnishing an entire home at affordable price points for the many people, not just the few. Value, coupled with strong principles around sustainability, form the foundation that’s allowed IKEA to become one of today’s most beloved global retail brands.
While fashions and designs may evolve, IKEA promises to democratize great design fit for real life to as many households as possible. From first apartments through to growing families, IKEA empowers customers to refresh living spaces themselves on a budget. This spirit of accessible functionality and Scandinavian-inspired living will surely continue powering IKEA’s phenomenal growth for new generations to come.
