BUSINESS

IT’S SWEDISH FOR INVINCIBLE

IKEA breaks all the rules of retail. So why can’t anybody beat it?

LIANNE GEORGE August 14 2006
BUSINESS

IT’S SWEDISH FOR INVINCIBLE

IKEA breaks all the rules of retail. So why can’t anybody beat it?

LIANNE GEORGE August 14 2006

IT’S SWEDISH FOR INVINCIBLE

BUSINESS

IKEA breaks all the rules of retail. So why can’t anybody beat it?

LIANNE GEORGE

It’s a bright Tuesday afternoon in Canton, Mich., a suburb of Detroit, where at least 150 people have skipped out on work to partake in the most hotly an-

ticipated local event in recent memory. Some of the group—from Grand Rapids, Toledo, Windsor and beyond—have been here camping out since Sunday night. They’ve erected dozens of multicoloured tents and lined them up along the periphery of an enormous concrete building. They’ve brought portable stereo systems, laptops, plastic tables, coolers, books, blankets, Xboxes, dogs, and babies.

Only 18 hours until the main event which, given the level of anticipation, might well be a Bob Seger concert or a Christian rock convention. Instead, it’s something twice as good: the grand opening of the world’s 236th Ikea store, the first one in the state of Michigan.

Ikea store inaugurations are fun-filled, family-friendly and choreographed to within an inch of their lives. By 8:30 a.m. on Wednesday, thousands of people are wrapped around the building. In the parking lot, a DJ is spinning Love Train by the O’Jays, while Ikea staff distribute Frisbees, visors, and umbrellas, until yellow and blue permeate every corner of the crowd—like a little piece of Sweden carved out right here in Canton. A balloon artist makes hats and animals for the kids. Mrs. Michigan 2006, in a brocade suit and an oversized tiara, waves metronomically at the crowd. “I’m a big fan, too, and I can’t wait to get inside,” she says. There is a live band, a Billy bookcase-building contest, a Swedish log-cutting ceremony, and the singing of the U.S. and Swedish national anthems. At 9 a.m., the doors finally open. People are literally dancing into the showroom.

Ikea is not so much a furniture store as it is an economic and cultural phenomenon. While other retailers have to scheme and kowtow to lure shoppers, Ikea only has to plunk itself down in some remote locale and its devotees will make pilgrimages, travelling for hours, just to join the throngs. In 2004, when Ikea opened its first store in Saudi Arabia, over 20,000 people turned up, inciting riots and ultimately resulting in the deaths of three men who were trampled. In early 2005, when the company opened its largest U.K. store in north London, the crowd, eager for a crack at a discounted leather sofa, quickly turned violent and sent six to the hospital.

But here in Canton, despite the 40-odd police officers surveying the scene, the mood is one of elation. Inside, dozens of staffers, in their blue-and-yellow uniforms, welcome customers with noisemakers, cheering and hooting and doling out high-fives. Salespeople hand out big yellow shopping bags and Ikea catalogues (there are 160 million copies printed in 25 different languages each year). Colourful signage lays out the rules of Ikea’s unique shopping system: the golf pencils, the shopping lists, the information tags, the self-serve warehouse. First-time customers— or “Ikea Virgins,” as company insiders call them—are overwhelmed by the prices. “Look at this sink,” gushes one middle-aged woman. “Twenty-nine bucks! For my mud room! I gotta tell Virgil to come here.”

Shoppers the world over complain about the quality of Ikea merchandise, the crowded parking lots, and the incomprehensible

assembly instructions, and yet the global appetite for the retailer is insatiable. Ikea currently has more than 90,000 employees, in 34 countries. Last year, international sales of the privately held company topped US$18.3 billion, up 17 per cent over 2004. For millions of shoppers—whether in North America, Europe, Asia, or the Middle East—fumbling with an Allen key to assemble a Lack chipboard coffee table ($19.99), or a Dunö floor lamp ($44.99), has become a rite of passage, and a unifying experience, particularly among students and young families. Online, there are Ikea fan sites, where enthusiasts—called “Tokigs” (Swedish for fans)—compare notes, gush over new products, and lobby for Ikea stores in their home city, state or country. “They’re so dominant in that particular field that they really are a category killer,” says Toronto-based retail analyst Richard Talbot of Talbot Consultants International. Even if there were a credible competitor on the horizon, he says, “there’s really not much room for anybody else.” Ikea may well be the perfect 21st-century brand.

AT 311,000 SQUARE-FEET-with 56 room settings and three full model homes—the Canton store is “mid-sized” by Ikea standards, according to store manager Mark McCaslin. In some ways, Ikea outlets are not unlike casinos—they’re a totally immersing experience. Stores provide no windows, no easy escape hatches, and continuous waves of sensory information. The showrooms are designed to keep consumers on the move along a carefully charted pathway. As long as they follow the arrows on the floor, they will potentially see everything on offer. “Whether you’re in Beijing or Sydney or Stockholm or Canton, it’s the same products, the same store concept,” says Ikea’s public affairs director Joseph Roth. All around the store, there is evidence of the company’s

unrelenting “Swedephilia.” Ikea relies on there being something inherently non-threatening—and wholesome and sensible—about the Swedes. Instead of trying to be all things to all people like so many other brands, Ikea is Swedish. To all people. Products are assigned Scandinavian proper names—kitchens are named for boys, bedrooms for girls, beds for Swedish cities, and bathrooms for Norwegian lakes. (Some products vary slightly from one country to the next. For instance, a children’s desk originally named Fartful— Swedish for “speedy”—didn’t hit the right note in the English-speaking world.) Ikea restaurants dish out more than 150 million Swedish meatballs a year. And in Smaland, which they’ve named the kids’ play area, kids can jump in “lingonberry balls” and hide behind giant clogs. One can imagine the warehouse staffed by woodland nymphs.

Watching Ikea Virgins examine the merchandise is a study in consumer anthropology. The fact that there is no sales staff hovering means that people’s customary shopping inhibitions diminish a little. They’re encouraged to test the mattresses, lie down, touch everything. “We’re not jumping on you,” says McCaslin. “If you’re looking at a sofa, no one’s jumping on you to say, ‘Do you

want to take this home today?’ You can sit on it, play on it for an hour if you want to. We encourage you to ask us if you have questions. And there are information booths around.” Kids can roam as they please, so parents are free to become fully absorbed in the bright and cozy individual room settings, scooping up two-dollar vases and other life props they didn’t know they needed. In its first five days, the Ikea Canton store welcomed some 100,000

IKEA IS NOT MERELY A STORE. IT’S A CULTURAL PHENOMENON. LAST YEAR, SALES HIT US$18.3 BILLION.

people, an impressive feat considering the entire population of Canton is only 83,000.

IKEA DEVOTION STEMS as much from the constancy of the brand as anything else. Perhaps no other company has been as singleminded in its vision and as innovative in its execution. Ikea was the first truly global lifestyle brand—the first to attempt to coordinate everything in your life from your Mörkedal bed to your Linjär kitchen cabinets and your Skänka saucepan—setting the stage for style gurus like Ralph Lauren and Martha Stewart. “Ikea was first to do it as a one-stop shop from the beginning,” says Talbot,“whereas Roots, for example, really started in leather goods, but then expanded into lower-end fashion and things like vitamins, furnishings and even an airline. The problem is that when you say Roots, you think leather stuff. It’s tough to push brands around. But Ikea started out that way from day one. That’s brilliant.” And unlike other value-priced home outfitters, like Wal-Mart or Target, who sell products that shoppers could quite easily find elsewhere, Ikea brand products are exclusive to its stores.

Ikea was also the first to democratize interior design by demanding high-style products that anyone could conceivably afford. “Any architect can design a desk that will cost 5,000 krona,” founder Ingvar Kamprad once wrote. “But only the highly skilled can design a good, functional desk that will cost 100 krona.” As such, in many cases, the company’s designers will start with a price point first. “It can be as simple as, ‘We would like a 50 cent glass. How can we make it?’ ” says McCaslin, who has been with the company since 1998. “And then we ask, ‘How can we produce the volume so we can continue to sell it for 50 cents?’ ” At any given time, the stores carry about

10,000 products, 20 per cent of which are replaced with new designs each year. “In some cases, like with textiles, we might change six times a year,” says McCaslin. “Our textile business has become more timely to keep up with what the new fashion trend may be.” Ikea’s philosophy of stringent economy is reflected everywhere in the store, but especially in the products themselves. The design is always simple, with straight, clean lines. In Scandinavia, the theory goes, daylight and space are at a premium. The native design is therefore conceived to brighten up interiors and make the best possible use of available space. Because of its pared-down, minimalist pieces, Ikea furniture is aesthetically dummy-proof. No matter what

you buy—whether it’s from Ikea’s “young a Swede,” “country,” “traditional Scandina^ vian” or “modern” collection—you are guar-

§ anteed it won’t look offensive. In fact, its o top-selling items—including the Glimma tea o lights and the Billy bookcase—are among £ its most unremarkable. “I think in Canada, Ikea has been a huge taste-shifter,” says Í2 Q Canadian furniture designer Patty Johnson, who teaches at the Ontario College of Art £ o and Design. “In some ways, it’s sort of brought H residential furniture design to the fore, but it’s also infantilized people. They make it w I seem so easy and complete, and I think they m jü feed into the North American taste of want-

0 ing things immediately. There’s no sense of “i building something over time or buying a 5 few good pieces and waiting. They’ve brand-

1 w ed themselves as being good taste, but they £7 don’t explain why. And design sort of re££ mains enigmatic to people.”

Still, revenue growth suggests that siropes t pers are more than willing to defer to Ikea’s ÍZ all-encompassing approach to style. To date, no other retailer has effectively managed to o 0 mimic Ikea’s no-frills aesthetic. And even if - m someone were to create a knock-off concept,

they almost certainly couldn’t compete with Ikea’s pricing. Ensuring its customers the lowest possible price is built into every decision Ikea makes. Designers, for example, have learned to save on production by sourcing cheap, unconventional materials. In the early days, according to British writer Elen Lewis, author of Great Ikea! A Brand for All the People, “there are stories of Kamprad visiting wood factories and examining the offcuts to see what could be made from them.” In the late ’60s, the company introduced its first sofa made of a particleboard base. Another sofa, designed in 1985, was produced at a cut rate by a shopping cart manufacturer that made its wire framework. “In the 1990s,” Lewis writes, “Ikea sold one line of

picture frames fashioned out of rubber cuts from a Volvo factory.”

Ikea also revolutionized distribution—one of the most costly components of any retail business—with the advent of flat-packing technology, which helps it save on transportation costs by fitting more products onto a pallet. “We lower our prices every year, because every year we do more volume,” says McCaslin, strolling through the Canton showroom. “For instance, when I opened the Chicago store in ’98, this pack of Boomerang hangers was $8.50. Now, it’s $3-49We practise reverse inflation.” This, according to Ikea’s own internal mythology, is just one of the benefits of being a privately held company. “If we were a public company, we would probably charge $8.50, because that’s what we could get/’ he says. “But this way, we can go into Russia, where we may not make money for a long time, but it’s the right thing to do. We’re there to help those families make a better everyday life for the many.”

The final, and perhaps most important piece of the Ikea puzzle is its retail concept. To begin with, the company saves millions

on real estate by purchasing enormous plots of land outside major cities. Beyond that, they rely heavily on shoppers’ initiative—to travel the distance to the store, to locate merchandise with little help, to load heavy pieces into their own cars, and to assemble the products themselves at home. Signs around the store provide feel-good reminders that all of the manual labour helps keep the prices down. Customers can feel that they are pouring their sweat into something beneficial for their families, their wallets, and in some obscure way, the earth. To top it off, they’re invited to reward themselves with a delicious 50cent Ikea hot dog on their way out. “There was a theory inside the company that Ikea is good for people’s sex lives,” says Lewis,

“because it’s about the man being able to regain his hunter-gatherer instincts in a modern world of equality. So his manly instincts drive him to put furniture together and be perceived in a different, more traditional light than is normal in his home.”

THE IKEA PHILOSOPHY and aesthetic seems to have sprung, fully formed, from the mind of its founder, 80-year-old Ingvar Kamprad, in the early ’40s. Kamprad started the company-named for his initials, plus the farm (Elmtaryd) and the village (Agunnaryd) in southern Sweden where he grew up-at the age of 17. Originally, Ikea was a cataloguebased company, which sold fountain pens, wallets, watches and other home accessories via mail order. In 1953, Kamprad opened the first Ikea retail store among the lakes and forests of Almhult, which still functions as Ikea’s corporate nerve centre. His concept spread quickly because of his steadfast devotion to the lowest price. Despite accumulating an estimated personal fortune of US$53 billion, Kamprad is notoriously, perhaps pathologically cheap. In Great Ikea!, Elen Lewis enumerates some of the many popu-

lar myths about Kamprad: that he recycles his tea bags, that he drives a rusted out Volvo, and that, when he takes a drink from a hotel mini-bar, he replaces it with another he buys at the supermarket at a much lower price.

By extension, Ikea corporate culture is rabidly anti-extravagance. “Once and for all, we have decided to side with the many,” Kamprad wrote in 1976 in a quasi-Maoist document he titled “The Testament of a Furniture Dealer.” Staff of all levels are expected to travel economy class, stay in cheap motels

and, whenever possible, use public transportation. Observers have long inferred a fascists quality in its corporate structure, Lewis notes, ranging from the heavy-seeming ide-

‘IKEA IS GOOD FOR PEOPLE’S SEX LIVES, BECAUSE THE MAN CAN REGAIN HIS HUNTER-GATHERER INSTINCTS’

ological indoctrination of its employees, to the uniforms they wear, to the fact that every single one of them, regardless of rank, is a “co-worker.” In this sense, they are not unlike mammoth U.S. retailer Wal-Mart, with its reliance on massive suburban stores, parsimonious corporate culture, and obsession with low prices.

And yet, while Wal-Mart is widely reviled and seen as emblematic of the tyranny of mass retailing, Ikea strolls merrily along, the lov-

able Swedish cousin to America’s ravenous corporate invader. In 1994, after Kamprad was discovered to have attended Nazi party meetings in Sweden in the late ’40s, he delivered a weepy public apology. He begged forgiveness, which evidently was granted, proving once again that Ikea is a Teflon brand. Nothing sticks to it: not the founder’s Nazi past or his admitted alcoholism. Not even the company’s Byzantine financial structure, which a recent Economist article paints as an elaborate scheme to avoid paying corporate taxes.

Anti-globalization activists denounce Nike and McDonald’s for cultural imperialism— for standardizing taste and destroying regional customs by economic force of will. Yet Ikea manages to hover under the radar, even as it grows quickly and quietly around the world like a weed. Ikea, after all, is the people’s furniture company—a democratic, demographic-spanning force that, on the surface, opposes principles of greed and waste that taint other corporations. While retailers like Starbucks colonize urban landscapes by opening a franchise on every corner, Ikea’s stores exist, by necessity, on the periphery of cities. Ikea doesn’t even advertise very much since Kamprad reportedly sees it as a waste of money. Instead, the brand engenders a sort of universal affection, much of which stems from the company’s forcefully trumpeted Swedish heritage.

In fact, it’s likely that Ikea’s success is rooted in its own elaborate, ingenious set of contradictions. It is democratic in that it provides the illusion of choice (of mixing and matching), and yet its dominance has meant that personal taste at home has never been so homogenous. The company is sprawling, and yet it retains its “little guy” charm. And it is celebrated as a “green” company even though it virtually created the concept of disposable furniture, in the same way H&M and Zara have popularized disposable fashion. If a person tires of her Ikea room, she can just toss it all out and start again for as little as $1,000. “I think the design quotient is very, very high,” says designer Patty Johnson, “but I think sometimes the quality is lacking. Ikea products are so pared-down, so minimal in some ways. But at the same time, they kind of stand out because of their cheapness. As someone who, in my practice, has always aimed to design and make things of very high-quality, that have a kind of longevity, I guess I have a problem with that. You wouldn’t pass it down along generations. It wouldn’t make it to the next generation.” Which, if you’re Ikea, is the beauty of it. M