Ikea Case Study
IKEA CASE STUDY
Introduction
IKEA is one of the world’s most successful global retailers. In 2007, IKEA had 300 home furnishing superstores in 35 countries and was visited by some 583 million shoppers. IKEA’s low priced, elegantly designed merchandise, displayed in large warehouse stores, generated sales of 21.2 billion in 2008, up from 4.4 billion in 1994. Although the privately held company refuses to publish figures in profitability, its net profit margins were rumored to be approximately 10% high for a retailer. The founder, Ingvar Kamprad, now in his 80s but still an active advisor to the company, is rumored to be one of the world’s richest men.
Company Background IKEA was established by Ingvar Kamprad in Sweden in 1943 when he was 17 years old. The name IKEA was an acronym: I and K his initials; E stood for Elmtaryd, the name of the family farm; and A stood for Agunnaryd, the name of the village in southern Sweden where the farm was located. IKEA is a privately-held, home products retailer that sells flat pack furniture, accessories, and bathroom and kitchen items in their retail stores around the world. The company which pioneered flat-pack design furniture at affordable prices is now the world’s largest furniture retailer. The IKEA concept began when Ingvar Kampard, an entrepreneur from southern Sweden, had an innovative idea. In their province the soil is thin and poor, the people have the reputation for working hard, living frugally and making most out of the limited resources. So when Ingvar started his furniture business, he applied the lessons he learned to the home furnishings market. Ingvar’s innovative idea was to offer home furnishing products of good function and design at prices much lower than competitors by using simple cost-cutting solutions that did not affect the quality of products. Ingvar used every opportunity to reduce costs, and he scraped and saved in every way possible except on ideas and quality.
IKEA TIMELINE
Introduction
IKEA is one of the world’s most successful global retailers. In 2007, IKEA had 300 home furnishing superstores in 35 countries and was visited by some 583 million shoppers. IKEA’s low priced, elegantly designed merchandise, displayed in large warehouse stores, generated sales of 21.2 billion in 2008, up from 4.4 billion in 1994. Although the privately held company refuses to publish figures in profitability, its net profit margins were rumored to be approximately 10% high for a retailer. The founder, Ingvar Kamprad, now in his 80s but still an active advisor to the company, is rumored to be one of the world’s richest men.
Company Background IKEA was established by Ingvar Kamprad in Sweden in 1943 when he was 17 years old. The name IKEA was an acronym: I and K his initials; E stood for Elmtaryd, the name of the family farm; and A stood for Agunnaryd, the name of the village in southern Sweden where the farm was located. IKEA is a privately-held, home products retailer that sells flat pack furniture, accessories, and bathroom and kitchen items in their retail stores around the world. The company which pioneered flat-pack design furniture at affordable prices is now the world’s largest furniture retailer. The IKEA concept began when Ingvar Kampard, an entrepreneur from southern Sweden, had an innovative idea. In their province the soil is thin and poor, the people have the reputation for working hard, living frugally and making most out of the limited resources. So when Ingvar started his furniture business, he applied the lessons he learned to the home furnishings market. Ingvar’s innovative idea was to offer home furnishing products of good function and design at prices much lower than competitors by using simple cost-cutting solutions that did not affect the quality of products. Ingvar used every opportunity to reduce costs, and he scraped and saved in every way possible except on ideas and quality.
IKEA TIMELINE