IKEA ....THE BEST FURNITURE COMPANY BY A MILKMAN

Ingvar Kamprad is still in the Forbes TOP 10 Richest Person on Earth. In March 2009, Forbes magazine estimated his fortune at US$22 billion, making him the 5th richest person in the world. Now how can this person be in the 5th richest in the world from owning nothing? This is the story of Ingvar Kamprad, founder of IKEA

Ingvar Kamprad, founder of IKEA

Ingvar Kamprad was born in the southern Sweden in 1926. He was raised on a farm called Elmtaryd, near the small village of Agunnaryd. Ingvar began to develop his business skills since he was a young boy. His first business was selling matches to neighbors from his bicycle. He found that he could buy matches in bulk very cheaply from Stockholm, sell them individually at a low price and still make a good profit. From selling matches, Ingvar then expanded to selling fish, Christmas tree decorations, seeds and later ball-point pens and pencils.

When Ingvar was 17 (1943), his father gave him a gift for getting high marks in his studies. Young Ingvar used that gift to establish his own business. He established a company with the name IKEA (formed from the founder’s initials (Ingvar.Kamprad.) plus the first letters of Elmtaryd and Agunnaryd, the farm and village where he grew up). At first, IKEA sold pens, wallets, picture frames, table runners, watches, jewelery and nylon stockings – whatever Ingvar found a need for that he could fill with a product at a reduced price.

In 1945 Ingvar put the first IKEA advertisements in local newspapers. He also began operating a makeshift mail order catalog. He distributed his products via the county milk van, which delivered them to the nearby train station. Soon after that, furniture has been introduced into the IKEA product range. It was produced by local manufacturers in the forests close to Ingvar Kamprad’s home. The positive response was gratifying, and the line expanded.

In 1953 the furniture showroom is opened in Almhult. The IKEA range focused to home furnishing products in the early 1950s. The opening of the showroom was an important moment in the development of the IKEA concept. For the first time customers could see and touch its furnishings before ordering. This came about as a solution to a problem. I

However, IKEA found itself in a price war with its main competitor. As both companies lowered prices, quality was not the priority. By opening the showroom, IKEA could in three dimensions present its products with function, quality and low price. And people did just what IKEA had hoped: they wisely chose the products with the best value for the money.
Not long after that, IKEA was boycotted from the suppliers due to pressure from competitors. This problem has forced Ingvar to make drastic step and so in 1955, IKEA began to design its own furniture.

Ultimately, this would lead to innovative design and improved function at lower prices. Then, by lucky inspiration, one early IKEA employee decided to remove a table’s legs so it would fit into a car, and to avoid transport damage. From that point on, we began to think in terms of design for flat packaging. Which led to even further reductions in price for its customers. A pattern had begun to establish itself at IKEA. Turning problems into opportunities.

Thanks to further cost reduction achieved by manufacturing its own furnitures, in 1973,IKEA opened outside Zurich, Switzerland. Its success paved the way for a rapid expansion in Germany, which is the largest IKEA market today. In 1975 the first IKEA stores are opened in, Canada and the Netherlands. In 1985 the first IKEA store opens in the USA. During the next seven years new IKEA stores are opened in the UK, Italy, Hungary, Poland, Czech Republic and United Arab Emirates. In 1993 IKEA reaches 114 stores in 25 countries.

In 1997 IKEA introduces Children’s IKEA. Child psychologists and professors in playing helped us develop things that are good for kids’ motor skills, social development and creativity. Then the other experts, kids, helped us choose the winners. Play areas, children’s room settings, baby areas, special meals in the restaurant and still more play areas make IKEA a place kids love to visit. In 1998 IKEA opens its first store in China.

In 1999 IKEA numbers 53,000 co-workers across a global network of over 150 stores in 29 countries on four continents. Ingvar Kamprad initiated the Big Thank You Event as a millennium reward to the many co-workers within the IKEA group. The total of all sales worldwide on this special day was given to the employees. The goal for the day was high, but the actual result was higher – approximately 187 million NLG. Every co-worker, from the snack bar staff and stock clerks to the president, got the same bonus. For most, this bonus was more than a month’s pay. It turned out to be a great way to thank the hard working IKEA co-workers for contributing to the success over the last millennium. And this is only the beginning. The first IKEA store opens in Russia in 2000.