Page 2: Business start-up
The IKEA concept was a revolutionary one which was well ahead of its time. Essentially, IKEA has built an anti-brand which stands for the good of the many people rather than a narrow group of shareholders. IKEA began with the question: ‘Who’s on the side of the customer?’ From this stemmed a corporate philosophy which asked two further questions:
- ‘Isn’t there room for an anti-brand that stands for low price, high quality and innovation?’
- ‘Isn’t there room for an anti-brand that stands for the benefit of everyone?’
High quality at affordable prices
In order to realise the aims of his business idea, Kamprad needed a way of designing which would make it possible to maintain high quality standards, while at the same time making reductions in price. The solution he came up with was based on common sense and a respect for the customer. He carried out detailed research in the different life stages and the needs of customers at each stage (e.g. setting up home for the first time, raising a young family, retiring etc.). From this, he was able to calculate what customers would be able to afford, while still having some money over. Then he sourced the right materials and the production units which had the expertise and capacity to produce goods economically. In many cases, he approached producers who were not part of mainstream furniture manufacturing. For example, a shirt manufacturer may well be suited to producing loose covers for settees and beds.
Large IKEA stores were built on the outskirts of towns where rates were cheaper and people could park easily. The furniture was sold in flat packages which saved space and allowed for ease of handling and transport. Finally, Ingvar Kamprad built his business on the philosophy ‘We do a little, you do a little, together we save money’ which meant that the customer became part of the production process. The DIY idea was refined and put into operation on a large scale. All this allowed for long production runs, which provided economies of scale and growth whilst maintaining the quality of the finished products. Instead of increasing the numbers of service personnel when the business grew, he kept the numbers the same, reasoning that employing more people would cost more money and this would make the products more expensive (so that buyers would not be able to afford them).
The simplicity of the way of working is what makes IKEA successful. The initial vision ‘to create a better everyday life for the many people’ is even more relevant today than it was 50 years ago.