IKEA Business Model | Case Study | How IKEA earns? | Complete Story
Ingvar Feodor Kamprad was born on 30 March 1926, on a small farm called Elmtaryd near the village of Agunnaryd, in the Swedish province of Småland. To most present-day Swedes, the date and the names, in a famously rural region, resound of harsher times, when Sweden was agrarian and poor. They speak of hard work, frugality and egalitarianism rooted in shared poverty – values which would eventually enter the IKEA ethos.
Kamprad began his career at the age of six, selling matches. When just ten, he criss-crossed the neighbourhood on his bicycle, selling Christmas decorations, fish and pencils.
At 17, in 1943, Kamprad’s father rewarded him with a small sum of money for doing well in school, despite being dyslexic. With it, Ingvar founded a business named IKEA, an abbreviation for Ingvar Kamprad from Elmtaryd, Agunnaryd, his boyhood home.
Two years after starting IKEA, Kamprad began using milk trucks to deliver his goods. In 1947, he started selling furniture made by local manufacturers. By 1955, manufacturers began boycotting IKEA, protesting against Kamprad’s low prices. This forced him to design items in-house.
In that vein, Kamprad unpopularly moved IKEA headquarters from Sweden to Copenhagen, Denmark, in 1973 to avoid unfavorable business taxes for his growing company. He also moved himself and his family to Switzerland to protest Sweden's increasing taxes. But the corporation is now based in the Netherlands, and Kamprad himself has since returned to Sweden.
Kamprad was also behind the simple, yet revolutionary innovation that is the flat pack. He began selling IKEA products in flat-pack form, from his own warehouses. Thus the basic IKEA concept – simple, affordable flat-pack furniture, designed, distributed and sold in-house – was complete.
The driving idea behind IKEA was, and is, that anyone should be able to afford stylish, modernist furniture. Kamprad felt he was not just cutting costs and making money, but serving the people as well.
Kamprad’s business grew. And grew. IKEA expanded throughout Sweden, to Norway and Denmark, via Germany to continental Europe, and on to the ends of the world. When IKEA opened in Shanghai, 80,000 people visited the store. Today, there are over 300 IKEA stores in the world – in 38 countries. All this time, Kamprad has never borrowed money or issued a stock.
Anecdotes about Kamprad abound. When his father complained that Ingvar slept late in the morning, Ingvar got himself an alarm clock, set it for six o’clock, and yanked away the off button. According to Kamprad, we should all divide our lives ‘into 10-minute units, and sacrifice as few of them as possible in meaningless activity.’
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