IKEA is a household name for DIY furniture all around the globe. However, most people don't know what the name actually means. It's an acronym standing for Ingvar Kamprad Elmtaryd Agunnaryd. Ingvar Kamprad founded the company in 1943 when he was only 17, while Elmtaryd was the name of the farm he grew up on, located in the Swedish village of Agunnaryd, which accounts for the final 'A'.
By 2015, the company's late founder Ingvar Kamprad was said to be worth $58.7 billion (£42.1bn), according to Bloomberg. He retired from the business in 2013, passing control on to his youngest son Mathias. Kamprad, who was famous for his frugal ways, died in January 2018 at the age of 91. Between 2005 and 2010, Forbes estimated that Kamprad was one of the 10 richest people in the world.
The coronavirus pandemic has pushed shoppers online, and IKEA saw a 60% surge in online sales between August 2019 and August 2020. In the 2020 financial year, e-commerce sales accounted for 16% of the company’s total sales, which is a 10% increase compared to the previous year.
An afternoon of shopping at IKEA can be transformed into a fun family day out – especially if you pay a visit to a branch’s cafeteria to devour a plate of traditional Swedish Köttbullar. IKEA sells a whopping one billion meatballs per year. Vegetarians don’t have to miss out either – the firm launched a tasty range of Veggie Balls in 2015, while 10 million Veggie Dogs were consumed in the year after their launch in 2018, which would be enough to cover 1,500 kilometres if lined up one after the other.
IKEA made its first foray into foreign territory when it opened in Oslo, Norway in 1963. In 2019, over one billion visits were made to IKEA stores in 54 markets. The only populated continent without an IKEA store is South America, and that was set to change in 2021 with a new store opening in Santiago, Chile. The store will now open in 2022 due to setbacks caused by the coronavirus pandemic. There are also plans to franchise with Chilean department store Falabella, with at least nine new stores selling IKEA goods due to open over the next 10 years.
IKEA first made its way to Japan in the 1970s, however 12 years later it closed its operations there. Its failure was put down to a lack of products targeted to the country's smaller-than-average homes and a reluctance among the Japanese public to build their own furniture. Learning from its mistakes, IKEA opened its first wholly-owned store in Funabashi in 2006 and now has 12 stores across the nation, with the latest positioned next to Shibuya Crossing, the world’s busiest road crossing.
The largest IKEA store in the world is also set to be in Asia, with a gigantic 65,000-square-metre shop set to open its doors in the Philippines in 2021. IKEA Pasay City will be the first store in the southeast Asian country, and it will sit in Manila Bay, sprawling across 150 basketball courts-worth of space. The area will also include a warehouse, an e-commerce hub, a call centre and, of course, an IKEA restaurant. IKEA Pasay City is due to open this year, but the COVID-19 outbreak has pushed back the launch.
The company that runs the Israeli franchise created a woman-free version of its catalogue for the ultra-orthodox population in Israel in 2018, which was available alongside the standard edition. It was asked by IKEA in Sweden not to run such an issue again, as it went against the company's equal rights policy. In February 2019 it was announced that IKEA would be sued for $4 million (£3.1m) for the misstep, which was described as having “severely insulted, angered and traumatised” customers who had received the catalogue.
The year 2017 saw the arrival of IKEA pet products in stores in the animal-loving nations of Japan, France, Canada, the US and Portugal. Cats and dogs in an increasing number of countries can now have their very own IKEA sofa, bed, dishes and toys. Felines can even get their paws on their very own IKEA house. A shrewd move by IKEA, as the pet market is set to see huge growth by 2025, according to recent research by Global Pet Furniture Market.
It can be a challenge to get customers to identify with global brands, but an IKEA store in Valladolid, northern Spain captured customers’ imaginations in 2011 when it asked them to come up with a name for a nearby street that was part of the company’s land. ‘I’m Missing a Screw Street’ (Calle Me Falta un Tornillo) won 54% of votes and quickly went viral as social media users groaned in unison at the frustrating moment of realising that your IKEA DIY efforts have been thwarted by one pesky missing piece.
IKEA has moved from making home furniture to making actual homes themselves. The BoKlok home is not quite flat-packed, but it is largely prefabricated. As a result of a partnership between IKEA and Swedish construction company Skanska, there are now more than 12,000 completed BoKlok homes in Sweden, Norway, Finland and the UK, all of which were built in a factory in Estonia. The companies have even collaborated with the Queen of Sweden in a project to create housing suitable for elderly people and those suffering with dementia in IKEA's homeland.
The brand's biggest markets, based on sales value, are Germany and the United States. The latest figures show Germany made up 15% and the US another 13% of IKEA's sales worldwide in 2019. France takes third place with 8%, followed by the United Kingdom with 7% and China with 6%. Overall though Europe is the largest market, making up 71% of sales.
The IKEA Group success shows on the bottom line. The latest figures show that sales were €35.2 billion ($42.3bn/£30.4bn) in the 2020 financial year. The group made a €1.7 billion ($2bn/£1.5bn) net profit in this period. The company has done better than most during the current crisis and has even been able to pay back furlough scheme money it had used to pay staff while they were unable to work during the peak of the pandemic.
In 2017 the European Commission launched an investigation into whether IKEA may have avoided paying tax bills adding up to €1 billion ($1.17bn/£903m) over a six-year period via its franchise business, which is based in the Netherlands. The company insists that it had always paid the correct amount of tax, and the investigation is still ongoing.
As of 2019 there were 211,000 employees or co-workers, as IKEA calls them, working for the company across the world. IKEA's goal is to employ equal numbers of men and women in leadership positions. Currently more than half of its workforce is female, and women make up 49% of managerial positions. The company is also working hard to close the gender pay gap, and revealed that across its UK retail operations men were being paid 6.9% more than women, which is significantly lower than the 16.4% average across the industry in Britain.
The IKEA Family loyalty card, which launched in 1984 and provides monthly offers and exclusive discounts, now has more than 110 million members. It grows by 10 million every year, equating to about 30,000 every day. IKEA Family members get additional perks in-store, such as free tea and coffee and free home furnishing workshops.
The Billy bookshelf, in its various incarnations, remains the retailer's most sought-after product. Designed by Gillis Lundgren, it first hit stores in 1979, and had sold over 110 million units by 2019. Considered an iconic piece of furniture, it even inspired the Bloomberg Billy Bookcase Index, which financial data company Bloomberg uses to illustrate exchange rates through global bookcase price comparisons.
In September 2017, IKEA moved into virtual reality with the launch of IKEA Place, an augmented reality app that allows people to virtually place furniture in their homes to help them visualise what it will look like in situ. Based on Apple’s ARKit technology, all of the products in IKEA Place are 3D and true to scale. New features were added to the app in 2019, including adding multiple pieces of furniture to your on-screen room at once, and finding furniture similar to what you already have just by pointing your phone at it.
IKEA's first television advert featuring a gay couple was screened in the US in 1994. The ad, which showed a male couple shopping for dining tables, was run late at night in New York, Washington DC and Philadelphia. It made headlines and became a controversial talking point.
The Ingka Group, IKEA’s holding company, currently has an impressive portfolio when it comes to renewable energy, including 547 wind turbines across 14 countries and 715,000 solar panels between two solar energy farms in the United States. In September, IKEA Finland completed its acquisition of three new wind farms in the country. The company’s wind farms in Finland are now capable of covering the energy consumption of 104,000 households and are part of the international target of using 100% renewable energy across 30 of its operating countries by 2025.
Being one of the world's largest producers of wood products, IKEA – which uses about 1% of the world's wood supply – felt a moral responsibility to promote and use sustainable wood. In Romania, for example, the retailer owns 50,000 hectares of FSC-certified forest, making it the largest private landowner in the country. By the end of last year, around 97% of the wood used in IKEA products came from recycled, wood and IKEA plans for 100% of the wood used in 2020 to be sustainable.
IKEA has been selling solar panels in selected territories for several years, but in 2018 it took its commitment to green energy a step further by launching solar battery storage in the UK. Produced in conjunction with Solarcentury, the new battery unit allowed home owners to store the excess energy generated by their solar panels, doubling the amount of energy the average home could use. Operations closed down just one year later however, when the UK’s feed-in tariff, whereby people were paid to produce their own electricity, shut down.
At the beginning of the year, IKEA launched a new product range made of recycled ocean plastic. The waste used for the Musselblomma series (a bag, two cushion covers and a tablecloth) was partly collected by Spanish fishermen in the Mediterranean Sea and went on sale in Spain and Italy. The company has also committed to using only recycled or renewable plastic, sourced from corn or sugar cane for instance, for its furniture by 2030.
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IKEA is making huge amounts of progress when it comes to reducing its environmental impact, and its next step is turning its Adelaide store in Australia “energy positive”. The development is part of IKEA’s energy transformation project, where the company plans for all of IKEA Australia’s energy to come from clean sources, in partnership with local renewable energy providers such as Planet Ark Power and Epic Energy. The store will be kitted out with a grid-connected solar and battery combination, which will create more than 70% of the store's electricity.
IKEA is expanding its buy-back and resale scheme in the UK and Ireland to try to reduce the amount of old furniture going to landfill. Following trials in several cities late last year, IKEA is now rolling out the scheme where unwanted IKEA pieces such as old Billy bookcases can now be traded in at stores in exchange for vouchers, which will be worth up to 50% of the original price depending on the furniture’s condition. Everything traded in will either be resold or recycled. The scheme, which is already in operation in 27 countries including Australia, hopes to encourage more sustainable living and will help IKEA become 'climate positive' by 2030.
To mark US loyalty scheme the Family Program's 10th anniversary, IKEA is currently offering a limited-edition Store in a Box, which "brings together the sensory experiences of visiting an IKEA store all in one compact box." The box includes a candle scented with the firm's famous meatballs for that truly authentic experience.
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