IKEA: Brand of Many Article

Ikea - brand of the many

Ikea's provincial charm and build-it-yourself ethic mask the power and reach of a profitable global marque, writes John Simmons

For some people it's heaven; for others it's hell. The infernal side of Ikea comes through in the pandemonium at store openings (riots in Saudi Arabia, chaos in Edmonton). But some people find it divine - because the brand has democratised our living spaces.

Once we regarded furniture as family assets; tables, chairs and beds were handed down from generation to generation. Because of the nature of this process, furniture was not seen as a fashion item.

Habitat started to change that in the UK, but in continental Europe Ikea had been revolutionising home lives for many years. It made furniture fashionable, cheap and disposable. Now, from its Swedish roots, it has spread to 32 countries around the world.

In a new book, Great Ikea!, Elen Lewis explains how it happened. Ingvar Kamprad founded Ikea in the 1940s, composing the name from his own initials plus those of the places in the Swedish countryside where he grew up.

He has been officially retired now for nearly 20 years, but he remains the soul of Ikea - and one of the world's richest men. This is a fact that Ikea - the image of all things Swedish, including social democracy - finds a little hard to reconcile.

Yet the reality is that Ikea is a very successful business, and has the figures to prove it. Profit margins are 18 per cent and sales have trebled in the past decade. Yet prices have been reduced by 15-20 per cent over the past five years.

It's clear from this that people are buying the idea of Ikea; they buy the brand. Ikea's identity is founded on a commitment to good design at low prices. Thirty years ago, Kamprad set out the philosophy: 'We have decided once and for all to side with the many. What is good for our customers is also, in the long run, good for us.' He wanted to 'create a better everyday life for the majority of people'.

Thses social - almost political - aspirations are counterbalanced by an obsessive practicality and a constant drive to lower prices. It has not been easy being a supplier to Ikea; as with other current examples of successful businesses (think of Tesco and Wal-Mart), low prices to the consumer are achieved by squeezing suppliers.

But behind this unwavering toughness there has always been a flair for design and a desire to innovate. Perhaps the most significant innovation in Ikea's history came early in its existence, as an idea almost stumbled upon by its fourth employee. As Gillis Lundgren was struggling to squeeze a table into the boot of his car, he decided to take its legs off. The table, in five easy pieces, fitted - and flat-pack furniture was invented.

Now the ideas of 'flat-pack' and 'Ikea' are inseparable. The practicality of the invention meant that transportation costs for furniture could be greatly reduced - and the assembly costs of putting the furniture together could be passed on to the customer. In a sense, this seems an enormous cheek. Yet Ikea customers participate willingly because they understand their role in reducing the price they pay for furniture. If you then go on to call your bookcase 'Billy', you create an ingenuous Swedish personality as friendly as Abba's.

After that, we learn to love the more unashamedly Scandinavian Ektorp (armchair) or Tuvull (travel rug) and smile about the nomenclature while eating meatballs in the cafe. But although there is something inherently provincial in Ikea's character, there's no doubt that this is a global brand. In America, 'Ikea' has even become a child's name.

Ikea's roots lie in the Swedish protestant work ethic. The way it operates is largely to do with lowering costs, but there is also a deeply ingrained feeling that it's good for customers to pick up their own furniture, carry it home and make it themselves. There's a complicity between company and customers to make the business model work; people keep coming back for more, even though the queues for the car park keep getting longer.

That's what makes Ikea so different; it really has become the brand of the many. Crown Princess Victoria of Sweden missed the wedding of Charles and Camilla because she was opening an Ikea store in Japan. That tells you a lot about the differences between the national identities of the UK and Sweden, and also about the attitudes towards royalty and hierarchy in both countries.

But there are challenges ahead. How sustainable is this brand model as the 'Ikea-boomer' generation gets older? Can Ikea keep growing and keep reducing costs?

There are few signs yet of the home-assembled model falling apart. But we know it sometimes happens.

The facts

· 1 million customers visit Ikea every day

· The average customer makes 3.5 store visits per year

· The average age of a customer is 42

· 60 per cent of them are female

· 150 million meatballs a year are served in Ikea restaurants

· Ikea has 84,000 'co-workers' (staff)

· 20 per cent of Ikea sales are made in Germany; 12 per cent are made in the UK

· 145 million catalogues are printed in 48 editions and 25 languages

· There are 202 Ikea stores in 32 countries

The founder

· Ikea's founder, Ingvar Kamprad, travels on public transport to save money

· The Kamprads own Habitat

· 'Ikea' stands for Ingvar Kamprad, Elmtaryd Agunnaryd (the last two being the farm and village where Kamprad grew up)

· John Simmons is editor of Great Brand Stories, a series from Cyan Books exploring some of the world's iconic brands. 'Great Ikea! A Brand for All the People by Elen Lewis (Cyan Books, £7.99) is available in bookshops. Observer readers can buy a copy at the special price of £6.99 (with free UK p&p). Call 01202 665432.

http://www.theguardian.com/business/2005/jun/12/theobserver.observerbusiness4