In 1943, Ingvar Kamprad, then just 17, started a business on his family’s farm in southern Sweden selling wallets, picture frames, table runners and watches.
A few years later, he added a line of furniture. During the next six decades, the founder of IKEA was so successful in building his home-furnishings empire — now 200 stores in 32 countries — there was speculation recently that Kamprad’s net worth had surpassed that of Microsoft’s Bill Gates.
It’s easy to understand why — even if it isn’t true.
Last year, IKEA had worldwide sales of $12.2 billion, $1.2 billion in the United States. More than 310 million people visited IKEA stores. And 130 million copies of its signature catalog were printed in 23 languages.
In a market crowded with furniture stores, IKEA has carved out a successful niche selling to people on a budget. College students and young people can afford modern, designer-looking furniture without asking mom and dad for a handout.
The IKEA phenomenon got its start very simply, with a young boy — Kamprad — peddling matches to his neighbors on a bicycle.
One of his earliest insights: He could buy matches in bulk cheaply, sell them in small lots at a low price and make a profit.
At 17, Kamprad used a graduation gift from his father to start IKEA and was, for several years, its sole employee.
IKEA — a name derived from Kamprad’s initials, plus the first letters of Elmtaryd and Agunnaryd, the farm and village where he grew up — only slowly evolved into a home-furnishings store, however.
At first, Kamprad sold whatever local villagers needed. As his business grew, he introduced a mail-order catalog and turned to the county milk van for distribution.
Low-priced furniture — IKEA’s signature today — didn’t become the primary focus until the 1950s. But it was the start of what has become a worldwide retailing sensation.
Fortuitous accident
IKEA kept prices low by designing its own furniture and pioneering self-assembly. And by compactly packaging disassembled furniture, shipping costs were held down.
All this came about by accident.
In the mid-1950s, an employee was wrestling with how to get a table into a car. The employee decided to unscrew the legs. IKEA seized on the concept, and began designing furniture that could be shipped in flat packages and assembled by consumers.
Flat packaging, common today, was cutting-edge in 1956. It permitted IKEA to ship more items on one truck, cut down on storage space and save on the cost of paying drivers.
“All this makes it possible to sell things at a price most young people can afford,” said Kurt Barnard, editor of Barnard’s Retail Report.
It also has another benefit: Customers picking up their boxed purchases at an IKEA store easily can transport them home.
A unifying force
Today, experts say shopping at IKEA is one part entertainment, with its room displays and model home sets, and one part place to get home decorating ideas.
But that wasn’t the idea originally. IKEA opened its first showroom in Sweden in 1953 because it was in a price war with competitors. The opening came five years before IKEA’s first store, and was intended to show consumers the quality of its furniture before they ordered.
Throughout its history, IKEA expanded slowly. It didn’t open a store outside Scandinavia until 1973, and didn’t venture into the United States until 1985.
The excitement surrounding the recent opening of IKEA’s store in New Haven, Conn., wasn’t always there when IKEA entered the U.S. market.
For the first six years, Americans weren’t happy with some of IKEA’s products. Drinking glasses were too small. IKEA’s dining room tables were too small to hold a Thanksgiving feast, and bedsheets were produced in small European sizes.
But IKEA adapted, and says it is now selling American-size items in Europe.
All this has helped build founder Kamprad’s wealth. Kamprad, like Gates in his fabled garage, began modestly. And although Kamprad’s wealth isn’t as massive as Gates’, it is still considerable. According to the latest survey by Forbes, Kamprad is listed as the world’s 13th-richest person, with a net worth of $18.5 billion.
“But there are still five Waltons ahead of him,” said IKEA spokesman Joseph Roth, of Wal-mart’s founding family.
