Europe is home to some of the world’s most iconic companies. Many started small to quell a single person’s curiosity before exploding into a global phenomenon. As a new resident, big, successful European brands have piqued my interest. What’s their story? How did they transform into the giants they are today? How have they sustained their legacy over time? Those are some of the questions I explore in this new series.
Most companies move with the tide–Ikea rewrites the playbook.
The Swedish furnishing company, which has become synonymous with all things at home, figured out its place in the world some 80 years ago and has stuck by that vision even when all hell broke loose.
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Kamprad’s vision was clear from day one: “Expensive solutions to any kind of problem are usually the work of mediocrity. We have no respect for a solution until we know what it costs.”
Many of the company’s choices have been astonishing in the age of modern business. It never took outside financing and shunned the idea of being publicly listed. Ikea built its fortune by selling simplistic, flat-packed furniture that people pay to assemble on their own. In exchange, the company promised top-quality cabinets and tables, erring on the side of minimalism and functionality.
Ikea’s knack for going against the grain became the cornerstone of its growth: The sticker price on some of its furniture, like the Poäng chair, is 70% cheaper now than 30 years ago.
Another decision Kamprad made early on was separating the group into two entities: One is a charitable foundation based in the Netherlands that owns most Ikea stores and manages its profits, while the other oversees the company’s retail operations.
While this ownership model shares elements with other European companies, such as Novo Nordisk, Kamprad’s single-minded focus was Ikea’s independence from demanding shareholders or inheritance spats.
“He was almost obsessed with the longevity of Ikea, and he wanted to make sure that he did everything he could do to actually enable that,” said Peter van der Poel, managing director for Ingka Investments, the investment arm of the group that owns most Ikea stores. He received the handbook when he first joined the company in 1999 as a sales manager and says he still resonates with the “timeless” lessons it imparts.
Kamprad died in 2018 as the world’s eighth-richest man. By this time, Ikea had become the biggest purveyor of home furnishing goods.
Today, Ikea is one of the top restaurant chains measured by number of customers, thanks to its cafe, which serves meatballs, hot dogs, and salmon gravlax.
To be successful in so many endeavors is no small feat. The Swedish retailer has made its presence felt globally by figuring out the fundamentals of its business early, spotting and sorting issues as they arise, and investing every penny it makes into its future.
3 things that helped Ikea conquer the world:
1. Finding its footing
Ikea would not be the company it is today without the concepts of “lista,” a relentless focus on frugality and democratic design.
Kamprad grew up in the southern province of Småland, where the history was riddled with poverty, warranting a level of thriftiness to survive.
People had no choice but to find creative ways to solve problems by making do with the bare minimum. This approach, called “lista,” guided every decision Kamprad made when expanding his business.
When it came to furniture, he resisted the urge to invest heavily in elaborate designs and craftsmanship, instead favoring a fusion of creativity and frugality.
Before this became mainstream, furniture would take weeks to deliver, and furniture makers would be responsible for bringing bulky packages to people’s homes and assembling them.
The unwitting bonus of making flat-pack and self-assembly the norm was the so-called “Ikea effect,” which caused people to feel much more attached to the furniture they put together.
But the quest for all things low-cost could have led Ikea astray and into discount piles instead of elevating it to furnishing royalty. The mantra of “democratic design” prevented that from happening. The concept leans into the fundamentals of Scandinavian design philosophies. While cost, no doubt, is a key determinant of whether a product makes Ikea’s cut, form, functionality, quality, and sustainability also matter.
Coates added that the retailer is seen as “offering one of the best price-to-style ratios in the home furnishings market,” and the “exceptionally high guarantees” make shoppers feel more confident about their purchases.
“Ikea’s success is largely driven by smart, practical design choices to accommodate most living spaces and scenarios”
2. Spot a problem, solve it
Since its humble beginnings in 1943, Ikea has evolved dramatically in size, reach, and product offerings. Despite the success on paper, in the mid-2000s, the Swedish giant went from being the disruptor to the disrupted in the furniture market.
For one thing, e-commerce became a pain point for the company, especially as the 80-plus-year-old Kamprad feared straying away from the tried-and-tested operating model.
Rivals were already making strides: Amazon’s marketplace was up and running and had become hugely popular worldwide. Subsequently, other traditional retailers began pouring money into e-commerce, raising the pressure on Ikea to create its own offering.
“Besides accessibility, experiential elements have long been a hallmark of its brand, with its physical stores often seen as the goal for a day-out retail experience,” said Sam Nguyen, senior retail analyst at market research firm Mintel, adding that Ikea focuses on “the generation of shoppers increasingly driven by convenience.”
The biggest trick to understanding Ikea’s growth puzzle is its receptiveness to shoppers’ needs.
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Perhaps the earliest evidence came from the company’s food introduction at its stores. When Ikea’s cafe debuted in 1958, the mixing of food and retail was unheard of. Kamprad argued that customers with full stomachs “stay longer and buy more,” but he didn’t want to make food Ikea’s cash cow (even today, Ikea’s hot dogs will set you back by just 85 pence in London).
Ikea’s biggest franchisee, Ingka Group, sought to reverse the damage by boosting pay packages and benefits and improving the onboarding process for new hires. By last April, voluntary attrition had dropped in many key markets, Bloomberg reported.
“While values are easy to talk about (and put on websites and in corporate material), from my observations [and] research, it is clear that these are real—and also explains Ikea’s learning culture,” said Anna Jonsson, an associate business professor at Stockholm University who studied the company for her PhD.
“Ikea values are used in all decisions Ikea makes,” she said.
3. Eye for investing
Ikea has a deliberately complex organizational structure that Kamprad crafted so that it could outlive him.
The web, although complicated, has helped Ikea run like a well-oiled machine so far and has made it one of Europe’s greatest retail successes.
Van der Poel, who oversees the Ingka Group’s investment arm from the Dutch city of Leiden, describes his job as caring for “the lifetime savings that have been accumulated in Ingka,” which amount to roughly €27 billion in assets under management.
“There is something about the Ikea culture that is sort of magic. [But] it doesn’t come for free. It takes a lot of hard work,” van der Poel said.
“There is something about the Ikea culture that is sort of magic. [But] it doesn’t come for free. It takes a lot of hard work.”
Many retail majors have entered the secondhand retail market, including fellow Swedish company H&M. In Ikea’s case, the foray will draw it closer to its 2030 goal of halving emissions in its value chain and becoming net-zero by 2050. It will also extend the lifespan of Ikea’s products before they are recycled.
Ikea has grown tremendously. Still, at its core, it resembles Kamprad’s brainchild from 1943, and it’s hard to separate his spirit from the company we see today.
The Dutch-headquartered company has gone to great lengths to ensure its ubiquity. As with everything at Ikea, the seed was Kamprad’s larger-than-life vision of creating “a better everyday life for the many people.”
That might explain why Ikea didn’t flinch when retail sales dipped 5% in its 2024 financial year compared to a year earlier. Van der Poel said the company thinks “years, sometimes even decades, with the investments that we’re taking on.”
“The uncertainty surrounding U.S. tariffs could disrupt Ikea’s global supply chain, potentially impacting pricing and manufacturing, given the retailer’s reliance on production in tariff-affected countries,” Mintel’s Nguyen pointed out.
As an octogenarian experienced with the ebbs and flows of business, Ikea has learned to future-proof itself. A company spokesperson said that despite the volatility in global trade, Ikea’s “absolute priority” was affordability.
In the increasingly complex, capitalistic business environment, Ikea emerges as an outlier with which few companies can compete in size and impact. When asked what a world without Ikea would look like, van der Poel, visibly stumped, took a few seconds before he found his words.
“It would be a world without a company that authentically aspires to make a positive difference, both in people’s lives at home, but also in the way we try to conduct our business,” he said.
Editor’s Note: This article has been updated to clarify Ingvar Kamprad’s links to a Swedish pro-Nazi group and mentions of Ikea’s brochure as catalogs, not books.
