If you’ve been to IKEA, then you have a strong opinion on it. It’s impossible not to.
IKEA stores are five times the size of a football field, arranged like dense mazes with thousands of furniture items all available for reasonable prices. Everything from the quirky Swedish names of the designs to the infuriating process of self-assembling furniture to the meatballs served in the cafeteria have been made into memes. Good grief – a full minute of screen time in Fight Club was dedicated to talking about IKEA as a synecdoche for consumer capitalism!
Imagine building a brand so successful that jokes about your company are met with widespread recognition. Think about what it means for a suburban, sprawling business operation to be thought of as the perfect fit for urban millennials with refined design tastes, a desire to move, and little cash to spend. Try, if you will, to imagine what $43.6 billion in revenue looks like because that’s what IKEA made in 2021.
Love it or hate it, IKEA is a massively successful business in every imaginable way.
Ability to remake the world in its image? Check.
Whereas the grandmothers of the world bought heavy brown couches in the 1970s with floral patterns, the modern consumer opens a flat box of parts and turns it into a plain, minimalist sofa with a few hex screws and an Allen wrench.
But what a bizarre turn! Why would a company that forces its customers to assemble their own furniture succeed so wildly? As it turns out, there are a lot of answers to that question.
What exactly is IKEA anyway?
Just in case you have never experienced IKEA, here’s a quick rundown. IKEA is a Swedish company that started way back in 1943. It made its way to the United States in 1985 and, as of 2022, has a presence in over sixty countries. You can by the furniture online, sure, but that’s not the way to understand IKEA.
IKEA is known for making these gigantic stores in suburban areas. You go in there and wander, following these arrows on the floor, through a series of imaginary rooms put together to showcase furniture and other items for the home. This journey can take hours at a time, and it’s no wonder that IKEA has both a cafeteria and a daycare center to keep you in the store for longer. IKEA, in a way, is like Venice – you can’t help but get lost. That’s the point.
In the process of viewing the many simulacra of possible rooms you could make, you get the idea to buy some furniture. For a cheap bedroom, perhaps you buy the sleek Malm bed. Upon your walls, you wish to affix Kallax shelving with its simple, cubic design. You covet the simple, elegant Lack tables to flank your couch. You get the idea.
But here’s the catch – everything you buy is going to come in a box. You must assemble it yourself with simplistic instructions that are both elegant in their ability to communicate complicated concepts across many cultures and frustratingly vague. The process will take hours.
Yet, in the end, it will be worth it. You home will be enhanced by genuinely good-looking furniture for cheap. Much like Costco, IKEA is one of those rare stores that manages to be competitive on price and quality at the same time.
Now sure, you could order flat-pack furniture from Wayfair all the same. But Wayfair doesn’t show you possibilities in a gigantic building the way that IKEA does. Going to the store is a huge part of the overall experience and it’s something that cannot be replicated through eCommerce. This is part of why IKEA is an order of magnitude larger than Wayfair.
5 reasons IKEA is dominating the furniture world
At this point, I’ve described what it feels like to shop at IKEA. Yet that doesn’t quite explain why it has become the phenomenon that it has. What exactly is it that makes IKEA different than, say, Ashley Furniture or Rooms To Go?
In my view, there is not one standout quality that makes IKEA a cultural phenomenon. Rather, there are a collection of different things that IKEA does either really well or very differently that, when summed up, create this very unique, inimitable beast of a corporation.
1. IKEA makes genuinely good-looking furniture for cheap
Let’s address the elephant in the room. You can’t make people assemble their own furniture and charge a fortune at the same time. People expect to save at least some amount of money when applying some DIY effort.
Yet IKEA does not skimp on quality. For example, check out the ever-popular Billy bookshelf. It is not even $100.
IKEA has to work within certain limitations. In order to get furniture into flat boxes and save on freight shipping, they have to work with flat panels and lightweight materials. It’s also an important thing to note that designers need to make furniture that can be easily assembled by others. This basically forces minimalism as a design requirement.
As it turns out, minimalism is actually really hard to do well. With so few elements in a design, every single element counts a lot. There’s nowhere to hide flaws.
IKEA hires really talented designers. That’s why you can see gushing praise for IKEA in such a wide variety of magazines and websites:
- Esquire: How IKEA Got Cööl: The Furniture Giant’s Rise from Boring Basics to Hyped Homegoods
- Architectural Digest: 10 designers share their all-time favourite IKEA products
- Financial Times: From luxury to Ikea — design with a human touch
Now combine this with the fact that furniture is typically very expensive. Millenials – many of whom are now over 40 – have less money on average than their parents. Yet they, and their Gen Z peers, still like nice things! IKEA allows younger consumers, as well as older consumers with less money, to feel like they can build a classy home. For value-oriented customers, this is a case of perfect product-market fit.
2. IKEA is ruthless about keeping costs down
Very, very few companies are capable of balancing both good quality and low prices as the same time. To do so requires considerable financial expertise. You have to make good use of cheap materials and efficient use of labor. IKEA is known for using particle board and other low-cost materials and for keeping labor costs low
IKEA takes this concept even further. The whole idea of having customers self-assemble furniture saves them money both on the labor needed to assemble in-house, and also on the cost of freight shipping. Flat boxes of furniture ship much more cheaply than fully-assembled furniture sitting in a box with a lot of empty space.
But beyond even that, using money efficiently is a part of the corporate culture. Just check out this well-cited excerpt from the Wikipedia page about founder and CEO, Ingvar Kamprad:
According to a 2006 interview, Kamprad was then driving a 1993 Volvo 240, flew economy class, and encouraged IKEA employees to use both sides of a page when writing or printing. He reportedly recycled tea bags and was known to keep the salt and pepper packets in restaurants. Kamprad had also been known to visit IKEA for a “cheap meal”, and was known for his frugal behaviour; purchasing wrapping paper and presents in post-Christmas sales.
The company he created is still known for the attention it gives to cost control, operational details and continuous product development; allowing it to lower its prices by an average of 2–3% over the decade to 2010, whilst continuing its global expansion. Kamprad explains his social philosophy in his Testament of a Furniture Dealer: “It is not only for cost reasons that we avoid the luxury hotels. We don’t need flashy cars, impressive titles, uniforms or other status symbols. We rely on our strength and our will!”Wikipedia article on Ingvar Kamprad
Careful stewardship of money is deeply ingrained into IKEA from the top down. Not only do they make good decisions on a strategic level, but by all accounts, the company is really good at saving money on a tactical level too. Those pennies add up, and make it possible for IKEA to continue selling furniture for cheap.
3. IKEA has tons of products, but seldom slips on quality
IKEA is said to have over 9,500 products in its catalog. Almost everything IKEA sells is good quality. You never really have to wonder.
This is really remarkable when you think of IKEA not as a furniture store, but as a gigantic retailer. I’m going to name a few gigantic retailers, and you tell me if you can honestly say “98% of the things in this store are good.”
Walmart. Amazon. Aldi. Costco. Alibaba. Tesco. Walgreen’s. Target. CVS.
Of those, I would only nominate Costco, and maybe Target if I’m feeling generous. And I’m not hating on any of these companies. Amazon has everything I could possibly need, and Walmart is always good when I need something cheap and local. Aldi is a great place to get groceries, and their quality is overall high, but some items are still not great. You get the idea.
Part of why IKEA’s brand sticks in our heads so much is because it’s so consistent. That’s why the name IKEA can cause people to recall such vivid imagery.
4. IKEA is part store, part maze, and part wonderland
I’ve made Costco comparisons throughout this article because doing so is nearly unavoidable. But the actual physical experience of walking into an IKEA is so similar to walking into Costco that it’s uncanny.
Both companies use enormous buildings to showcase a huge variety of products. Both places are very easy to get lost in. In each one, you can find a cafeteria there to sate your hunger. IKEA and Costco are both designed in such a way to keep you comfortable in the store for as long as humanly possible to buy as much stuff as possible.
Some people hate how easy it is to get lost in IKEA. But truth be told, if any other company designed its store like such a maze, the company wouldn’t last very long before going out of business. IKEA gets away with it because there is something wonderful and bizarre about being able to walk through imaginary living rooms and kitchens. It’s like getting to peek into the lives of others, getting see the personal stuff that you don’t normally get to it. IKEA gives you a way to imagine lives that you could be living.
That kind of customer experience is rare, though you may get the same feeling walking through a hardware store like Home Depot or Lowe’s. But combine this unique experience with low prices, quality, and consistency, then you have a powerful blend.
5. The act of furniture assembly makes you appreciate it more
The last factor that makes IKEA so unique and successful should actually be working against it. Truth be told, the idea of flat-pack furniture to be assembled by the customer was probably made as pure cost decision. “Let’s just find a way to save on shipping and labor, claim it’s a way to save the customer some money, and call it a day.”
That would be all well and good, but a funny thing happens when people put effort into something. Consider the invention of cake mix by General Mills. Initially, cake mix was made to where you just put the mix and some water in a pan and baked the cake. It didn’t do so well on the market.
At the time, it was believed the housewives so commonly tasked with baking in that era “saved so much time and effort when compared with the traditional cake baking routine that they felt they were deceiving their husbands and guests.” General Mills then revised the cake mix, requiring bakers to add an egg.
According to Psychology Today, the simple requirement of adding an egg made the bakers feel more accomplished. They appreciated their work more. The cake mix sold very well.
IKEA furniture is kind of like the cake mix. It’s a real pain to assemble their furniture. The instructions are confusing, and will nearly inevitably result in the assemblers fighting with one another. Yet it’s hard not to feel some measure of pride after putting the furniture together. Then the painful feelings of assembly, resolved ultimately in a finished piece of furniture, are largely forgotten and replaced.
When the furniture is finally assembled, the purchasers feel accomplished. They want to be extra careful not to spill anything on it or otherwise damage their couch or bookshelf or whatever it is they made. Suddenly these inexpensive objects become imbued with additional human meaning. That creates a bond between the purchaser and their purchase that can’t be replicated.
There is no company like IKEA in the world. IKEA makes an enormous amount of money and evokes vivid, passionate responses – both positive and negative – from just about anyone who hears the name.
Its success cannot be easily chalked up to one factor. Rather, IKEA’s competitive advantage is built on many pillars: low prices, good quality, consistency, a unique in-store experience, and – strangely enough – the pride of self-assembling furniture.
While you may not wish to create the next IKEA, you can still take lessons from its success. What can you do today to make your brand experience more unique and consistent? Ponder these questions next time you’re bonding planks of particle board with hex screws and an Allen wrench.