Inside IKEA: The Wonderful Everyday

IKEA, the world’s largest furniture brand, has transformed from a small Swedish enterprise into a global manufacturing powerhouse.

The brand's commitment to efficiency and sustainability has cemented its position at the forefront of global manufacturing.

By leveraging a sophisticated supply chain, IKEA manages a vast array of products, balancing high quality with cost-effectiveness.

The global furniture market, projected to be worth approximately US$800bn in 2024, is reflective of the scale and impact of IKEA’s operations, and the room it still has to grow. 

The company’s global reach is supported by its robust production strategies, which include regional manufacturing hubs, and adaptability in a rapidly evolving market.

The birth of the flat-pack

IKEA, founded by Ingvar Kamprad in 1943 in Småland, Sweden, began with Kamprad selling pens and wallets.

In 1948, he started selling furniture, marking the birth of IKEA’s product range. Kamprad focused on low prices without sacrificing quality, as explained in the 1948-1949 brochure “ikéa-nytt”: “Our low prices – by far the lowest in the land – are possible thanks to a high turnover, direct delivery from the factory and very low overheads.”

This principle remains central to IKEA today.

In 1953, IKEA adopted flatpack furniture, reducing transportation costs and damage rates. This innovation led to the popularisation of self-assembly furniture.

The concept of Democratic Design, devised by IKEA in 1995, integrated price, quality, function, form and sustainability in product development.

“Democratic Design is a tool we use when we develop and evaluate the products we put into our range," Sarah Fager, Senior Designer at IKEA of Sweden AB explains.

"It has five dimensions, which are function, form, quality, sustainability and low price. When there is a balance between all five, we consider that the design is democratic.”

According to Sarah, an IKEA product that embodies Democratic Design and balances these five key dimensions is the FLISAT desk designed for kids. 

"The price is fair, it can be height-adjusted so it grows with the child, and it has smart functions such as a tilted tabletop and paper holder," Sarah says.

"We hope these functions encourage children to be creative.

"It’s very high quality and has a classic form so that it can be loved and passed on to future generations.

"The material is sustainable and renewable – wood.  It’s quite simply Democratic Design.”

IKEA also ventured into food services, opening its first fully equipped restaurant in 1960 to ensure customers remained in stores during lunchtime, boosting sales.

IKEA expanded beyond Sweden in the 1960s and 1970s, reaching Denmark, Norway, and many countries outside Scandinavia.

To ensure long-term independence, Kamprad separated retail ownership from the IKEA brand, creating a franchise system in the early 1980s.

The first edition of "ikéa-nytt" (IKEA News) was published in spring 1948, initially targeting retailers with promises of good quality at low prices.

Ingvar Kamprad wrote all the text, focusing on items like pens, watches, and nylon stockings.

By the autumn 1948 issue, furniture was featured prominently.

In 1949, Kamprad targeted the general public with a mass mailing through the farming paper Jordbrukarnas Föreningsblad, emphasising low prices due to high turnover, direct factory delivery, and low overheads.

Five issues of "ikéa-nytt" were released between 1948 and 1952, with the final issue marking IKEA's shift to exclusively selling home furnishings. 

The IKEA Catalogue, first published in 1950, was also a marketing cornerstone until its final print in 2021.

To bring its homeware to life, IKEA collaborates with more than 1,200 local furniture suppliers globally, alongside 100 food and 275 transport suppliers.

The main supplier countries are China, Poland, Italy, Germany and Sweden. Ingka Group is the largest of IKEA's 12 franchisees, accounting for approximately 90% of total sales.

It encompasses three main areas:

• IKEA Retail, with nearly 400 stores in 31 markets
  
• Ingka Centres, which establish shopping centres anchored by IKEA stores across Europe and China
  
• Ingka Investments, focused on sustainable growth by partnering with value-aligned companies

Overcoming adversity to deliver home comforts

Despite shipping disruptions and increased costs from attacks on ships in Yemen, IKEA plans to continue with price reductions.

Jesper Brodin, CEO of Ingka Group, stated at the World Economic Forum in Davos that the company is committed to lowering prices, having invested over US$1.1bn in price cuts from September to November, and aims to further reduce prices in 2024.

He noted that higher transport costs are a concern but expects significant deflation in the supply chain.

Emphasising support for customers over profits, he remarked, "This is not a year for us to optimise profits. This is a year to try to navigate on a thinner profit, but to make sure that we support people."

IKEA also aims to increase production in the US and the Americas due to shipping disruptions and a shift away from seamless global trade.

Susanne Waidzunas, Global Supply Manager at Inter IKEA, highlighted efforts to boost the production footprint in North America, noting opportunities in South and Central America and the US.

Currently, about 10% of IKEA products sold in the Americas are locally produced.

Inter IKEA is considering regional production closer to the US, spurred by recent supply chain disruptions and tensions between the US and China.

Susanne comments, "We need to get used to a more volatile and, I would say, dynamic world," indicating a strategic shift to reduce dependencies on specific countries and trade routes.

Manufacturing greener homeware for the future

One example of IKEA's consistency despite ongoing challenges is the SILVERSIDA series, which gives ceramic production waste a new life, transforming factory waste into brand new tableware.

Most ceramics are not recycled due to their durability and heat resistance, making disposal challenging.

With IKEA's aim to use only renewable or recycled materials by 2030, innovation in ceramics is essential.

Four years ago, a supplier in Romania proposed using ceramic waste after the second firing, which is harder to recycle due to stronger chemical bonds.

By grinding defective ceramics and adding them to new raw materials, waste can be diverted from landfill.

“It took several years to develop SILVERSIDA because creating a good quality product from this waste and making the production flow scalable wasn’t straightforward,” says Karin Engquist, a Product Design Developer. The SILVERSIDA series now comprises 65-70% internal factory waste, potentially paving the way for post-consumer ceramic recycling.

Henrik Preutz, an IKEA in-house designer, crafted the SILVERSIDA series to be durable and visually appealing, with expressive blue splashes adding a playful, contemporary look.

“It’s an amazing feeling to be able to make a change, and to do so on a large scale,” says Karin.

IKEA plans to cut emissions by 50% by its 2030 financial year, up from its previous 15% target, which it already exceeded in 2023.

Inter IKEA, which manufactures IKEA products and acts as franchisor to store owners, aims to reduce absolute greenhouse gas emissions across the entire value chain, from raw material production to product disposal.

The new 50% reduction target is compared to the 2016 financial year, while the prior 15% goal was set in 2017. The company achieved a 12% emission reduction in the latest financial year as more manufacturing facilities switched to fully renewable energy.

"It's still going to be challenging and a lot of hard work, but there is at least a realism in the goal of 50%," says Par Stenmark, Chief Sustainability Officer at Inter IKEA.

Emissions in the 12 months through August 2023 totalled 24.1 million tonnes of CO2 equivalent, down from 27.2 million tonnes in the 2022 fiscal year, and 22% lower than in 2016.

An additional 142 IKEA or supplier factories switched to 100% renewable electricity, bringing the total to 408.

IKEA’s use of raw materials like wood accounts for 45.9% of emissions, with product use in homes at 16.1%.

Emissions from materials fell by 17% in 2023, partly due to decreased production. IKEA began using glue made from industrial corn starch in Lithuania to replace petroleum-based glue.

"We are stepwise introducing it in production because availability is not really high at the moment," Par comments.

IKEA aims to reach net-zero emissions by 2050, avoiding carbon offsets, and has submitted its new targets to the Science Based Targets Initiative.

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