IKEA Calvin Rehbein, Victor Bondarev, and Mina Sumaadii Dickinson State University

IKEA IKEA is a franchise-based chain of household furnishings' stores, first opened in Sweden. The owner and franchiser of the IKEA system is based in the Netherlands, and there are stores in 34 countries

IKEA CATALOGUE The IKEA Catalogue, containing about 12,000 products, is printed in 160 million copies (2006) worldwide, and distributed free of charge, through mail and stores worldwide. The IKEA Catalogue appears to meet or exceed the Bible (estimated at 53 to 100 million copies) in number of copies printed annually

WHERE IKEA GETS THE NAMES Upholstered furniture, coffee tables, rattan furniture, bookshelves, media storage, doorknobs: Swedish place names Beds, wardrobes, hall furniture: Norwegian place names Dining tables and chairs: Finnish place names Bookcase ranges: Occupations Bathroom articles: Scandinavian lakes, rivers and bays Kitchens: grammatical terms, sometimes also other names Chairs, desks: men's names Materials, curtains: women's names Garden furniture: Swedish islands Carpets: Danish place names Lighting: terms from music, chemistry, meteorology, measures, weights, seasons, months, days, boats, sailors' language Bedlinen, bedcovers, pillows/cushions: flowers, plants, precious stones Children's items: mammals, birds, adjectives Curtain accessories: mathematical and geometrical terms Kitchen utensils (cutlery, crockers, textiles, glass, porcelain, tablecloths, candles, serviettes, decorative articles, vases etc.): foreign words, spices, herbs, fish, mushrooms, fruits or berries, functional descriptions Boxes, wall decoration, pictures and frames, clocks: colloquial expressions, also Swedish place names

HISTORY

I K E A Ingvar Kamprad Elmtaryd Agunnaryd IKEA - I and K as the initials of his name, E stood for his parental home Elmtaryd and finally the A for Agunnaryd I Ingvar K Kamprad E Elmtaryd A Agunnaryd

1943 Komprad aged 17 opens his first real business 1951 first published catalogue 1958 first real IKEA store in Almhult (Smaland) 1963 first store in Oslo, Norway 1965 first store in Stockholm, Sweden 1969 Copenhagen, Denmark

IKEA IN THE WORLD There are a grand total of 247 IKEA stores in 34 countries/territories. The IKEA Group itself owns 219 stores in 24 countries (as of October 2006).

top 5 sales countries Germany 19 % USA 11 % United Kingdom 11 % France 9 % Sweden 8 % top 5 purchase countries China 18 % Poland 12 % Sweden 9 % Italy 7 % Germany 6 %

sales by region Asia + Australia 3 % North America 16 % Europe 81 purchasing by region North America 3% Asia 30 % Europe 67 %

HOME FURNISHINGS INDUSTRY Includes furniture, floor coverings, and household textiles. Over last five years growth has increased. Europe is most important geographical market.

FINANCIAL RATIOS 2004 Home furnishings Current Ratio 1.8 Quick Ratio 1.09 Inventory to Networking Capital 0.89 Net Profit Margin 2.6% Return on Assets 9.0% Inventory Turnover 10.42 Asset Turnover 3.46 Fixed Asset Turnover 26.82 Average Collection Period 37 Days

LEADING COMPANIES IKEA Group Bed Bath & Beyond Inc. Federated Department Stores Inc. Williams-Sonoma Inc. Linens’n Things Pier 1 Imports Inc. MFI Furniture Group Pic.

THE OWNERSHIP STRUCTURE AND ORGANIZATION OF THE IKEA GROUP

DEVELOPMENT STRATEGY Developing a strong and vital range Offer outstanding sales prices Improve meeting with customers Continue to reduce purchase prices and improve product quality Develop a logistic efficiency in the whole pipeline

DEVELOPMENT STRATEGY 7. Be one IKEA 6. Attract, develop and inspire IKEA’s people 7. Be one IKEA 8. Become leaner, more simplified and quicker 9. Take responsibility for suppliers, their co-workers and for the environment 10. Keep the culture of IKEA a strong living reality

LOW PRICES POLICY IKEA stores Distribution Purchasing Industry group Developing the product range

COMMUNICATION loose organizational structure began using e-mail in the early 1980s IKEA’s network is available worldwide maximizing communication efficiency, IKEA minimizes costs

CATALOG DISTRIBUTION Identify target consumer types and geographic areas for distribution of catalogue Identify types and areas with poor sales potential Increase sales return on catalogue expenditure Develop business strategy strategy resulted in an increased spend of 26% for each catalogue, which equates to an increase in sales only in the UK of £51 million

EXPANDING THE FOOD DIVISION IKEA expands its food division inverse of the strategy adopted by retail giants such as Tesco and Wal-Mart