9 -7 2 0 -4 2 9

JUNE 16, 2020

JUAN ALCACER

CYNTHIA A. MONTGOMERY

EMILIE BILLAUD

VINCENT DESSAIN

What IKEA Do We Want?

Over 75 years, IKEA—the iconic firm founded by Swedish entrepreneur Ingvar Kamprad—had
conquered the household goods sector with its ready-to-assemble flat-pack furniture. Yet, as it
celebrated its anniversary in 2018, with revenues of $43 billion from 422 stores worldwide, IKEA was
undergoing a significant transformation. Not only was it mourning the death of its charismatic founder,
it was also being challenged by the rise of online shopping and changing consumer habits. In addition,
IKEA was preparing for a future when it would likely serve increasing number of customers who
would have lower incomes and less space in their homes. 1 As Torbjörn Lööf and Jesper Brodin—
respectively the CEOs of Inter IKEA (IKEA’s worldwide franchisor) and Ingka (IKEA’s largest
franchisee)—were taking over the orphaned firm, they knew they had to step out of their comfort zones
and embrace new strategic initiatives. But which initiatives, executed when and how, would enable
IKEA to achieve its goals in a way that was profitable while creating an IKEA they would want to pass
on to the next generation of co-workers and customers?

IKEA’s Business Model History

A native of Småland, a rural region in southern Sweden, Kamprad reportedly began selling matches
to neighbors at the age of five and soon expanded his offering to include Christmas cards, wall
hangings, seeds, and other miscellaneous items. 2 In 1943, at age 17, he launched a mail-order business 3
named IKEA after the initials of his name (IK), the farm he grew up on, Elmtaryd (E), and his
hometown, Agunnaryd (A). 4 In 1948, Kamprad diversified into furniture 5 after realizing that younger
Swedes increasingly preferred to purchase rather than inherit furniture. 6 Despite this growing demand,
agreements between furniture manufacturers and retailers reportedly kept furniture prices high. 7 To
attract farmers and working class customers, 8 Kamprad concluded that he had to offer quality furniture
at much lower prices than his rivals. 9 Produced by local manufacturers in the forests close to his home,
Kamprad’s first product line included an armchair, coffee table, sofa bed, and chandelier. 10 All pieces
were given names, as Kamprad’s dyslexia made it hard for him to remember product codes. 11 Unlike
traditional retailers who offered a wide array of styles, Kamprad embraced the streamlined
minimalism of Scandinavian design. He also offered standardized products rather than traditional
made-to-order items that required long lead times. Both approaches lowered his costs of production,

Professors Juan Alcacer and Cynthia A. Montgomery, Assistant Director Emilie Billaud, and Executive Director Vincent Dessain (HBS Europe
Research Center) prepared this case. It was reviewed and approved before publication by a company designate. Funding for the development of
this case was provided by Harvard Business School and not by the company. HBS cases are developed solely as the basis for class discussion. Cases
are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.

Copyright © 2020 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685,
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 720-429 What IKEA Do We Want?

savings he passed on to consumers in the form of low prices. As a result, IKEA sales were so good that
Kamprad decided to focus exclusively on furniture. 12

In 1951, Kamprad published the first annual IKEA furniture catalogue. Threatened by the
company’s unexpected success and undercutting of prices, competitors retaliated with a set of price
wars. Soon margins in the industry fell, followed by declines in quality standards. 13 As a result, mail-
order trade started to suffer from a bad reputation. To alleviate customers’ fears, Kamprad opened a
showroom in Älmhult in 1953, where customers could physically interact with the company’s products
before buying them—a novel approach at the time. When IKEA subsequently started to exhibit and
sell its products at home furnishings fairs in Sweden, a tightly knit cartel called for a boycott, and
banned IKEA and Kamprad personally from the fairs. 14 Kamprad reportedly resorted to measures such
as sneaking into one fair by hiding under a carpet in the back of a friend’s car. Once inside, no one
dared to throw him out. 15 Exasperated competitors pressured local suppliers not to sell to IKEA. Those
who continued to supply IKEA reportedly made deliveries at night in unmarked vans. 16 To secure
supplies, Kamprad started to source cheaper goods from manufacturers in communist Poland
instead—an unusual and risky move at the height of the Cold War. 17 “IKEA resembles the monsters of
old times,” a rival said. “If we cut one of its heads, it soon grows another.” 18

In this period, Kamprad generated other ideas that became central elements of IKEA’s business
model. In 1956, after observing an employee take the legs off a table to fit it into the back of a car, 19
Kamprad started to produce and sell IKEA furniture in flatpacks. While flatpack itself was not a novel
concept, Kamprad recognized its potential for slashing transport and storage costs, 20 allowing IKEA to
lower its prices further. In 1958, Kamprad opened IKEA’s first store on the outskirts of Älmhult, where
land was cheap, and built a large parking lot, betting that customers would be willing to drive a
distance for better prices. 21 After noticing that many visitors left without buying, he opened a
restaurant and a supervised children’s playroom within the store—turning a visit to IKEA into a day
trip. 22 In time, he added small but higher-margin 23 household items—such as kitchen utensils, lamps,
and rugs—making it far less likely that customers would leave empty-handed. 24 When Kamprad
opened a second store outside of Stockholm in 1964, it generated so much traffic that employees could
not keep up with customer orders. To reduce lines, the store allowed customers into the storage area
to pick up their own products. 25 This self-service concept further reduced store costs and became the
company norm in all stores. 26 Innovations in the supply chain mirrored innovations in the stores. IKEA
placed large orders with suppliers to lower its procurement costs. 27

Between 1965 and 1973, IKEA expanded geographically, opening five stores in Sweden, one in
Norway, and one in Denmark. The first stores outside of Scandinavia were in Switzerland (1973) and
Germany (1974), 28 followed by Australia, Canada, Hong Kong, and Singapore later in the 1970s. IKEA
owned and operated most of the new stores, but occasionally local franchisees did so in non-European
markets. Most franchise deals arose when groups approached IKEA directly and offered their services
based on their networks and demonstrated ability to thrive in their economic contexts. (See Exhibit 1
for more details on IKEA’s development over time.)

IKEA’s Organizational History

Over time, Kamprad worried that IKEA’s ownership structure neither ensured the company’s
continuation after he would no longer be able to lead it, 29 nor preserved cash for growth due to
Sweden’s high taxes, 30 which at one point exceeded marginal rates of 100%. 31 In 1986, Kamprad set up
two separate firms: Inter IKEA owned the rights to the IKEA brand, patents, and business processes—
considered the IKEA concept—while Ingka owned and managed the existing stores, furniture design,

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 What IKEA Do We Want? 720-429

manufacturing, procurement, and logistics. The two entities operated under a franchisor-franchisee
agreement independent of Kamprad whereby Ingka received use of the IKEA brand and concept in
return for a royalty fee 32 equal to 3% of Ingka’s annual turnover. Each operated from Dutch
headquarters, in Delft (Inter IKEA) and Leiden (Ingka), but were owned by separate non-profit
foundations in Liechtenstein (Inter IKEA) and the Netherlands (Ingka). 33 When Kamprad stepped down
as chief executive in 1986, two separate boards and management teams were hired. 34 (See Exhibit 2 for
IKEA’s structure.) The franchise setup was unusual as both the franchisor and the franchisee originally
came from the same company. Some argued that the structure was unclear: while Inter IKEA and Ingka
were officially two separate entities, Kamprad’s family sat on both boards and executives moved from
one firm to another. 35 However, IKEA executives noted that Kamprad saw the structure as more of a
pragmatic choice.

Following the restructuring, Ingka continued IKEA’s geographic expansion to the U.S. (in 1985),
U.K. (1987), Italy (1989), Poland (1990), and China (1998). In most countries outside Europe, such as
Saudi Arabia (1983), Taiwan (1994), Malaysia (1996), and Turkey (2005), new stores were owned and
run by separate franchisees. This structure soon became known as “one brand and many companies.” 36

Culture and Values

Kamprad looked for ways to preserve IKEA’s culture as it grew globally. In 1976, he laid out the
company’s business concept, product range, and pricing philosophy in “The Testament of a Furniture
Dealer,” a manifesto that captured what he described as “the essence of our work”:

To create a better everyday life for the many people by offering a wide range of well-
designed, functional home furnishing products at prices so low that as many people as
possible will be able to afford them. We have decided once and for all to side with the
many. What is good for our customers is also, in the long run, good for us. 37

Kamprad emphasized that the many people IKEA would serve usually had limited financial
resources, and that the first rule was to “maintain extremely low prices. But they must be low prices
with a meaning. We must not compromise either functionality or technical quality.” 38 Forty-five years
later, Kamprad’s text remained required reading for all IKEA workers. 39 (See Exhibit 3.)

Kamprad created an informal, non-hierarchical, team-based environment where all employees were
called “coworkers,” and he never stopped visiting the stores to keep in touch with the teams and
customers. 40 Kamprad’s own frugality, hard work, and modesty had a strong impact on IKEA’s
culture. 41 He eschewed unnecessary luxuries by taking public transport, staying in budget hotels, and
eating lunch in IKEA canteens. 42 Kamprad was once refused entry to a gala because he had arrived by
bus to pick up his “Businessman of the Year” award. 43 His simple and down-to-earth lifestyle soon
inspired the rest of the firm. At both the store and head office levels, employees wore informal dress,
addressed one another by first name, and drove modest cars. 44 Even the most senior managers could
not travel first class. They shared hotel rooms and spent one week a year working in the stores. 45

It was a culture that continued to thrive at IKEA. In 2019, an executive remarked:

It is one of the strongest cultures that I have lived in my life. The culture goes beyond
a code of conduct. It’s a way to live and a mission in life. One could even go as far as
saying that it’s almost like a religious belief or a faith. It manifests in authenticity and in
the type of people that work here: very good-hearted, collaborative, nice people that are
committed to have less egocentric or selfish careers and want to have an impact in the

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 720-429 What IKEA Do We Want?

world. This is bigger than a company. It’s a family. The culture is very rooted in Swedish
values such as simplicity and honesty. Trust is the essence of everything. So, when
somebody says: “I will do something,” then the expectation is that the person will.

To maintain a sense of family and community, the company hired for fit with IKEA’s culture. An
executive recalled his own recent recruitment: “A considerable part of the job posting was about who
you were as a person. It was clear that values were just as important as skills.”

IKEA’s Success Formula.

IKEA relied on an efficient supply chain and on scale economies to “provide quality furniture at
affordable prices,” a process it referred to as “democratic design.” At IKEA, democratic design meant
that product design for each new item had to meet four criteria: affordability, sustainability, good
design, and functionality. The price of a product was determined before it was even made. New
product development took two years on average and, from the beginning, included a team of designers,
marketers, and procurement experts who worked to minimize material, packing, and transportation
costs. 46 This approach allowed IKEA to minimize both cost and assortment complexity. Fourteen
designers based in Sweden oversaw the product development process, assisted by a small number of
external design consultants. The firm introduced 2,000 new products annually into a product portfolio
of 9,500 items (known as the IKEA range).

Failing to “act locally” was an issue IKEA had faced earlier during its global expansion. In 1986,
IKEA withdrew from Japan after it did not adjust its product portfolio to small living spaces there. The
firm faced the opposite challenge in the U.S., where customers who found European-sized drinking
cups too small, bought IKEA flower vases to drink from instead. Learning from these experiences,
about 20% of the IKEA range aimed to fit local tastes, cultures, countries, and seasons in 2019.

IKEA bought production capacity rather than product quantities 47 to create incentives for suppliers
to invest in dedicated facilities that produced large volumes at low costs. “Volume in itself protects our
supply chain because there's no other brick and mortar player of our size. Competitors will not have
the capability to build a highly rational, mass production, tailor made, specialized supply chain that
reduces costs in 20% to 30%,” said Per Berggren, industrial strategy manager at Inter IKEA. The firm
only worked with manufacturers that could deliver its product specifications at its procurement
prices, 48 and prioritized long-term relationships—lasting 11 years, on average 49—with about 1,000
suppliers in 51 countries. 50 It offered suppliers technical and financial support to help upgrade factories
with modern technologies, achieve safety and technical standards, and invest in new assembly lines. 51
IKEA also often partnered with unconventional suppliers, for example, using a shopping cart maker to
manufacture chairs, a ski maker to make tables, and a shirt manufacturer to make cushion covers. 52 In
2019, around 600,000 people worked for IKEA’s tier-one suppliers; millions more worked in its
extended value chain. 53 That same year, IKEA’s own manufacturing facilities accounted for up to 10%
of the firm’s total production. 54 European suppliers provided 60% of IKEA products. 55

After determining the optimal sourcing strategy for each market based on the lowest total landed
cost, IKEA Supply, a Switzerland-based subsidiary, delivered finished products in flatpacks to
franchisees. For instance, IKEA Supply shipped products from Europe to sell in the U.S. because sales
volumes there remained too low to justify U.S. sourcing.

Retail operations aimed to keep costs down and drive volumes up. The IKEA retail concept was
essentially a big blue box store outside of a city center. (See Exhibit 4 for an illustration.) Stores were
designed to route customers past nearly every item IKEA offered. 56 This meant that customers often

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 What IKEA Do We Want? 720-429

spent two to three hours inside—far longer than in rival furniture retailers. 57 Increased exposure
prompted impulse buys: some 60% of IKEA purchases reportedly were unplanned. 58 Although
customers often described it as a maze, each IKEA store was well organized: a lower level featured
household goods—bedding, dishes, towels, etc.—that customers could put in a shopping cart or bag;
an upper level featured room mockups showing integrated arrangements of IKEA furniture. A day-
care at the store entrance and a restaurant on the upper level complemented the customer experience.
Customers interested in purchasing furniture items first noted their names and storeroom locations
before picking them out of the corresponding warehouse bays, which were located between the display
showroom and IKEA’s bank of checkout registers. 59

IKEA’s self-service and self-assembly practices did more than save money. 60 Self-selection meant
that customers did not wait weeks to get their products delivered, for example. Further, to some
customers, the overall perceived value of IKEA furniture also increased from the satisfaction they
gained from assembling the products themselves. 61 Lastly, consistency in the stores created a
homogenous IKEA shopping experience. 62 “Wherever you go, Ikea looks the same,” a manager said.

Clouds on the Horizon?

In 2013, Torbjörn Lööf became the CEO of Inter IKEA, the worldwide franchisor and owner of the
IKEA concept. Raised in a small village in the Småland region, Lööf had worked for IKEA for almost
25 years, holding a variety of positions in areas such as purchasing, supply chain, and product range.
Looking back on the period when he became CEO, Lööf said: “Although sales were going well, costs
were going in the right direction, and new product launches were successful, we [nonetheless] had this
feeling that we were not in a good place.”

Specifically, Lööf identified three problems. First, Kamprad was not getting any younger. While no
longer in charge of day-to-day operations, he still made major decisions and wielded influence in the
company. Lööf thought employees were concerned that IKEA might lose its compass without
Kamprad’s guiding light. Second, the legal structure was too complex. Ingka was a franchisee of Inter
IKEA, but Lööf observed that it operated “more like a stand-alone retailer, deciding its own product
lines and controlling the full supply chain,” 63 an approach that was no longer serving the system well.
Third, the retail industry was entering a new era marked by the rapid expansion of e-commerce players,
new technologies, and evolving consumer behavior in the digital age. Some thought that IKEA was no
longer fit for long-term growth in this challenging environment. “We are not a new product offering
or a new technology. We sell desks and chairs,” Lööf said. “How will we survive in the future?”

To better understand customer needs and help the company craft a more compelling strategy, in
2014 Lööf recruited Anneleen Waterloos, a seasoned manager from Procter & Gamble. Crucial data
that Waterloos collected thereafter about IKEA’s performance and brand perceptions revealed
remarkable strengths about the firm, but also a number of important issues. (See Exhibit 5.)

Challenges in the Field: Europe and the U.S.

In 2018, Ingka (IKEA’s largest franchisee) generated 71% of its global revenue in Europe, 18% in the
Americas, and 8% in Asia. 64 (See Exhibit 6 for top five countries by revenue and other selected financial
data.) In its home country, Sweden, IKEA had a 25.9% market share; penetration was much lower in
most other countries. (See Exhibit 7 for IKEA’s market share and an overview of other industry
players.)

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 720-429 What IKEA Do We Want?

While the opportunity for growth in traditional markets looked appealing, Waterloos’ report
suggested that it could be difficult to achieve. As the company’s markets matured, earnings growth,
same store purchases, and number of customer visits were slowing. Several factors contributed to these
challenges. First, a number of these markets were quite competitive. Second, the emergence of e-
commerce and the enormous amount of information unlocked by the Internet allowed consumers to
shop online from the comfort of their homes, making it easy to compare products, prices, and
warrantees. In North America, Amazon had become a looming threat by giving consumers access to a
wide range of furniture and household products. In 2019, Wayfair, another American e-commerce firm
specializing in furniture and home goods, offered 14 million items from more than 11,000 suppliers. 65
Third, convenience became increasingly important in furniture shopping and customers’ preferences
for affordable delivery and assembly options grew. 66 Also, U.S. auto ownership was expected to
decline by 80% over the decade to 2030, 67 making it increasingly difficult for some shoppers to reach
the out-of-town stores.

Waterloos’ analysis also uncovered an unexpected trend. While IKEA had always targeted young,
low- to middle-income families, the average age and income levels of customers were rising
significantly. “In developed markets, penetration rates have actually grown towards people with
thicker wallets and we have lost people living on lower incomes,” Waterloos said. This change was
partly because standards of living were rising in many of IKEA’s traditional markets. 68 (See Exhibit 8
for key indicators.) Over the years, IKEA had followed this upmarket trend, starting to offer
increasingly sophisticated services such as kitchen design and remodeling. In 2014, for instance, a U.S.
architect estimated that the price of an average IKEA kitchen was closer to $25,000 than $5,000. 69
However, higher-end products and services did not necessarily generate customer loyalty for IKEA as
wealthier customers could afford to choose from among more retail alternatives.

Challenges in the Field: China and India

On paper, developing markets offered IKEA promising opportunities as their economic growth
lifted millions out of poverty and into the consuming classes. In India and China alone, 380 million and
350 million people respectively were expected to gain middle-class status between 2015 and 2022. 70 In
practice, operating profitably in these markets was difficult. For example, although IKEA had entered
China in 1998, its operations there were not profitable for a decade. Posted in Beijing for about ten
years, Gillian Drakeford, manager of the IKEA retail experience, said:

When you enter these countries and try to reach people who have less money, it
challenges you to do things in new ways. Certain elements of the big “blue box” store,
which had been highly successful in so many other countries, didn’t work in China. At
that time, very few people had cars. If they did own a car, the last thing they did was
transport goods home in it. The number of home deliveries was far higher than in Europe.
We also didn’t have a price level that was accessible to many people. We had to work with
our sourcing organization to bring prices down. At the beginning, we put more focus on
low-price articles. The stores sold much higher volume in terms of cubic meters, but the
price average was much lower. This had a margin and a sales mix effect. Then we had to
think about how to become profitable. We worked with volumes. A big part of our success
came from the integrated value chain. Although 30% of our offer was produced in China,
that 30% gave us 70% of our sales.

In 2013, IKEA operated the most square footage of any foreign commercial business in China, “with
12 stores covering a total of 640,000 square meters.” 71 More than 15 million people visited them each
year. 72 Sales reached $1 billion in the year ending August 2013, an annual increase of 17%. 73 To succeed,

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 What IKEA Do We Want? 720-429

IKEA tweaked its product range to adapt to small living spaces and included such relevant household
items as rice cookers and chopsticks. It also offered home delivery and assembly because a do-it-
yourself culture did not exist in China. 74 IKEA also increased the size of its stores to accommodate the
volume of visitors—28,000 on an average Saturday in Beijing—and built these stores closer to where
customers lived. 75 Finally, to become price competitive with local alternatives, 76 IKEA reportedly
slashed prices in its Chinese stores by 60% between 2000 and 2013. 77

Despite all these efforts, IKEA was still seen as a Western retailer with mid-range prices. In 2013,
most of the company’s efforts focused on its large stores while Chinese customers shopped online more
than any other consumers in the world, on average: “8.4 times each month compared to 5.2 times in
the U.S. and 2.9 times in Germany.” 78 Chinese internet giant Alibaba accounted for 80% of all online
retail sales in the country that year, 79 hosting sales of a wide range of items, including furniture, and
increasingly competing with physical counterparts such as IKEA.

With a population of 1.3 billion people, India represented another big opportunity for IKEA. Rising
disposable income, a growing middle class, and increasing numbers of urban households were
projected to boost Indian furniture sales from $15 billion in 2013 to $44 billion by 2020. 80 In 2013, IKEA
received approval from the Indian government to invest roughly $1.7 billion to open retail stores, 81 and
spent the ensuing five years conducting market research and laying needed groundwork. In addition
to visiting thousands of households to understand how people lived, IKEA augmented its product
portfolio with local items such as spice boxes and idli makers. To accommodate the price sensitivity of
Indian consumers, IKEA rethought its sourcing and manufacturing processes to produce affordable
furniture, 82 and set up an in-house team to assemble furniture purchases and deliver them to
customers’ homes the next day. 83 Finally, IKEA had to woo consumers who preferred bulkier furniture
to its minimalist designs. 84 An executive commented, “In India, we have a different proposition. We
only want to offer products under a certain number of rupees. But it takes time to redesign the product
range and to build a new supply chain.”

Considering the nature of the opportunities and challenges in most developing countries, some
IKEA employees thought that it was time for the organization to be more forward-thinking and to do
more to fulfill its vision. “We have always been for the masses: those who get out of poverty, need to
get all their basics covered, and can finally start investing in their home,” Waterloos said.

One Era Ends, Another Begins

Contemplating the varied challenges IKEA faced, Lööf said: “We are entering a storm. What does
it mean for us? And what are we going to do about it?” These were some of the questions Lööf asked
the Inter IKEA board after reviewing the outcome of Waterloos’ analysis. As challenges started to pile
up, it was time to make decisions on how to take the company forward.

A New Organizational Blueprint: “The Transaction”

During a meeting in late 2014, Inter IKEA—the owner of the IKEA concept and the worldwide IKEA
franchisor—exercised its right to take back control of design, manufacturing, procurement, and
logistics from Ingka. 85 Accordingly, Ingka sold these entities, which employed roughly 25,000 people,
to Inter IKEA for $5.5 billion. This limited Ingka to a purely retail role under its franchise agreement
with Inter IKEA. 86 The transaction was completed in September 2016. (See Exhibit 2 for the structure.)

In Lööf ‘s view, several developments necessitated the restructuring. First, the previous setup had
serious shortcomings, including lack of flexibility and slow decision-making. To adjust to changing

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 720-429 What IKEA Do We Want?

market conditions, the business concept had to evolve, yet Inter IKEA was unable to do so without
control over key functions like logistics. “We had a complicated corporate structure. In a sense, it was
by Ingvar [Kamprad] and for Ingvar,” Lööf said. “It fitted his purpose, but it was not a scalable, modern
setup for the future. When the environment was static and predictable, that model worked. But when
the rules of the game changed, we needed a franchisor with development capabilities.” Second, it was
hard for Inter IKEA to manage a franchisee as big as Ingka, which had sales of $36.6 billion and
employed 160,000 people in 2015. In comparison, Inter IKEA was a small entity with $4 billion of
revenues and 3,400 employees that year. 87 The reorganization sought to rebalance power relations in
the franchise system. Further, Ingka was only one of 11 Inter IKEA franchisees. While Ingka accounted
for 92% of IKEA’s turnover in 2015, it was important to acknowledge the other franchisees too. Third,
ongoing success bred complacency that made innovation difficult to encourage. “In the old structure,
the likelihood of the franchisees challenging themselves, their P&L, operations, and assets was very
low,” Lööf explained. “Sales were still growing—not by a lot—but it was still better than most retailers.
Expansion was progressing well. So, if you had introduced radical new thoughts, by definition, they
would have faded out and died because people would have said: ‘Look, we are still doing fine.’”

Lööf was not alone in the process of transforming IKEA; Ingka CEO, Peter Agnefjäll, was also
deeply involved in the restructuring. Even though the transfer of key functions and staff impacted
Ingka significantly, Agnefjäll helped to push ahead with IKEA’s ambitious transformation plans. 88
However, when the transaction was completed in 2017, Agnefjäll resigned. “Of course, it’s easier for
the party who acquired resources and influence,” Lööf later noted. 89

In May 2017, IKEA veteran Jesper Brodin was appointed Ingka CEO. 90 Raised on the west coast of
Sweden, Brodin had joined the firm as a purchasing manager in Pakistan in 1995 and had had various
assignments at both Ingka and Inter IKEA over the years, including roles in product development and
logistics, and a stint as Kamprad’s assistant. 91 Looking back at the transaction, Brodin said, “It
happened at a very transformative time. It was almost an overwhelming task for the CEO of Ingka to
oversee so many activities. The transaction has provided an opportunity for me to create focus in the
CEO role.” Having worked together for many years, Lööf and Brodin knew each other well. As they
depended on each other for success in their new positions, it was important for them to be tightly
aligned. “With this complexity, with this uneven size of the franchisees, and with the Ingka group
being so dominant, you can’t pretend that Ingka is just another franchisee,” an executive said. “Lööf
and Brodin have been put at the top because they are close to one another. They can deal upfront with
whatever friction shows up in the organization. They are the perfect couple at this point in time.”

A New Direction: “IKEA’s Three Roads Forward”

With the new setup in place and guided by Kamprad’s urging to build for the long-term, Lööf was
ready to chart a new strategic direction for the company. Inter IKEA CFO Martin Van Dam later
remarked that the fact that IKEA was privately held was an important part of the context, “Our
financing was not a deep issue. We didn’t have to go to the market for money. Ingvar always said:
‘Let’s save what we earn. Let’s spend carefully.’ We didn’t have to give what we earned to
shareholders. We kept it for ourselves. We buffered up and saved for rainy days.” Lööf sketched out a
strategy called “IKEA’s Three Roads Forward” outlining IKEA’s future direction towards 2025.
Launched in August 2017, the strategy focused on three priorities: affordability, accessibility, and
sustainability.

Affordability—Make IKEA Affordable For People Who Cannot Afford IKEA Today The
first priority was to become more affordable, especially for the millions of customers entering the
middle class in emerging markets. 92 Emerging economies were growing rapidly in Asia and Latin

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 What IKEA Do We Want? 720-429

America, 93 and urbanization meant that more people were moving to cities. 94 Yet, because total buying
power in developing markets lagged that of more mature ones, IKEA had no choice but to further
lower its prices and costs. “We have a good track record to take cost out; it has been one of our biggest
sources of pride,” an executive said. To do so, IKEA needed to work closely with its supply chain and
re-engineer parts of its product range. “We need to invest and accelerate our innovations, using less
material and smarter construction, so that we can absorb cost while maintaining quality,” a manager
said.

Accessibility—Reach and Interact with Many More of The Many People, Where They
Are The second priority was to bring access to IKEA products closer to even more people. In 2019,
the estimated world population was 7.7 billion. 95 That same year, more than 1 billion people went to
IKEA stores around the globe. 96 The company aimed to increase this figure to 3 billion people by 2025,
principally through expansion in its current geographies. IKEA also planned to enter a dozen new
markets, including South America, spearheaded by Falabella, a new IKEA franchisee known for its
large network and its strong expertise in the retail industry. 97 (See Exhibit 9 for the list of franchisees.)
But the opportunities were not only geographic: IKEA would also experiment with new store formats,
multi-channel shopping, and with a more personal and curated customer experience. “I wonder to
what extent we will meet customers with just a traditional brick and mortar store,” Lööf mused.

Sustainability—Create a Positive Impact For People, Society, and The Planet IKEA’s
third priority was to become by 2030 both climate-neutral and circular—by eliminating all waste
through recycling and by making all products from recycled materials. 98 The firm also aimed to reduce
the carbon footprint of its stores and other operations by 80% from 2016 levels. 99 To this end, IKEA
would focus, among other things, on banning single-use plastic and on sourcing 100% renewable
energy. 100 “We position ourselves as a responsible firm that wants to scale good solutions that are truly
sustainable,” Brodin said. “I think it’s the responsibility of every big company to take the lead in their
industry. And if we don’t work towards a sustainable solution, we will ultimately go out of business.”

Walking the Three Roads

Executing on these ambitions implied substantial change. As one executive noted: “People have
been operating for 75 years in one way and perfecting this concept all along. But today what should
we keep that is truly unique to IKEA? And what are the aspects that we need to change?”

Making IKEA Affordable

In order to interact with 3 billion people by 2025, the team first had to identify how to reach such a
large number of individuals. Internal research found that 91% of IKEA’s potential customers lived in
existing markets—61% in the Asia-Pacific region, 23% in Europe, 12% in North America, and 4% in the
Middle East and North Africa. The remaining potential customers lived in new, planned markets:
essentially in Latin America, where IKEA planned to expand.

The majority of these 3 billion people (1.8 billion) lived on thin wallets with an annual household
income of between $10,000 and $35,000, while 700 million were in households that earned between
$35,000 and $70,000, and 500 million belonged to thick wallet households with annual income of more
than $70,000. (See Exhibit 10 for more details.) Although IKEA could not reach the world’s poorest—
an estimated 3.4 billion people below the poverty line of $5.5 per day in 2015, 101 serving a greater
proportion of those with thin wallets was a tempting idea as it would more easily allow the firm to
reach the largest possible number of customers. IKEA surveys revealed that these consumers valued
well-designed home furnishing nearly as much as people living on thick wallets (38% vs. 41%);

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 720-429 What IKEA Do We Want?

currently, they just had less choice. IKEA would have to step up its marketing efforts, as low-income
earners did not perceive IKEA as catering to them. In fact, those with thin wallets rated IKEA’s range
less favorably than those with thick wallets when it came to low prices (57% vs. 70% for thick wallets),
function (63% vs. 74%), and durability (50% vs. 55%). More than half of the IKEA range (52%) was more
expensive than that of the local competition. (See Exhibit 11 for other IKEA customer data.)

Would IKEA be able to make the necessary changes to reach thin wallets, and if so, how? And what
did “thin wallets” even mean in the first place? “If you think about thin wallets in Western countries,
it’s not the same as thin wallets in India,” an executive said. “Getting to price points that work for both
is challenging. These are two different pyramids, two different marketplace structures. We will be
forced to broaden our business model in order to address the different economics inherent in both. This
is not a simple business equation to solve for.” Brodin disagreed, “You can get lost in demographics
and believe that things in Germany and India are very different. But the group with thin wallets in
India is just larger. When we develop products for India, we test them in Germany, and they work
fantastically. The most dangerous thing for us is to stand still.”

One solution could be to reduce the cost of the range by working with the supply chain. “We should
talk to our suppliers and ask them: what would it take to sell this $6 table for $2?” a manager said. An
alternative was to focus on a low-price basic home furnishing offer for low-income customers, either
with a smaller range (1,000 products instead of 9,500), or in a separate brand solely for the thin wallets.
“If you take India—which is a very humid climate, wood might not be the right choice of material in
the first place,” an executive remarked. “Maybe we should use metals or plastics in products as these
are more resistant. …Humid markets are everywhere beyond a certain part of the hemisphere. If we
regroup those markets, we could gain critical mass, set up an efficient supply chain for them, and
perhaps even get a cheaper product in the end.” A senior employee had additional ideas:

When Kamprad founded the company, he put low prices on the map for the first time.
That was a real differentiator. But today, some of our competitors are more affordable
than us. They have different labor standards. They use cheap plastic and toxic chemicals.
Instead of being the cheapest, perhaps IKEA can offer something else than just products,
because we have some knowledge of home furnishing than our competitors don’t have.
For instance, perhaps there could be some way to rent out our products. It would be a
different business model. Our customers would get a new chair every now and then; that
chair could be re-used in different offices; some parts would have to be replaced; we
would have to figure out how to disassemble and recycle it. We could even rent out
furniture and accessories for a whole living room or for a whole kitchen instead of renting
our products piece by piece. Making a product, putting it in a package, and selling it, it’s
quite easy. But thinking from a totally different perspective, that’s something else.

Making IKEA Accessible

In addition to making IKEA more accessible through deeper geographic penetration, the company
wanted to make it easier for customers to interact with the firm. An executive, for example, even saw
potential to reach more customers in markets IKEA had entered decades ago, “We are all in expansion
mode. Germany is our biggest market today, and we still have white spots in Germany. The U.S. is our
second-biggest market, but we are only a quarter of what we could be there.”

Introducing New Store Formats IKEA was increasingly conscious that it had to make more of
an effort to be where people wanted it to be. Because those living in large cities would account for 80%
of global consumption by 2030, 102 IKEA planned to open stores in 30 city centers around the world to
reach younger, urban shoppers who might not have a car. IKEA’s Paris store, for instance, opened in

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 What IKEA Do We Want? 720-429

the upscale district of Place Madeleine in May 2019. It was four times smaller than IKEA’s typical blue
box stores 103 and carried a limited assortment of 1,500 items, 104 most of which were only available for
delivery to home or to one of 350 pickup points. The store also included a restaurant and offered Feng
Shui advice, cooking classes, and workshops on repairing furniture. 105 Other city center formats
included a dedicated kitchen showroom in Stockholm, Sweden, and one for living room furniture in
Madrid, Spain. 106 “We are going big with an unproven strategy. It’s revolutionary for a firm like IKEA
to just test and learn,” one executive said. “Previously, if we wanted to open a new store, we would
have built a sales volume forecast. It would have been an extremely precise process.” The experiments
had already shown some positive results. “What we have learned so far is that the demand is there,
and customers love our stores. Now we need to build them in an operationally intelligent way so that
we can be profitable long-term,” Brodin said.

The economics of running a city center store were radically different from those in an out-of-town
store. “Do I think that we need small stores? Absolutely!” Waterloos said. “But do we know how to
make them work?” Urban rents were more expensive than buying cheap land on the edge of a city. In
a big blue box store, customers also did much of their own fulfillment, whereas central urban stores
involved higher shipping fees and more work by IKEA staff, fees unlikely to be absorbed by consumers.
“From a replenishment perspective, the city center stores may be the most challenging because soon
you will not be allowed to enter the cities at certain times,” an executive said. “These stores are also
small, which means that they can’t receive entire shipping pallets like big stores. There are ambitions
that we would have the same cost structure, but I can’t perform miracles. I can only do my best to get
the goods in at the lowest possible cost. It will be costlier in the end.”

Boosting Digital Capabilities IKEA also had to transition to a more digital world both to
become more efficient and to meet customers’ preferences. Yet IKEA’s existing IT systems were old
and mostly operated by Ingka. “They are ancient. There are all intertwined. We call it spaghetti. There
are about 500 systems with over 150,000 connections. We need to modernize progressively, that is
decommissioning parts while maintaining the whole thing working,” an executive said. Two digital
transformation leaders were hired in 2018: Barbara Martin Coppola, who had held marketing
leadership positions at Google and YouTube before she landed at Ingka, and Gerry Rogers, on the Inter
IKEA side, who had run global supply chain, sourcing, and manufacturing at Nike. As Brodin put it,
“Their strategy is the de-spaghettification. Opening up and doing surgery.” Ingka focused on
consumer-facing platforms, while Inter IKEA digitalized design, supply chain, and operations.

Streamlining IT operations was critical if IKEA wanted to boost online sales in a departure from
past deference to the in-store IKEA experience. IKEA’s historic resistance to exploring the channel had
led franchisees to act on their own. In fiscal 2018, 35 different IKEA websites worldwide had received
about 2.5 billion visits, 107 and pure online sales represented roughly 7% of IKEA’s total sales. (See
Exhibit 12 for a breakdown of purchases by channel). “Fragmentation exists as each franchisee has
innovated on top of the common IT landscape. That said for each franchisee to thrive digitally, the
common landscape needs to be thoroughly modernized,” Martin Coppola said. Rogers and Martin
Coppola worked closely to synchronize their efforts. In April 2019, for instance, they launched IKEA’s
first app for worldwide use. The app was tested in two countries: France and the Netherlands.

In parallel, Martin Coppola and Rogers went “deep into the spaghetti” by reinventing fulfillment
and replenishment. For years, failures to link product information, forecasts, and supply sometimes
caused stockouts. This problem was accentuated once IKEA began using its stores as distribution
centers for its online business. A more robust and efficient IT configuration could help solve some of
these issues. Martin Coppola said, “With data, we are able to manage the value chain differently. We
are much more adaptable to consumers; we understand much faster whether the range is selling. We

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 720-429 What IKEA Do We Want?

are going from a one touchpoint value chain (the stores) to a multitude of touchpoints value chain. This
needs end-to-end thinking and transparency to reduce costs and increase margins. It is a big change.”

Offering More After-Market Services To cater to changing tastes, IKEA worked with affiliates
to experiment with a wide range of services, including assembling furniture, installing kitchens, and
refurnishing homes. For instance, Ingka’s acquisition of American firm TaskRabbit in 2017 boosted its
furniture assembly service to U.S. customers. By 2019, 10% of all jobs done by Task Rabbit contract
workers were in furniture assembly, compared to 2% before the acquisition. 108 According to Brodin,
TaskRabbit was exploring interior design and furniture repair services too. 109 Many customers viewed
home delivery as a basic element of furniture retailing, and as of 2019, one in four IKEA items was
delivered rather than taken home by a consumer from its stores. The firm anticipated that this would
rise to greater than 40% by 2022. This added costs: “If greater than 40% of our products are delivered,
that means that a significant part of our demand picture no longer subscribes to the old model,” Rogers
said. “The economics of delivery will challenge our entire structure.” Brodin added, “A model for home
delivery is a lot of hard work and a lot of infrastructure. It’s not difficult to make it happen; it’s super
tricky to make it financially sustainable.” But even if IKEA figured out a new business model for these
services, were these initiatives really in line with the company’s vision of reaching the many people?
“We know we need to have competitive home delivery and assembly, but this is only for a few,” an
executive said. “We need to look at other ways to make it convenient for those people with thinner
wallets. We need to offer a convenience ladder that allows people to make their own choices.”

Investing More in Big Blue Boxes New store formats, digital capabilities, and additional
services were a promising idea, but many of the traditional markets IKEA already served still had room
for significant growth through its existing business model. “We know we need to be in city centers and
close to where people are, we know that convenience is a key driver to be able to engage with people.
But we still need to continue to invest in our big stores. It’s not one or the other,” a manager remarked.
“I think sometimes we forget the assets we have today. The role of the store needs to be re-positioned.
If 93% of our business overall is coming from the store, what are we doing to invest in that asset? Do
we know what we are shaking up? We want to catch up with the competition, but we need to do it our
way. We are a low-cost company and we need to have a low-cost retail operation in order to be able to
give low prices to our customers. If we are not careful, we are at risk of driving costs up.”

Making IKEA Sustainable

“Sustainability has always been with us because by being low cost, we had to be frugal. IKEA
always wanted to do more with less raw materials,” Per Berggren said. But sustainability played an
even more important role in IKEA’s strategy at the beginning of the 21st century. “Sixty percent of the
price of IKEA products is driven by natural resources,” Brodin said. “If the price of raw material goes
up, it doesn't matter how much volume or efficiency we have; IKEA will be more expensive, we will
have less customers, and we will fail. The only way for us to really be the IKEA of tomorrow is to
innovate in building sustainability and circularity into the business model. That used to be a dilemma,
then it became an insight, and now it is a commitment.”

Starting in the 1990’s, IKEA pursued programs to guarantee that raw materials, especially cotton
and wood, were grown in a responsible way. By 2015, 100% of cotton used in IKEA products came
from more sustainable sources 110 that minimized use of water and chemicals. IKEA also invested in
solar and wind energy with the goal of producing all the energy it used from renewable sources.

IKEA also introduced sustainability concerns in the design process as designers were asked not only
to think about the materials sourced, but also about how products would be recycled, refurbished, or

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disposed of. The results were not obvious. Senior designer Sarah Fager, for instance, wanted to create
a lounge chair made of hemp and covered by leather. “I thought this would be an interesting concept,”
she said. “But since the production method combined two materials that couldn’t be recycled, it
wouldn’t align with the circular model that we were moving towards.” Product developer David Wahl
also kept sustainability in mind when embarking on the design of a new product:

Recycling processes vary a lot from country to country depending on standards and
facilities. Some separate components manually; others dispose of waste directly in
landfills. If you think of two lamps, one made of wood with some metal pieces and
another one with a LED integrated into a steel tube. Which one is more sustainable? Most
people would favor the wood lamp because it is a natural material. But it's really difficult
to remove the wood from the metal, so when it goes into a modern recycling facility in
Sweden for instance, you can't really take it apart and you have to throw it away. The LED
lamp is pretty much all metal and plastic, so you just put it through a shredder; plastic
floats, metal sinks, and you’ve sorted out the parts, so it could be recycled more easily.

Extending product life was also a step to more sustainable products. “We realized that when you
assemble and disassemble, you destroy the furniture a little bit every time. After two, three, four times,
you can’t use the furniture anymore,” an executive remarked. To address this problem, IKEA engineers
designed a new assembly process where parts clicked with each other with no need for tools. Besides
reducing assembly time and complexity dramatically, the new system allowed disassembled furniture
to be sold and moved after being used. Additional examples of possible initiatives to extend product
lifetime included building a platform to facilitate and centralize a secondary market for IKEA products
and offering furniture leasing services.

Forging Ahead
IKEA was at an inflection point. In a spectacular global expansion, it had planted its blue and yellow
flags in over 50 countries. It had mastered the art of producing and selling high volumes of products
at a consistently low price in different markets. 111 It was estimated that one Billy bookcase was sold
every five seconds 112 and that one in ten Europeans had been conceived on an IKEA bed. 113

Yet, IKEA’s original business model—a blue box store on the outskirts of a city that was only
accessible by car and customers who were eager to save money by transporting and assembling
products themselves—no longer seemed sufficient for the “glorious future” Kamprad had always
urged the company to seek. As a result, the company broadened its vision to encompass a truly multi-
channel experience, making up for lost time with a comprehensive approach to new forms of
retailing—online sales, city center and popup stores, pickup points, new services, etc.—and bold
incursions into new geographies, more specifically targeting the thin wallets of the world.

Is it likely that all of this would lead to one robust IKEA, or to two or more business models? Was
IKEA spreading its resources too thin by testing too many things at the same time? One manager said,
“Are we doing so much that we risk losing sight of our essence? We have more than 75 years of
experience democratizing life at home. When new trends develop, we should use the strength of who
we are and respond with solutions that are unique to IKEA, rather than matching the competition.
Otherwise we could end up more like them and less like us.” In contrast, Lööf believed it was essential
for IKEA to stay in synch with the revolution in retailing and consumer behavior around the world.
“There may be growing pains,” he said, but, ultimately “as long as the purpose and the inspiration and
motivation are there, you can have quite a large amount of chaos and overload. The idea is to positively
disrupt ourselves, to take transformational leaps, and to explore possibilities for a new way forward.”

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 720-429 What IKEA Do We Want?

Exhibit 1 IKEA’s Historical Development: Growth and Performance Indicators, 1954-2018

Year Turnover Outlets Countries Co-workers Catalogues Number of

(million, (000s) visitors
USD) (millions)
1954 0.5 1 1 15 285 N/A
1964 15 2 2 250 1,200 N/A
1974 151 10 5 1,500 13,000 N/A
1984 755 66 17 8,300 40,000 38
2004 15,619 202 34 90,000 160,000 365
2014 38,510 361 48 164,000 217,000 821
2018 43,374 422 53 208,000 203,000 957

Source: Created by casewriters based on Ingka and Inter IKEA data.

Note: N/A stands for not available, as some information was not publicly available. The outlet in 1954 was a showroom.
Catalogues for 2018 measured the number of catalogues made for the 2018 season, which were actually released in
2017.

Exhibit 2 Organization of IKEA, as of 2019.

Source: Created by casewriters based on Ingka and Inter IKEA Data.

Note: Inter IKEA operated a pilot store in Delft, the Netherlands, which in addition to be an ordinary IKEA store also carried
facilities for testing and training in the IKEA concept. Between the end of 2018 and September 2019, eight new IKEA
stores were opened worldwide, which explains why 430 stores are listed in this exhibit (as opposed to the 422 stores
mentioned on the first page of the case study).

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 What IKEA Do We Want? 720-429

Exhibit 3 The Testament of a Furniture Dealer, 1976

To create a better everyday life for the many people by offering a wide range of well-designed, functional
home furnishing products at prices so low that as many people as possible will be able to afford them. We have
decided once and for all to side with the many. What is good for our customers is also, in the long run, good for
us. This is an objective that carries obligations. All nations and societies in both the East and West spend a
disproportionate amount of their resources on satisfying a minority of the population. In our line of business, for
example, far too many of the fine designs and new ideas are reserved for a small circle of the affluent. That
situation has influenced the formulation of our objectives. After only a couple of decades, we have achieved
good results. A well-known Swedish industrialist-politician has said that IKEA has meant more for the process
of democratization than many political measures put together. We believe, too, that our actions have inspired
many of our colleagues to work along the same lines. Sweden, our “domestic market”, has become a world
pioneer in that many of the new concepts have been devised right from the outset for the benefit of the many –
all those people with limited resources. We are in the forefront of that development. But we have great
ambitions. We know that we can be a beneficial influence on practically all markets. We know that in the future
we will be able to make a valuable contribution to the process of democratization outside our own homeland
too. We know that larger production runs give us new advantages on our home ground, as well as more
markets to spread our risks over. That is why it is our duty to expand. The means we use for achieving our
goals are characterized by our unprejudiced approach, by “doing it a different way” if you will, and by our aim to
be simple and straightforward in ourselves and in our relations with others. Lifestyle is a strong word, but I do
not hesitate to use it. Part of creating a better everyday life for the many people also consists of breaking free
from status and convention – becoming freer as human beings. We aim to make our name synonymous with
that concept too – for our own benefit and for the inspiration of others. We must, however, always bear in mind
that freedom implies responsibility, meaning that we must demand much of ourselves. No method is more
effective than the good example. I claimed earlier that we contribute to the process of democratization. Let me
add, to avoid any misunderstanding, that this does not mean that we take a position on questions of equality –
such as salary issues. Though you may say that here again, we approach these problems from a different
perspective. Our product range and price philosophy, which are the essence of our work, are described in the
following chapters. They also describe the rules and methods that we have worked out over the years as
cornerstones of the framework of ideas that have made and will continue to make IKEA a unique company.

1. The product range – our identity

We shall offer a wide range of well-designed, functional home furnishing products at prices so low that as many
people as possible will be able to afford them.
Range: The objective must be to encompass the total home environment, i.e. to offer furnishings and fittings
for every part of the home whether indoors or outdoors. The range may also include tools, utensils and
ornaments for the home as well as more or less advanced components for do-it-yourself furnishing and interior
decoration. It may also contain a smaller number of articles for public buildings. The range must always be
limited to avoid any adverse effect on the overall price picture. The main effort must always be concentrated on
the essential products in each product area.
Profile: The main emphasis must always be on our basic range – on the part that is “typically IKEA”. Our basic
range must have its own profile. It must reflect our way of thinking by being as simple and straightforward as
we are ourselves. It must be hard-wearing and easy to live with. It must reflect an easier, more natural and
unconstrained way of life. It must express form, and be colorful and cheerful, with a youthful accent that
appeals to the young at heart of all ages. In Scandinavia, people should perceive our basic range as typically
IKEA. Elsewhere, they should perceive it as typically Swedish. Alongside the basic product range, we may
have a smaller range in a more traditional style that appeals to most people and which may be combined with
our basic range. This part of the range must be strictly limited outside Scandinavia.
Function and technical quality: “Throw-away” products are not IKEA. Whatever the consumer purchases
shall give long-term enjoyment. That is why our products must be functional and well-made. But quality must
never be an end in itself: it must be adjusted to the consumer’s needs. A tabletop, for example, needs a harder-
wearing surface than a shelf in a bookcase. In the first example, a more expensive finish offers the consumer
long-lasting utility, whereas in the latter it just hurts the customer by adding to the price. Quality must always be
adapted to the consumer’s interests in the long-term. Our benchmarks should be the basic Swedish Möbelfakta
requirements or other sensible norms.

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Low price with a meaning: The many people usually have limited financial resources. It is the many people
whom we aim to serve. The first rule is to maintain an extremely low level of prices. But they must be low prices
with a meaning. We must not compromise either functionality or technical quality. No effort must be spared to
ensure our prices are perceived to be low. There shall always be a substantial price difference compared to our
competitors, and we shall always have the best value-for-money offers for every function. Every product area
must include “breath-taking offers”, and our range must never grow so large as to jeopardize our price picture.
The concept of a low price with a meaning makes enormous demands on all our co-workers. That includes
product developers, designers, buyers, office and warehouse staff, sales people and all other cost bearers who
are in a position to influence our purchase prices and all our other costs – in short, every single one of us!
Without low costs, we can never accomplish our purpose.
Changes in our range policy: Our basic policy of serving the many people can never be changed. Changes in
the guidelines given here concerning the composition of our product range can be made only by joint decision
of the Boards of Ingka Holding B.V. and Inter IKEA Systems B.V.

2. The IKEA® spirit – a strong and living reality

You have certainly experienced it. You may even have given it our own interpretation on it. Obviously it was
easier to keep alive in the old days when there were not so many of us, when we were all within reach of each
other and could talk to each other. It is naturally harder now that the individual has gradually been lost in the
grey conformity of collective bargaining and the numbered files of the personnel department. Things were more
concrete in those days – the readiness to give each other a helping hand with everything; the art of managing
on small means, of making the best of what we had; cost-consciousness to the point of being stingy;
humbleness, undying enthusiasm and the wonderful sense of community through thick and thin. But both IKEA
and society have changed since then. But the spirit is still to be found in every one of our workplaces. Among
old co-workers and new ones. Heroic efforts are still being made – daily – and there are many, many people
who still feel the same way. Not everybody in a large group like ours can feel the same sense of responsibility
and enthusiasm. Some undoubtedly regard the job simply as a means of livelihood – a job like any other.
Sometimes you and I must share the blame for failing to keep the flame alight, maybe for faltering in our own
commitment at times, for simply not having the energy to infuse life and warmth into an apparently monotonous
task. The true IKEA spirit is still built on our enthusiasm, from our constant striving for renewal, from our cost-
consciousness, from our readiness to take responsibility and help out, from our humbleness in approaching our
task and from the simplicity of our way of doing things. We must look after each other and inspire each other.
Those who cannot or will not join us are to be pitied. A job must never be just a livelihood. If you are not
enthusiastic about your job, a third of your life goes to waste, and a magazine in your desk drawer can never
make up for that. For those of you who bear any kind of leadership responsibility, it is crucially important to
motivate and develop your co-workers. A team spirit is a fine thing, but it requires everybody in the team to be
dedicated to their tasks. You, as the captain, make the decisions after consulting the team. There is no time for
argument afterwards. Take a football team as your model! Be thankful to those who are the pillars of our
society! Those simple, quiet, taken-for-granted people who always are willing to lend a helping hand. They do
their duty and shoulder their responsibility without being noticed. To them, a defined area of responsibility is a
necessary but distasteful word. To them, the whole is just as self-evident as always helping and always
sharing. I call them stalwarts simply because every system needs them. They are to be found everywhere – in
our warehouses, in our offices, among our sales force. They are the very embodiment of the IKEA spirit. Yes,
the IKEA spirit still lives, but it too must be cultivated and developed to keep pace with the times. Development
is not always the same thing as progress. It is often up to you, as the leader and bearer of responsibility, to
make development progressive.

3. Profit gives us resources

A better everyday life for the many people! To achieve our aim, we must have resources – especially in the
area of finance. We do not believe in waiting for ripe plums to fall into our mouths. We believe in hard,
committed work that brings results. Profit is a wonderful word! Let us start by stripping the word profit of its
dramatic overtones. It is a word that politicians often use and abuse. Profit gives us resources. There are two
ways to get resources: either through our own profit, or through subsidy. All state subsidies are paid for either
out of the state’s profit on operations of some kind, or from taxes of some kind that you and I have to pay. Let
us be self-reliant in the matter of building up financial resources too. The aim of our effort to build up financial
resources is to reach a good result in the long term. You know what it takes to do that: we must offer the

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 What IKEA Do We Want? 720-429

lowest prices, and we must combine them with good quality. If we charge too much, we will not be able to offer
the lowest prices. If we charge too little, we will not be able to build up resources. A wonderful problem! It
forces us to develop products more economically, to purchase more efficiently and to be constantly stubborn in
cost savings of all kinds. That is our secret. That is the foundation of our success.

4. Reaching good results with small means

That is an old IKEA idea that is more relevant than ever. Time after time we have proved that we can get good
results with small means or very limited resources. Wasting resources is a mortal sin at IKEA. It is not all that
difficult to reach set targets if you do not have to count the cost. Any designer can design a desk that will cost
5,000 kronor. But only the most highly skilled can design a good, functional desk that will cost 100 kronor.
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. An IKEA product without a price tag is always wrong! It is just as wrong as
when a government does not tell the taxpayers what a “free” school lunch costs per portion. Before you choose
a solution, set it in relation to the cost. Only then can you fully determine its worth. Waste of resources is one of
the greatest diseases of mankind. Many modern buildings are more like monuments to human stupidity than
rational answers to needs. But waste costs us even more in little everyday things: filing papers that you will
never need again; spending time proving that you were right anyway; postponing a decision to the next
meeting because you do not want to take the responsibility now; telephoning when you could just as easily
write a note or send a fax. The list is endless. Use your resources the IKEA Way. Then you will achieve good
results with small means.

5. Simplicity is a virtue
There have to be rules to enable a lot of people to function together in a community or a company. But the
more complicated the rules are, the harder they are to comply with. Complicated rules paralyze! Historical
baggage, fear and unwillingness to take responsibility are the breeding ground for bureaucracy. Indecisiveness
generates more statistics, more studies, more committees, more bureaucracy. Bureaucracy complicates and
paralyzes! Planning is often synonymous with bureaucracy. Planning is, of course, needed to lay out guidelines
for your work and to enable a company to function in the long term. But do not forget that exaggerated
planning is the most common cause of corporate death. Exaggerated planning constrains your freedom of
action and leaves you less time to get things done. Complicated planning paralyzes. So let simplicity and
common sense guide your planning. Simplicity is a fine tradition among us. Simple routines mean greater
impact. Simplicity in our behavior gives us strength. Simplicity and humbleness characterize us in our relations
with each other, with our suppliers and with our customers. It is not just to cut costs that we avoid luxury hotels.
We do not need fancy cars, posh titles, tailor-made uniforms or other status symbols. We rely on our own
strength and our own will!

6. Doing it a different way

If we from the start had consulted experts about whether a little community like Älmhult could support a
company like IKEA, they would have undoubtedly advised against it. Nevertheless, Älmhult is now home to one
of the world’s biggest operations in the home furnishings business. By always asking why we are doing this
or that, we can find new paths. By refusing to accept a pattern simply because it is well established, we make
progress. We dare to do things differently! Not just in large matters, but in solving small everyday problems too.
It is no coincidence that our buyers go to a window factory for table legs and a shirt factory for cushions. It is
quite simply the answer to the question “why”. Our protest against convention is not protest for its own sake: it
is a deliberate expression of our constant search for development and improvement. Maintaining and
developing the dynamism of our business is one of our most important tasks. That is why I hope, for example,
that we will never have two identical stores. We know that the latest one is bound to have several things wrong
with it, but, all things considered, it will still be the best yet. Dynamism and the desire to experiment must
continually lead us forward. “Why” will remain an important key word.

7. Concentration – important to our success

The general who divides his resources will invariably be defeated. Even a multitalented athlete has problems.
For us too, it is a matter of concentration – focusing our resources. We can never do everything, everywhere,
all at the same time. Our range cannot be allowed to overflow. We will never be able to satisfy all tastes
anyway. We must concentrate on our own profile. We can never promote the whole of our range at once. We
must concentrate. We cannot conquer every market at once. We must concentrate for maximum impact, often

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 720-429 What IKEA Do We Want?

with small means. While we are concentrating on important areas, we must learn to do what people in Småland
call “lista”. “Lista” is common term in Småland; it means “making do”, doing what you have to do with an
absolute minimum of resources. When we are building up a new market, we concentrate on marketing.
Concentration means that at certain vital stages we are forced to neglect otherwise important aspects such as
security systems. That is why we have to make extra special demands on the honesty and loyalty of every co-
worker. Concentration – the very word implies strength. Use it in your daily work. It will give you results

8. Taking responsibility – a privilege

There are people at all levels in every type of company and community who would rather make their own
decisions than hide behind those made by others. People who dare to take responsibility. The fewer such
responsibility-takers a company or a community has, the more bureaucratic it is. Constant meetings and group
discussions are often the result of unwillingness or inability on the part of the person in charge to make
decisions. Democracy or the obligations for consultation are sometimes cited as excuses. Taking responsibility
has nothing to do with education, financial position or rank. Responsibility-takers can be found in the
warehouse, among the buyers, sales force and office staff – in short, everywhere. They are necessary in every
system. They are essential for all progress. They are the ones who keep the wheels turning. In our IKEA family
we want to keep the focus on the individual and support each other. We all have our rights, but we also have
our duties. Freedom with responsibility. Your initiative and mine are decisive. Our ability to take responsibility
and make decisions. Only while sleeping one makes no mistakes. Making mistakes is the privilege of the
active – of those who can correct their mistakes and put them right. Our objectives require us to constantly
practice making decisions and taking responsibility, to constantly overcome our fear of making mistakes. The
fear of making mistakes is the root of bureaucracy and the enemy of development. No decision can claim
to be the only right one; it is the energy that is put into the decision that determines whether it is right. It must
be allowed to make mistakes. It is always the mediocre people who are negative, who spend their time proving
that they were not wrong. The strong person is always positive and looks forward. It is always the positive
people who win. They are always a joy to their colleagues and to themselves. But winning does not mean that
someone else has to lose. The finest victories are those without losers. If somebody steals a model from us,
we do not sue them, because a lawsuit is always negative. We solve the problem instead by developing a new
and even better model. Exercise your privilege – your right and your duty to make decisions and take
responsibility.

9. Most things still remain to be done. A glorious future!

The feeling of having finished something is an effective sleeping pill. A person who retires feeling that he has
done his bit will quickly wither away. A company which feels that it has reached its goal will quickly stagnate
and lose its vitality. Happiness is not reaching your goal. Happiness is being on the way. It is our wonderful fate
to be just at the beginning. In all areas. We will move ahead only by constantly asking ourselves how what we
are doing today can be done better tomorrow. The positive joy of discovery must be our inspiration in the future
too. The word impossible has been deleted from our dictionary and must remain so. Experience is a word to be
handled carefully. Experience is a brake on all development. Many people cite experience as an excuse for not
trying anything new. Still, it can be wise to rely on experience at times. But if you do so, you should preferably
rely on your own. That is usually more valuable than lengthy investigations. Our ambition to develop ourselves
as human beings and coworkers must remain high. Humbleness is the key word. Being humble means so
much to us in our work and in our leisure. It is even decisive for us as human beings. It means not just
consideration and respect for our fellow men and women, but also kindness and generosity. Will-power and
strength without humbleness often lead to conflict. Together with humbleness, will-power and strength are your
secret weapons for development as an individual and fellow human being. Bear in mind that time is your
most important resource. You can do so much in 10 minutes. Ten minutes, once gone, are gone for good.
You can never get them back.

Source: Used with the permission of Inter IKEA Systems B.V.

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 What IKEA Do We Want? 720-429

Exhibit 4 Pictures of IKEA Stores, as of 2019

a) Traditional Big Blue Box Store

b) City-Center Stores

Source: Inter IKEA and Ingka data.

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 720-429 What IKEA Do We Want?

Exhibit 5 IKEA’s Brand Perception

a) Product Assortment and Product Quality, FY2014 -FY2019

65%
63% 63%
62% Has many styles of
61% 61% furniture that suit
60%
60% my taste
58% 59%
57%
57% IKEA offers good
55% 55% 55%
55% 56% product quality
56%
54%
53%
50% 50% 51% IKEA offers
50% products that I love
48%
47%
46%
45% Offers durable
products that wear
well
40%
FY14 FY15 FY16 FY17 FY18 FY19

b) Positive Impact on People, Environment, and Society, FY2014 -FY2019

60%
Is committed to
57% operating in a way that
55% is better for society
55% 54%
53%
and the environment
52%
51%
Listens to customers'
50%
views

45% 45% 46%

45% 44%
43% 44%
42% 43%
43% Is committed to using
42% 42% renewable energy
40% 41%
38% 40%
39%
38%
37%
35% 36%
Treats its employees
well
30%
FY14 FY15 FY16 FY17 FY18 FY19

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 What IKEA Do We Want? 720-429

c) Relevance of the IKEA Concept, 2014-2019*

Note: * Total Global Population

Source: Inter IKEA data.

Exhibit 6 Ingka (IKEA’s largest franchisee) Selected Financial Data

a) Ingka Sales by Geographical Area, 2013 vs. 2018

2013 2018
Top Five Selling Countries Germany: 14% Germany: 15%
USA: 12% USA: 13%
France: 9% France: 8%
Russia: 7% UK: 6%
Sweden: 5% China: 6%
Sales Per Region Europe: 69% Europe: 71%
North America: 16% Americas: 18%
Asia, Australia, Russia: 15% Asia: 11%

Source: Ingka data.

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 720-429 What IKEA Do We Want?

b) Ingka Historical Evolution of Revenue and Net Income, 2008-2018

Revenue in billion $ Net income in billion $

43.5 43.4 4.7

4.3 4.4 4.4
35.6 34.0 37.6 38.5 36.6 39.5 4.0 3.9
3.6 3.4
31.1 30.7 29.4 3.2 3.3
26.9 2.9

1.7

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Source: Adapted from “Ingka Holding B.V.,” Capital IQ, Inc., a division of Standard & Poor’s, accessed September 2019.

Note: Ingka indicated that the profit decline in 2017 and 2018 was explained, among other things, by the sale of the range,
supply, and industrial activities to Inter IKEA, as well as by the investments associated with the “transaction” in order
to transform the business.

c) Ingka Income Statement, Millions of USD, 2015-2018

For the Fiscal Period Ending Aug-31-2015 Aug-31-2016 Aug-31-2017 Aug-31-2018

Revenue 36,581.3 39,099.3 43,100.6 43,006.4
Other Revenue - 412.5 364.6 368.0
Total Revenue 36,581.3 39,511.7 43,465.1 43,374.3
Cost of Goods Sold 20,410.0 21,089.1 28,179.6 28,665.1
Gross Profit 16,171.4 18,422.6 15,285.6 14,709.2
Selling General & Admin Exp. 5,385.6 - 11,686.3 12,096.3
Other Operating Expense (Income) 6,2504 13,407.3 - -
Other Operating Expense, Total 11,636.0 13,407.3 11,686.3 12,096.3
Operating Income 4,535.4 5,015.3 3,599.3 2,612.9
Interest and Invest. Income 991.3 - - -
Net Interest Exp. 991.3 - - -
Other Non-Operating Inc. (Exp.) (656.4) 968.7 336.1 (160.2)
EBT Incl Unusual Items 4,870.3 5,984.1 3,935.4 2,452.7
Income Tax Expense 920.8 1,290.9 979.7 735.9
Earnings from Cont. Ops. 3,949.6 4,693.2 2,955.7 1,716.8
Extraord. Item & Account. Change (15.7) (11.1) (19.0) (12.8)
Net Income 3,933.9 4,682.0 2,936.7 1,704.0

Source: “Ingka Holding B.V.,” Capital IQ, Inc., a division of Standard & Poor’s, accessed September 2019.

Note: Ingka indicated that the profit increase in 2016 included a gain on the “transaction,” which lifted the FY16 results. The
company also mentioned that the profit decline in 2017 and 2018 was explained, among other things, by the sale of the
range, supply, and industrial activities to Inter IKEA, as well as by the investments associated with the “transaction”
in order to transform the business.

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 What IKEA Do We Want? 720-429

Exhibit 7 Competitive Environment in Key Countries.

a) Home Furnishings: Market Share by Brand, 2013-2018

China Sweden
2013 2018 2013 2018
IKEA 1.1% 1.8% IKEA 25.4% 25.9%
Oppein 0.8% 1.4% Mio 7.9% 12.9%
Opple 0.9% 1.1% Jysk 7.2% 7.1%
Others 97.2% 95.7% Others 59.5% 54.1%
France United Kingdom
2013 2018 2013 2018
IKEA 13.4% 15.7% IKEA 6.4% 8.1%
Maisons du Monde 2.7% 4.7% DFS 3.4% 3.5%
Schmidt 3.8% 3.8% SCS 1.2% 1.1%
Others 80.1% 75.8% Others 89.0% 87.3%
Germany United States
2013 2018 2013 2018
IKEA 9.1% 11.1% Ashley 5.1% 5.5%
Nobilia 1.4% 1.4% IKEA 2.7% 2.8%
Hülsta 1.2% 1.1% Serta 2.2% 2.2%
Others 88.3% 86.4% Others 90.0% 89.5%
India
2013 2018
Philips 2.3% 2.3%
Godrej Interio 1.5% 1.8%
Surya 1.1% 1.0%
Others 95.1% 94.9%

b) Selected Indicators, 2013-2018

Countries Home Furnishings: Motor Vehicles Per

1,000 Inhabitants.
Internet Share % of Total Sales
2013 2018 2017 Data
China 2.6% 10.2% 180
France 6.9% 9.5% 590
Germany 4.8% 6.4% 605
India 0.1% 4.8% 28
Sweden 3.6% 7.5% 537
United Kingdom 10.3% 14.8% 617
United States 8.7% 14.9% 838

Source: Compiled by Casewriters from “Home Furnishings,” Passport, Euromonitor International; European Automobile
Manufacturers Association (ACEA), “Vehicles per Capita,” https://www.acea.be/statistics/tag/category/vehicles-
per-capita-by-country; U.S. Department of Transportation, Federal Highway Administration (FHWA), “State Motor-
Vehicle Registrations – 2017,” https://www.fhwa.dot.gov/policyinformation/statistics/2017/mv1.cfm; Brajesh
Chhibber, Rajat Dhawan, “Six ways to reignite India’s auto industry,” LiveMint, December 2, 2019,
https://www.livemint.com/industry/manufacturing/6-ways-to-reignite-india-s-auto-industry-
11571157981126.html; all accessed January 2020.

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 720-429 -24-

Exhibit 8 Selected Economic and Social Indicators, 2018 (unless indicated otherwise).

Country GDP Per Capita GDP Per Population GINI Poverty Headcount Poverty Headcount Poverty Headcount
in 1990, PPP Capita in 2018, Index* (%) Ratio at $1.90 per day Ratio at $3.20 per day Ratio at $5.50 per day
(current PPP (current (2011 PPP) (% of (2011 PPP) (% of (2011 PPP) (% of
internat. USD) internat. USD) population) population) population)
Luxembourg 29,665 113,337 607,728 33.8 0.2% 0.5% 0.5%
Norway 18,432 65,511 5,314,336 27.5 0.2% 0.2% 0.2%
United States 23,889 62,795 327,167,434 41.5 1.2% 1.5% 2.0%
Netherlands 19,145 56,329 17,231,017 28.2 0.0% 0.2% 0.5%
Denmark 18,216 55,671 5,797,446 28.2 0.2% 0.2% 0.5%
Sweden 20,121 53,209 10,183,175 29.2 0.3% 0.7% 1.0%
Germany 19,423 53,075 82,927,922 31.7 0.0% 0.0% 0.2%
Australia 17,330 51,663 24,992,369 35.8 0.5% 1.0% 1.2%
Canada 20,174 48,130 37,058,856 34.0 0.5% 0.5% 1.0%
United Kingdom 16,698 45,974 66,488,991 33.2 0.2% 0.2% 0.7%
France 17,624 45,342 66,987,244 32.7 0.0% 0.2% 0.2%
Japan 19,561 42,797 126,529,100 32.1 0.2% 0.5% 1.0%
South Korea 8,273 40,112 51,635,256 31.6 0.2% 0.5% 1.2%
Malaysia 6,850 31,782 31,528,585 41.0 0.0% 0.2% 2.7%
Turkey 6,141 28,069 82,319,724 42.9 0.3% 2.7% 11.5%
Russia 8,010 27,147 144,478,050 37.7 0.0% 0.3% 2.7%
Argentina 7,380 20,611 44,494,502 42.4 0.6% 2.4% 7.8%
Mexico 6,499 19,845 126,190,788 43.4 2.5% 11.2% 34.8%
Thailand 4,318 19,051 69,428,524 36.0 0.0% 0.5% 7.1%
China 988 18,237 1,392,730,000 38.6 0.7% 7.0% 27.2%
Brazil 6,711 16,096 209,469,333 51.3 3.4% 8.0% 19.4%
Indonesia 3,002 13,080 267,663,435 39.7 7.2% 33.1% 67.0%
Egypt 3,827 12,412 98,423,595 31.8 1.3% 16.1% 61.9%
Ukraine 6,790 9,233 44,622,516 24.6 0.1% 0.5% 7.8%
Philippines 2,605 8,951 106,651,922 40.1 7.8% 32.6% 63.2%
India 1,237 7,763 1,352,617,328 35.7 21.2% 60.4% 86.8%
Vietnam 946 7,448 95,540,395 35.3 2.0% 8.4% 29.0%
Nigeria 2,181 5,991 195,874,740 43.0 53.5% 77.6% 92.1%
Pakistan 1,983 5,567 212,215,030 33.5 3.9% 34.7% 75.4%

Source: Compiled by Casewriters from The World Bank, “GDP Per Capita,” “Population,” and “Poverty,” https://data.worldbank.org/; all accessed September 2019.

Note: *GINI Index measures income distribution among a population. The coefficient ranges from 0% to 100%, with 0% representing perfect equality and 100% representing perfect
inequality. GINI & Poverty Ratios: 2015 data except for Japan (2008); Nigeria (2009); India (2011); South Korea (2012); Canada (2013); Australia (2014); Argentina, Mexico, the
United States, and Vietnam (2016).

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 What IKEA Do We Want? 720-429

Exhibit 9 IKEA Franchisees, as of 2019

Franchisees Date of First IKEA Stores Markets

IKEA Store
Al-Futtaim Group 1991 4 Egypt, Qatar, United Arab Emirates
Al-Homaizi Group 1984 3 Kuwait, Morocco, Jordan
Al-Sulaiman 1983 5 Bahrain, Saudi Arabia
Dairy Farm Group 2002* 11 China (Hong Kong), Indonesia, Taiwan
House Market Group 2001 7 Bulgaria, Cyprus, Greece
IKANO Group 1986** 8 Malaysia, Singapore, Thailand
Ingka Group 1986** 372 Australia, Austria, Belgium, Canada, China
(Mainland), Croatia, Czech Republic, Denmark,
Finland, France, Germany, Hungary, India, Ireland,
Italy, Japan, the Netherlands, Norway, Poland,
Portugal, Romania, Russia, Serbia, Slovakia,
South Korea, Spain, Sweden, Switzerland, United
Kingdom, United States
Mapa 2005 7 Turkey
Miklatorg Group 1981 3 Iceland, Latvia, Lithuania
Northern Birch 2005*** 4 Israel
Sarton Group 2010 5 Dominican Republic, Spanish Islands
Falabella First store: 9 stores over the Chile, Colombia, Peru
2021 (TBC) next 10 years

Source: Created by casewriters based on Ingka and Inter IKEA data.

Note: Franchisees entities listed here were not intended to indicate accurate corporate names but were merely provided to
indicate the company or the group of companies that had been granted a franchise right. Between the end of 2018 and
September 2019, eight new IKEA stores were opened worldwide, which explains why 430 stores were listed in this
exhibit (as opposed to the 422 stores mentioned on the first page of the case study).

*The IKEA operations in Hong Kong and Taiwan were bought by Dairy Farm from Jardine Pacific Holdings in 2002.**
IKANO and Ingka were originally part of IKEA. IKEA operations were divided into three separate and legally
independent groups of companies (Inter IKEA, IKANO, and Ingka) in 1986. *** In 2005, Matthew Bronfman, who
owned Northern Birch, bought IKEA Israel from Co-Op.

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 720-429 What IKEA Do We Want?

Exhibit 10 IKEA’s Plan to Interact with Three Billion People by 2025, as of 2019

Source: Inter IKEA data.

Note: In 2019, the estimated world population was 7.7 billion.

Exhibit 11 Selected IKEA Consumer Insights

a) Who is IKEA for Today? Thin wallets vs. Thick Wallets,* as of 2019

Note: *Thin wallets= people living on $10-35,000 per household per year. Thick wallets = people living on more than $70,000
per household per year.

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 What IKEA Do We Want? 720-429

b) Different Brand Perception Across Key Markets, FY2019 vs. FY2014

Note: A dash (-) means no change.

c) Visitation and Conversion, FY2019 vs. FY20 14.

Source: Inter IKEA data.

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 720-429 What IKEA Do We Want?

Exhibit 12 Breakdown of IKEA’s purchases by channel, 2019

Source: Inter IKEA data.

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 What IKEA Do We Want? 720-429

Endnotes

1 Anna Molin, “IKEA Prepares for Future of Mega Cities and ‘Thin Wallets,’” Bloomberg, April 10, 2018,
https://www.bloomberg.com/news/articles/2018-04-10/ikea-prepares-for-future-of-mega-cities-and-thin-wallets, accessed
December 2019.
2 Bertil Torekull, Leading by Design: the IKEA Story (New York: HarperCollins Publishers, 1999), p. 9, accessed January 2020.

3 Siok Hui Leong, “The Low-Price, Flatpack Phenomenon,” The Star Online (Malaysia), August 27, 2012,
https://www.thestar.com.my/lifestyle/archive/2012/08/27/the-lowprice-flatpack-phenomenon/, accessed July 2019.
4 London Business School, “Business Heroes: Ingvar Kamprad,” December 1, 2004, https://www.london.edu/lbsr/business-
heroes-ingvar-kamprad, accessed July 2019.
5 Inter IKEA Group, “Milestones in Our History - Inter IKEA Group,” 2012-2016, https://inter.ikea.com/en/about-
us/milestones/, accessed December 2019.
6 Christopher A. Bartlett and Ashish Nada, “Ingvar Kamprad and IKEA,” HBS No. 390-132 (Boston: Harvard Business School
Publishing, 1996), p. 1.
7 Ibid.

8 Jonathan Margolis, “Ingvar Kamprad: Founder of Ikea Who Struggled to Shake Off Nazi Skeletons in the Cupboard,” The
Independent, January 31, 2018, https://www.independent.co.uk/news/obituaries/ingvar-kamprad-ikea-founder-nazi-
connections-sweden-flatpack-furniture-history-collaboration-a8185241.html, accessed July 2019.
9 Christopher A. Bartlett and Ashish Nada, “Ingvar Kamprad and IKEA.”

10 Jonathan Margolis, “Ingvar Kamprad: Founder of Ikea who struggled to shake off Nazi skeletons in the Cupboard.”

11 Noah Friedman and Lamar Salter, “Here’s the Meaning behind All of Those Obscure IKEA Product Names,” Business
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12 Karl Ritter, “Ingvar Kamprad, Who Founded Furniture Giant IKEA, Dies at 91,”AP News, January 29, 2018,
https://apnews.com/4567f8751bbb498a98eb6c69531b3992/Furniture-for-all:-IKEA-founder-Ingvar-Kamprad-dies-at-91,
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13 Bertil Torekull, Leading by Design: the IKEA Story (New York: HarperCollins Publishers, 1999), p. 24.

14 Stig Ottosson, Developing and Managing Innovation in a Fast-Changing and Complex World, (Cham: Springer International
Publishing AG, 2019), p. 64, https://bit.ly/2PQ2D8S, accessed October 2019.
15 Jonathan Margolis, “Ingvar Kamprad: Founder of Ikea Who Struggled to Shake Off Nazi Skeletons in the Cupboard.”

16 Christopher A. Bartlett and Paul W. Beamish, Transnational Management: Text and Cases in Cross-Border Management
(Cambridge: Cambridge University Press, 2018), p. 497, https://bit.ly/2sYEZOe, accessed September 2019.
17 Richard Milne, “What Will IKEA Build Next?” The Financial Times, February 1, 2018,
https://www.ft.com/content/8a8bb9a0-0613-11e8-9650-9c0ad2d7c5b5, accessed July 2019.
18 Christopher A. Bartlett and Ashish Nada, “Ingvar Kamprad and IKEA,” p. 2.

19 Simon Johnson, “Flat-pack pioneer Kamprad built Sweden's IKEA into global brand,” Reuters, January 28, 2018,
https://www.reuters.com/article/us-people-kamprad-obituary/flat-pack-pioneer-kamprad-built-swedens-ikea-into-global-
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20 Simon Johnson, “Ingvar Kamprad, Father of the IKEA Flat-Pack Furniture Revolution, Dead at 91,” The Sydney Morning
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21 Christopher A. Bartlett and Ashish Nada, “Ingvar Kamprad and IKEA,” p. 2.

22 Inter Ikea Group, “Milestones in Our History.”

23 Richard Milne, “What Will IKEA Build Next?”

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24 Christopher A. Bartlett and Paul W. Beamish, Transnational Management: Text and Cases in Cross-Border Management, p. 500.

25 Alain Verbeke, International Business Strategy: Rethinking the Foundations of Global Corporate Success (Cambridge University
Press, 2009), pp. 94-95, https://bit.ly/2MDRupN, accessed December 2019.
26 Kate Gillespie and H. David Hennessey, Global Marketing (Mason: South-Western Cengage Learning, 2007), p. 518,
https://bit.ly/30De6MV, accessed July 2019.
27 Inter Ikea Group, “Milestones in Our History.”

28 Inter Ikea Group, “This is IKEA: 1960-1970,”

https://www.ikea.com/ms/fr_MA/about_ikea/the_ikea_way/history/1960_1970.html, accessed January 2020.
29 Inter Ikea Group, “Milestones in Our History.”

30 Martin Sandbu, “Can Today’s Ultra-Rich Make Peace with a Wealth Tax?” The Financial Times, June 16, 2019,
https://www.ft.com/content/f9036af0-4009-11e9-9499-290979c9807a, accessed September 2019.
31 Richard Milne, “What Will IKEA Build Next?”

32 Ibid.

33 Ibid.

34 Ibid.

35 Ibid.

36 Steen Thomsen, “Foundation Ownership at IKEA,” Copenhagen Business School, August 27, 2018, p. 3,
http://www.tifp.dk/wp-content/uploads/2011/11/Foundation-Ownership-at-IKEA.pdf, accessed September 2019.
37 Ingvar Kamprad, “The Testament of a Furniture Dealer,” 1976, https://www.ikea.com/ms/en_US/pdf/reports-
downloads/the-testament-of-a-furniture-dealer.pdf, accessed December 2019.
38 Ibid.

39 Tim Leberecht, “Take the Bus and 6 Other Lessons from Late IKEA Founder Ingvar Kamprad,” Inc., February 1, 2018,
https://www.inc.com/tim-leberecht/convenience-is-overrated-6-other-lessons-from-late-ikea-founder-ingvar-kamprad.html,
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40 Ibid.

41 Szu Ping Chan, “Ikea Founder Ingvar Kamprad Steps Down as Chairman,” The Telegraph, June 5, 2013,
https://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10100082/Ikea-founder-Ingvar-Kamprad-steps-
down-as-chairman.html, accessed July 2019.
42 Marc Rattray and Richard Milne, “Ingvar Kamprad, 1926-2018, IKEA Founder,” The Financial Times, January 28, 2018,
https://www.ft.com/content/bd54dbea-042a-11e8-9650-9c0ad2d7c5b5, accessed September 2019.
43 Glynda Alves, “Five Fun Facts about IKEA’s Founder Ingvar Kamprad,” The Economic Times (India), February 5, 2018,
https://economictimes.indiatimes.com/magazines/panache/5-fun-facts-about-ikeas-founder-ingvar-
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44 Richard Godfrey, Strategic Management: A Critical Introduction (New York: Routledge, 2016), https://bit.ly/2R0xOyL,
accessed September 2019.
45 Ibid.

46 Els van Asseldonk, “IKEA Sets the Prices of Its Products before They Are Even Designed,” Business Insider, October 25, 2016,
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47 Malini Goyal, “’Make More in India’: Why IKEA Is Beefing Up Its Manufacturing ahead of Its Store Launch,” The Economic
Times (India), February 8, 2015, https://economictimes.indiatimes.com/industry/services/retail/make-more-in-india-why-
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48 Bill Nelson, “Where Is Ikea Furniture Manufactured?” May 17, 2018, post on the blog “Hunker,”
https://www.hunker.com/13710050/where-is-ikea-furniture-manufactured, accessed July 2019.

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49 Inter IKEA Group, “IKEA Range & Supply,” https://inter.ikea.com/en/inter-ikea-group/ikea-range-and-supply/, accessed

September 2019.
50 Ibid.

51 Christopher A. Bartlett and Ashish Nada, “Ingvar Kamprad and IKEA,” p. 6.

52 Beth Kowitt, “It’s IKEA’s World. We Just Live in It,” Fortune, March 10, 2015, https://fortune.com/longform/ikea-world-
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53 IKEA, FY2018 Sustainability Report, (Delft, IKEA, 2018), p. 3,
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54 Yasuhiro Monden and Yoshiteru Minagawa, Lean Management of Global Supply Chain (Singapore: World Scientific Publishing
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55 Anuj Nawal, “Why is IKEA so cheap? IKEA Business Model,” July 21, 2019, post on the blog “Feedough,”
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56 Jeff Harder, “10 IKEA Etiquette Rules,” post on the blog “How Stuff Works,” https://people.howstuffworks.com/10-ikea-
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57 Nigel Slack, Stuart Chambers, Robert Johnston, Operations Management, (Essex: Pearson Education Limited, 2010),
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58 UCL Minds Lunch Hour Lectures, “Alan Penn: Who Enjoys Shopping in IKEA?” YouTube video, published January 19,
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59 Gus Lubin, “Why Shopping at IKEA Is a Magical Experience Like Nothing in the World,” Business Insider, January 16, 2014,
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60 IKEA, “Together We Save Money: You Do Your Part. We Do Our Part. Together We Save Money,” undated,
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61 Norton, Michael I., Daniel Mochon, and Dan Ariely, “The IKEA Effect: When Labor Leads to Love. “ Journal of Consumer
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62 Craig Hodgson, IKEA Director Retail Architecture and Store Design Development, quoted in Sarah Kampman, “A Study in
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63 Tom Bergin, “Factbox: IKEA’s Complex Structure,” Reuters, April 15, 2016, https://www.reuters.com/article/us-ikea-
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64 Liam O’Connell, “Sales share of Ingka Holdings B.V. (IKEA) in 2018, by region,” Statista, July 9, 2019,
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65 “Wayfair, Inc.” United States Securities and Exchange Commission Form 10-Q for quarterly period ending September 30,
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66 Alison Davis, “What You Can Learn from IKEA about Changing Customer Preferences,” Inc., December 6, 2017,
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67 Leanna Garfield, “Only 20% of Americans Will Own a Car in 15 Years, New Study Finds,” Business Insider, May 4, 2017,
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68 Rakesh Kochhar, “Middle Class Fortunes in Western Europe,” Pew Research Center, April 24, 2017,
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69 Lisa Greim, “Kitchen Remodel: What It Really Costs, Plus Three Ways to Save Big,” The Denver Post, August 29, 2014,
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70 Cheng Qingqing, “IKEA’s Experience in China May Help It Grow in India,” Global Times, August 21, 2018,
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71 Kim Wall, “IKEA at Last Cracks China Market, but Success Has Meant Adapting to Local Ways,” South China Morning Post,
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72 Ibid.

73 “A Wedding in Aisle 3? Why IKEA Encourages Chinese to Make Its Stores Their Own?” AdAge.com, December 10, 2013,
https://adage.com/article/cmo-strategy/ikea-encourages-chinese-make-stores/245573, accessed September 2019.
74 Absence of do-it-yourself culture in China: Helen H. Wang, “Why Home Depot Struggles and IKEA Thrives in China?”
Forbes, February 10, 2011, https://www.forbes.com/sites/helenwang/2011/02/10/why-home-depot-struggles-and-ikea-
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75 Anna Ringstrom, “IKEA Turns the Global Local for Asia Push,” Reuters, March 7, 2013,
https://ca.reuters.com/article/lifestyleNews/idCABRE92606220130307, accessed July 2019.
76 Ibid.

77 Jens Hansegard, “IKEA Taking China by Storm,” The Wall Street Journal, March 26, 2012,
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78 Walter Loeb, “Alibaba Is a Threat to Amazon, eBay, Walmart, and Everyone Else,” Forbes, July 24, 2013,
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else/#6e9c40f31e66, accessed November 2019.
79 Mark Broad, “Alibaba: What Exactly Does It Do?” BBC, September 14, 2014, https://www.bbc.com/news/business-
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80 Indonesian Trade Promotion Center Chennai, “Potential of Furniture Market in India: Market Outlook to 2020,” 2015, p. 21-
26, http://djpen.kemendag.go.id/membership/data/files/69fcb-potential-of-furniture-market-in-india-(market-outlook-to--
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81 “IKEA to Increase Investment in India, Plans to Open over 40 Stores,” NDTV, August 9, 2018,
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82 ILO Consulting, “Impact of IKEA Entering India,” ILO Consulting Website, 2019, http://www.iloconsulting.in/knowledge-
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83 Ashish Gupta, “Is India Ready for IKEA?” Fortune India, March 24, 2017, https://www.fortuneindia.com/ideas/is-india-
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84 Ashish Gupta, “Is India Ready for IKEA?”

85 Tom Bergin, “IKEA Finalizing Its Biggest Overhaul in Decades,” Reuters, April 15, 2016,
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86 “IKEA Just Made a $6 Billion Deal to Overhaul Its Business,” Fortune, December 7, 2016,
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87 Interogo Holding, “2015 Inter IKEA Group Annual Report Published,” June 27, 2016,
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88 “IKEA Just Made a $6 Billion Deal to Overhaul Its Business,” Fortune, December 7, 2016,
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89 Richard Milne, “Inter IKEA’s Torbjorn Loof: Making the Vision Clear,” The Financial Times, February 3, 2019,
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90 “IKEA Group Appoints Jesper Brodin New CEO,” Reuters, May 24, 2017, https://www.reuters.com/article/ikea-ceo/ikea-
group-appoints-jesper-brodin-new-ceo-idUSFWN1IQ01Y, accessed January 2020.
91 Ingka Group, “Jesper Brodin,” undated, https://www.ingka.com/bios/jesper-brodin/, accessed January 2020.

92 Subrat Patnaik, “IKEA Strives to Keep Prices Low As It Opens First Store in India,” Reuters, August 8, 2018,
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93 International Monetary Fund (IMF), “World Economic Outlook Update, July 2018,” IMF Website, July 2, 2018,
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94 Morphocode, “Global Trends of Urbanization,” Morphocode Website, undated, https://morphocode.com/global-trends-
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95 United Nations (UN), Department of Economic and Social Affairs, “World Population Prospects 2019: Highlights,” UN
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96 Inter IKEA, “IKEA continues to grow while developing for the future,” Inter IKEA Website, September 25, 2019,
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97 Anna Molin, “IKEA Plans to Expand to a Dozen New Markets in Coming Years,” Bloomberg, October 10, 2018,
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98 Raz Robinson, “Ikea Has Announced a Radical New Plan to Go Green By 2030,” Fatherly, June 10, 2018,
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99 Jill Bederoff, “IKEA Aim to Use Only Renewable and Recycled Materials by 2030,” Business Insider, June 10, 2018,
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100 Ibid.

101 PovcalNet dataset, “Regional aggregation using 2011 PPP and $1.9/day poverty line,” The World Bank,
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102 McKinsey Global Institute, “Urban World: The Global Consumers to Watch,” April 2016, p. 4,
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103 AFP, “Paris Gets World’s First City-Center IKEA Store,” The Local.fr, May 6, 2019,
https://www.thelocal.fr/20190506/paris-gets-worlds-first-city-centre-ikea-store, accessed July 2019.
104 Harriet Agnew, “IKEA Opens First Store in Central Paris as Part of €400 Million Push,” The Financial Times, May 6, 2019,
https://www.ft.com/content/792e77be-6fea-11e9-bf5c-6eeb837566c5, accessed July 2019.

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105 Dominique Vidalon, “IKEA Opens Central Paris Store to Cater for Changing Tastes,” Reuters, May 6, 2019,
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106 Ibid.

107 Inter IKEA, “Fiscal year ending August 2018, IKEA Facts and Figures 2018,” Inter IKEA website, 2019,
https://www.ikea.com/ms/en_JP/this-is-ikea/facts-and-figures/index.html, accessed January 2020.
108 Anna Ringstrom and Melissa Fares, “IKEA Accelerates Services Drive as Competition Stiffens,” Reuters, February 11, 2019,
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idUSKCN1Q00G3, accessed July 2019.
109 Ibid.

110 IKEA, “100% committed to sustainable cotton,” IKEA Website, https://www.ikea.com/us/en/this-is-ikea/sustainable-

everyday/100-committed-to-sustainable-cotton-pub7f285ad1, accessed on January 19th 2020
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