Frugality + Fortitude = Ingvar Kamprad, Furniture Fortress
Only a few fortunate individuals are lucky enough to be born with silver spoons in their mouths. For most of us, we need to make ends meet, start our own finances, and strive hard to work our way up the financial ladder. With little pennies in our pockets, we are strongly focused on thriftiness and prudence as we walk thru the rough road to success. And there is absolutely nothing wrong with that as proven by Ingvar Kamprad. As he quoted once, “People say I am cheap, and I don’t mind if they do”. Ingvar is ranked by Forbes magazine as the 7th wealthiest person in the world, with an estimated net worth of around US$31 billion and the wealthiest European-born person as of 2008.
Ingvar Kamprad, now 81 years old, was born in the south of Sweden and was raised on a farm. As a young boy, he started selling matches to his neighbors on his bicycle. He realized that he could buy matches from Stockholm in bulk for very cheap prices and sell them individually at a fair price and yet, still, make a good profit. This method was a success and so he re-invested his profits and expanded from matches to selling fish, Christmas tree decorations, seeds and later, ball-point pens and pencils. In 1943, at the age of 17, his father gave him a gift for succeeding in his studies. Most boys at that age would spend the money recklessly and splurge on leisure activities. But not Ingvar. He used the money to set up his own business, IKEA.
The name IKEA originated from the founder’s initials (I.K.) plus the first letters of Elmtaryd and Agunnaryd, the farm and village where he grew up. IKEA originally sold pens, wallets, picture frames, table runners, watches, jewelry and nylon stockings—whatever is needed and Ingvar could meet at a reduced price. When Ingvar was unable to attend to his customers individually, he resorted to running on a makeshift mail order system and started advertising in local newspapers. He employed the country milk man to distribute his products, which in turn delivered this to the nearby train station.
In 1947, Ingvar first presented furniture into the IKEA product line. He used local manufacturers in the forests close to his home and this permitted him to keep his prices down. The favorable response was overwhelming and this paved way to expansion. 1951 showed Ingvar the chance of becoming a furniture manufacturer on a much larger scale. He soon made the resolution of discontinuing all other product lines and to concentrate on the low-priced furniture. This became the heart of the company and it is how the company is known today.
1953 established the development of IKEA’s concept. The first furniture showroom was opened in Älmhult. This provided customers the opportunity to see for themselves and touch first-hand the furniture before purchasing.
1955 was the first time that they begin designing their own furniture amidst being boycotted by suppliers as a result of pressures from competitors. Also, through a stroke of inspiration, one employee decided to remove a table’s legs so that it may be able to fit in a car as well as avoid transport damages. This innovation led to flat-packaging designs of IKEA’s furniture that resulted to more items fitting perfectly inside delivery trucks. This move also meant less space needed for each item, reduced labor costs, and minimized transport damages. Also, it led to lower priced products and easy transport of items to customers. Customers are also presented the opportunity for self-sufficiency through the self-service designs of the products and ease of assembly of the furniture. In 1958, the first IKEA store was inaugurated in Älmhult and was, at that time, the largest furniture display in Scandinavia.
On the one hand, Ingvar was always been seen as a man of frugality, but in the truest sense, a man of the people. For instance, his idea of a luxury vacation is a ride on his bike and when he drives, he uses an old Volvo. Although retired, he still sees to it to visit IKEA stores to maintain the feel of where the business really is.Indeed, the company had gone a long way from that long ago days of a boy selling matches from a bicycle. From flat-pack furniture, it has expanded to other home products such as accessories, bathroom fixtures and kitchen furnishings. Now, it is considered as the world’s largest furniture manufacturer, with over 200 stores in 31 countries, employing over 75,000 people and generating over 12 billion in sales annually.
Further Readings:
Ingvar Kamprad & family
Ikea.com timeline
Ingvar Kamprad
IKEA
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Comments
Leave a comment