Building Piece by Piece: IKEA Becomes an Industry Leader

“It is our duty to expand,” said Kamprad. “Those who cannot or will not join us are to be pitied…A glorious future!”

In 1947, Kamprad decided to purchase an abandoned factory and begin production of a line of furniture. In order to keep his costs down, Kamprad used local manufacturers in the forests close to his home to supply his goods. The furniture was such a hit that in 1951, Kamprad chose to discontinue all his other operations and product lines and to focus solely on furniture. He believed that his company could become a furniture provider on a larger scale.

Over the next few years, IKEA become embroiled in a pricing war with its main competitor. As both companies continued to lower their prices, Kamprad become concerned about preserving quality. In 1953, Kamprad came up with a solution to this problem in the form of a showroom. IKEA’s first furniture showroom opened in Älmhult to much positive response. For the first time, customers could actually come face to face with the products before ordering them, allowing them to make their purchasing decision based on first-hand experience. It was a gamble that paid off for IKEA as people flocked to the showroom in droves.

Two years later, IKEA would run into trouble. Under pressure from its competitors, IKEA’s suppliers began to boycott the company. In response, Kamprad would make a decision that would forever change the company; from now on, IKEA was going to design its own furniture. When one IKEA employee decided to remove a table’s legs so it would fit securely into a car, the company would again be revolutionized. After that point, IKEA began to orient itself towards design for flat packaging. The result of this was both lower prices and easier transportation home.

In the coming decade, IKEA would continue its expansion, opening its first stores outside of Sweden. As increasing numbers of people showed up to store openings, Kamprad decided to change the layout of his stores to a warehouse style, allowing people to serve themselves. Denmark, Switzerland, Germany, Australia, Hong Kong, Canada, France, Russia, and the U.S. – one by one, IKEA expanded into each of these countries, creating a cult-like following wherever it went.

Today, Kamprad is no longer in charge of the day-to-day operations of running the company, but IKEA remains in the hands of his family. He has refused to take the company public for fear that it will slow the decision-making process that has enabled its growth over the decades. The future of the company lies in the hands of one of Kamprad’s three sons, although he does not know which one as of yet. He has given his children a challenge – whichever son is most successful in running their respective arms of Habitat (IKEA’s upmarket furniture chain) will not only be placed in charge of the company, but will also inherit the Kamprad family fortune.

Until that time, it is likely that this company whose stores received over 500 million visitors worldwide in the last fiscal year will maintain its position as the global industry leader.

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