IKEA: History and SWOT Analysis

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Ingvar Kamprad, IKEA’s founder, has a very intriguing and impressive life story. Kamprad was a very intelligent young Swedish boy who quickly turned into the 5th wealthiest man in the world. His net worth is now $4.2 billion. At a very early age Kamprad started his selling knowledge. When he was just 5 years old he would buy matches in bulk at a cheap store in Stockholm and re-sell them around his neighborhood at low prices, but enough to make a hefty profit. Kamprad’s selling continued and expanded from flowers to greeting cards to pencils and pens throughout the 1920’s. As Kamprads business skills increased he began studying the retail prices of different items in Sweden. He recognized that furniture prices had increase by 41% in 1935 and realized how profitable this area of retailing could be. In 1943, at age 17 Kamprad received money from his father for his successful studies and used the money to create a business. IKEA was then formed, standing for Ingvar Kamprads initials (I.K.) and the first letter of the farm he lived on, Elmtaryd (E) and the first letter of the village he lived in, Agunnard (A.) Kamprad created his furniture line in 1948 aiming for furniture that would be affordably priced. He began only selling his furniture through magazine advertisements. In 1953 the first showroom opened in Almhult Sweden. This was the first time consumers could physically see and feel the IKEA furniture before ordering them. 3 years later the need for flat packs and self-assembly furniture gave rise; one of IKEA’s co-workers had to remove the legs of a table to fit into their car without damaging the surroundings. (“IKEA Official Page”) In 1958 the first IKEA store was opened in Almhult Sweden. It was the largest furniture store in Scandinavia at the time with 6,700 square meters. Two years after the opening the store Kamprad introduced the first IKEA restaurant which was located inside the furniture store building. Kamprad expanded his store outside of Sweden in 1963 by opening an IKEA store in Norway. Within ten years IKEA stores were being opened outside of Scandinavian countries and expanding into 3 more continents (“IKEA Official Webpage”.) One of the most recent expansions was into the Dominican Republic in 2010. IKEA is in the process of opening new stores and developing the most innovative furniture products of today.

Store Locations

After IKEA opened in Sweden in 1958, it quickly moved into other Scandinavian countries opening stores in Norway in 1963 and in Denmark in 1969. Throughout the 1970’s IKEA rapidly spread through Europe. The first store outside of Scandinavia opened in Switzerland and quickly after IKEA made its presence in Germany. In 1975 IKEA arrived in Australia and opened its first store in Sydney. Throughout the 1970’s IKEA also opened stores in Japan, Hong Kong, The Netherlands and Singapore. Germany has IKEA’s biggest market with 46 stores in the country. Following Germany is the United States with 38 stores across the country. As of right now, IKEA has not appeared in developing countries, but is still planning for more global expansion (Countries.) IKEA group has continued growing every year and is now a large retail experience with over 123,000 co-workers. IKEA’s employees help generate annual sales of more than 21.5 billion dollars. The stores locations are placed strategically. The location is near major roads, freeways and public transportation. Although the stores are not normally placed in densely populated areas, IKEA is still successful and reaps high traffic due to the Huff Gravity model. Since IKEA stores are so large and carry a wide range of products, people are willing to travel a further distance to their stores. The largest IKEA store is in Stockholm, Sweden with a size of 55,200 square meters and following behind it is the Shanghai, China store with a size of 49,400 square meters (“IKEA”) In 2011 IKEA announced a plan to build a wind farm in Sweden to help IKEA...
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