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Business Heroes: Ingvar Kamprad

From garden seed salesman to furniture titan: The story of Ingvar Kamprad

By London Business School 01 December 2004

From garden seed salesman to furniture titan: The story of Ingvar Kamprad
Business Heroes Ingvar KampradIn 2002, a Swedish company was ranked as the 15th largest food chain in America. In the same year, it sold 112 million meatballs in the United Kingdom; and distributed 115 million copies of its product catalogue – 46 editions in 23 languages – making it one of the largest publications in the world. This company is not a publisher; or a restaurant chain. Nor is it a food retailer. It is IKEA, the selfassembly furniture company. With an empire that stretches from China to California, it is the creation of a business legend and one of Sweden’s greatest entrepreneurs, Ingvar Kamprad.

Today, IKEA is a design style icon – a contemporary lifestyle statement. Disposable design, perhaps, but it has captured the public imagination. A staggering 286 million people shopped at IKEA during 2002. Revenues were in excess of $7 billion. It is a remarkable achievement for a man from humble beginnings.

Kamprad was born in 1926 in Småland, an isolated region of Sweden some 150 miles south of Stockholm. A land of forests and lakes, of otters, elk, grouse, and the ubiquitous lingonberry, the area is characterised by small tightly knit communities, housed in traditional red painted timber framed cottages. Sparsely populated, with an average of just 24 people per square kilometre, it is cool in the summer, and icy cold in the winter. Raised on the family farm in Agunnaryd, life was tough for the young Kamprad. Rural Sweden in the late 1920s and early 1930s was a difficult place to grow up. Outside the main cities, the cold unforgiving Swedish landscape offered few opportunities for advancement. Yet Kamprad was resourceful and full of the enthusiasm of youth. “I suppose I was slightly peculiar,” he observes in his biography, “in that I started tremendously early doing business deals.”

At five years of age Kamprad was the archetypal child entrepreneur. He sold matches to neighbours. He picked lingonberries that were then dispatched by bus to a local buyer. He enjoyed his first taste of success when he made enough money from selling garden seed to buy a new racing bike and a typewriter.

In 1943, aged 17, Kamprad formed Ikéa. He took the IK from his initials, E for Elmtaryd the farm he grew up on, and A for Agunnaryd his home village. He sold a mixture of products to the local farmers. It wasn’t long before the business outgrew the local market so Kamprad switched to selling by mail order. Newspaper advertisements stimulated demand and the local milk cart and train network solved his distribution problems. Soon, IKEA pens, pencils, picture frames, wallets, watches and other assorted goods were wending their way across Sweden. Kamprad was still working full time for the Forest Owner’s Association while running IKEA in his spare time. It was only after completing his national service in 1946 that he focused solely on managing IKEA.

Furniture was advertised for the first time in 1948. Sourced from local manufacturers it was competitively priced and sales were encouraging. In fact, sales were so good that four years later Kamprad abandoned all other products to concentrate on affordablypriced furniture and domestic articles.

In the early 1950s the business changed direction again. Up until 1953 IKEA had been solely a mail-order business. But cut-throat competition in the mail-order industry was driving down prices, margins were squeezed and as a result many companies skimped on quality. The delivery of shoddy goods by some mail-order companies damaged the image of the whole industry. Kamprad knew that he needed to dissociate IKEA from other mail order companies in the minds of the consumer. A change of strategy was required.

His solution was to provide the customers with the opportunity to get hands-on with the products, rather than just look at a picture in a catalogue. He bought a local wood-working shop in Älmhult and advised customers if they wished to see the products featured in the catalogue they should come along to IKEA’s furniture exhibition. Kamprad had no idea how many people were likely to take a trek through the forests to Älmhult. Fearing the worst, as an added incentive he promised coffee and buns for all first day visitors. On March 18th 1953, when a nervous Kamprad opened the doors of his new display store and furniture factory for the first time, there were over 1000 people waiting patiently outside.

It was during these early years that Kamprad developed the principles and philosophy that underpin the company today. Cost consciousness and customer convenience were fundamental principles. Self-assembled furniture was a byproduct of making an IKEA table easier to fit into customers’ cars. The organisation eschewed hierarchy – employees are “co-workers” in IKEAspeak. Kamprad assumed an almost pedagogical role; the pastor of the IKEA flock instructing his IKEA family in the IKEA way – which is enshrined in Kamprad’s Testament to a Furniture Dealer – a document he wrote in 1976.

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