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Leave IKEA - and the old man - alone

One can’t help but be fascinated by IKEA. Whether due to a sense of bewilderment that so many millions of people are willing to subject themselves to the bizarre torture of the IKEA shopping process. Or the mystery surrounding the popularity of their restaurant meatballs, which even have their own Facebook page.

One can’t help but be fascinated by IKEA.

Whether due to a sense of bewilderment that so many millions of people are willing to subject themselves to the bizarre torture of the IKEA shopping process. Or the mystery surrounding the popularity of their restaurant meatballs, which even have their own Facebook page.

And there’s the weirdness of its reclusive founder, the now 85-year-old Ingvar Kamprad who heads one of the biggest family businesses in Europe. It’s been known for a long time that Mr Kamprad held fairly unsavoury right-wing views in his youth.

But recently some old documents have been unearthed that show he was an active recruiter in the successor to the Swedish Nazi Party.

This kind of thing is not judged to be helpful for the brand image which, if you think about it, is not very Nazi-like at all. You cannot imagine Goebbels spending nine hours assembling Tromsö bunk beds for his six kids.

Because the organisation is quite reclusive and the way its ownership structure works a trifle opaque – there is a Liechtenstein-based foundation controlled by the family although the parent for the group is a private Dutch-registered company – it takes a reputation pounding for this sort of revelation.

On the plus side, Kamprad has always been straight about his past and has apologised for it in an open letter. (This is more than many German industrial companies who were up to their necks in the awful events of 1933-45 have ever managed to do.)

He has agreed to increase the donation from his charitable foundation to close to £100 million a year to make amends - £40 million of this will go to the overcrowded Dadaab refugee camp in Kenya.

Skeletons in the cupboard are embarrassing for any business but for IKEA they hurt because the company’s ethical and operational standards are felt to be high. Forty percent of the company’s 200 most senior managers are women.

They are also straight about corruption, which they frequently encounter when entering developing countries. They went public in Russia when IKEA got squeezed by the hoods running the local electricity supplies in St Petersburg.

One thing is for sure. In a world of excess and mindless consumption, IKEA is a very thrifty organisation which has enabled it to ride the recession with great skill – 2010 sales were up 7.7 % - despite having 80% of its sales in retail-blighted Europe. “We hate waste,” said Mikael Ohlsson, who took over as chief executive of IKEA Group in September 2009, in a recent Economist interview.

They are always trying to chisel down costs and one wonders how on earth they can produce what are generally good quailty goods for the prices they do.

Ohlsson traces it back to the company’s birthplace in Smaland, a down at heel part of Sweden whose inhabitants, he noted , are “stubborn, cost-conscious and ingenious at making a living with very little”.

I’d say this is a classic and entirely laudable trait common to many family businesses. It’s in their blood. It’s been pilloried for paying too little tax but you could put this down to the same sort of thriftiness.

IKEA is stubborn in other ways. The organisation has long vigorosly argued that its privately held status is vital to its success. It doesn’t have to jump every time those demanding quarterly figures bark.

It has a cool eye that is always focussed on the long term and that has paid off handsomely. They will need that steady long-term nerve as they focus on India and China – locations that are over the next few years likely to prove grisly graveyards for many unwary Western retailers.

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