Ikea, the world’s largest furniture seller, was one of several companies that pulled its ads from GB News last week. The boycott lasted about 48 hours: Ikea quickly reversed on the decision, saying it was taken “at great speed”.
Now the two have made up, maybe Ikea could refurbish GB News’s shoddy sets?
It could certainly spare the furniture. Ikea’s revenue was £34bn last year, and more than 800 million customers visited its stores in 2020. (That’s down from a billion in 2019, before the pandemic.) Its products use 1% of the world’s wood supply and the Billy bookcase, of which more than 110 million have been sold, is so widespread that Bloomberg uses it to analyse exchange rates. The Ikea catalogue (in its final year thanks to the internet) was said to have a bigger circulation than the Bible. And one in ten Europeans – or one in five Brits, depending on which corner of the internet you believe – is supposedly conceived in an Ikea bed.
That’s quite enough of that. When was the company born?
In 1943, in a backwater Swedish village called Agunnaryd. Its founder was Ingvar Kamprad, a 17-year-old farmer’s son who never woke up early enough to milk the family cows. He did, however, have a talent for business: when he was five, he persuaded his aunt to bulk-buy 100 boxes of matches, then resold them to neighbours. Ikea – an acronym of Kamprad’s initials, the name of the farm, Elmtaryd, and the village – started as a mail-order operation selling all sorts. The furniture did so well that Kamprad soon specialised.
Was it always sold in pieces?
Not at first. But when an early employee removed a table’s legs so it could fit in a car, the company realised the self-assembly method would save on shipping and storage costs. It had other, unexpected benefits: a Harvard Business School professor has written of “the Ikea effect”, where customers become more attached to products they have to make themselves. Not that this stopped Ikea from calling its most difficult assemblies “husband killers”. And the shops are designed to be so confusing that customers pick up impulse buys because they’re worried they won’t be able to find them again. A University College London architecture professor has likened the shopping environment to a 17th-century Persian bazaar.
Did Kamprad also live on a large scale?
He was actually a notorious tightwad. Despite having a fortune that once reached $60bn, he drove a battered old Volvo, recycled his teabags and even pocketed the salt and pepper packets at restaurants. His 1976 book The Testament of a Furniture Dealer offered his staff nuggets of wisdom such as “only while sleeping one makes no mistakes”, and “exaggerated planning is the most common cause of corporate death”.
Just a business-savvy eccentric, then?
Well, not quite. In 1994 it emerged that as a young man, Kamprad had a nine-year friendship with a leading Swedish fascist. In 2011 there were claims that he was an active player in Swedish pro-Nazi circles in the 1940s. Kamprad later described his involvement as “the greatest mistake of my life”. Ikea isn’t spotless either. It knowingly bought goods from suppliers using the labour of political prisoners in East Germany in the 1980s, and last week it was fined £861,000 in France for illegally spying on its staff. Ikea originally cited “humanistic values” as its reason for pulling ads from GB News, but the station’s chairman, Andrew Neil, wrote on Twitter: “Here are Ikea’s values – a French CEO who is a criminal with a two-year suspended jail sentence for spying on staff.” Since 2017 Ikea’s tax arrangements in the Netherlands have been under investigation by the EU, after a report estimated the company avoided a billion euros in tax over six years. It insists its arrangements are all in accordance with EU law.
Is there some creative accounting going on?
The Economist once observed that the only thing more nerve-shredding than piecing together Ikea’s furniture is working out the company’s corporate structure. Suffice to say, it involves various holding companies and charitable foundations that own and do business with bits of each other. Kamprad wanted to give Ikea “eternal life” by making it almost impossible for the company to be sold or taken over after his death.
That sounds a lot like Succession
Indeed. A 2013 Swedish book claims that, in the 1980s, Kamprad’s three sons hired a lawyer to try to claw back some of the billions their father was transferring over to the foundations. They were partially successful: after Kamprad’s death in 2018, aged 91, Peter, Jonas and Mathias were left stakes that are now worth $1.2bn. At one point Kamprad toyed with handing over control of Ikea to the most capable of the three, but it seems none of them made the grade: the brothers, now in their fifties, hold senior but mainly ceremonial positions in the Ikea network. Kamprad’s adopted daughter Annika, who lived with her mother after her parents split up, was left just $300,000. She’s said she’s “happy with the arrangement”. All four scrupulously stay out of the public eye.
One last thing – what’s with the meatballs?
The company loses money with every plate of meatballs, mash and lingonberry jam it sells – but the food gets people hanging around in its shops longer, so they buy more stuff. Ikea meatballs, two million of which are sold every day, aren’t even that Swedish: King Charles XII brought the dish back from Turkey in the early 18th century. Moving with the times, Ikea launched vegan “plant balls” last year.