﻿How IKEA Was Founded by a Dyslexic Farmboy
Furniture that is both cheap and high-quality is one thing we can take for granted today
because of how easy it is to get. However, it wasn’t always like this.
Once upon a time, furniture was an expensive commodity,
especially in places like Sweden. Now we can conveniently get cheap, ready-to-assemble
furniture for a relatively low cost. For this, we have a gifted dyslexic kid to thank
Ingvar Feodor Kamprad struggled with school because of his learning disability.
Though he managed to complete high school, he never attended college. However, all through
his life, he displayed a strong instinct for business. It was this instinct that he used
to take his business from being in a tiny shed, to becoming the world’s largest furniture retailer.
This is the story of IKEA…
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The Birth of IKEA
On the 30th of March 1926, on a farm called Elmtaryd near the small village of Agunnaryd in Sweden,
a boy named Ingvar Feodor Kamprad was born. Long before Kamprad was born,
his paternal grandfather who owned the farm he was born on, had committed suicide because
his company was on the verge of bankruptcy. Ingvar’s grandfather could not pay the mortgages
that his company owed and he saw no other way out. At the time Ingvar’s grandfather killed himself,
his son Achim, who would later on father Ingvar, was just a young boy. Achim was left with his
mother who ended up saving the company after her husband’s suicide. She was a woman with willpower
and perseverance, and Ingvar, her grandson, likely picked up these traits from her.
The province where Ingvar lived was known for poverty. The people had to farm,
but farming wasn’t enough to survive because the ground was too rocky.
To make ends meet, his mother owned a guest house and his father owned a country store in Älmhult.
Understanding the general hardship and wanting to help his family out,
Ingvar began working very early in his life. When he was just five years old,
he got his first job selling matches and pencils. At this tender age, he would buy pencils and
matches in bulk and resell them to his classmates for a profit.
His aunt helped him buy his first one hundred boxes of matches. In the words of Kamprad,
By the time he was ten years old, he had dabbled
in selling various items – from fish to Christmas decorations. The only business companions he had
were his trusty bicycle and his inborn instinct for business.
Unfortunately, Ingvar had a problem. He was dyslexic.
Even though this learning disorder made it hard for him to do well in school, his business
senses always remained heightened. When he was just 17 years old, he had saved up some money.
His father gave him a little more money as a gift for doing well in school despite his dyslexia.
This money was used to pay the registration fees of the business firm the young man had
always wanted. And so, IKEA was born. Coined from the owner’s initials,
Ingvar Kamprad, and his place of birth, Elmtaryd farm in Agunnaryd, the name
IKEA was used to refer to the small shed from which Ingvar operated his registered business.
It was far from being the multinational conglomerate that we know today.
The Experiment That Changed It All
At the onset of his business, things weren’t going so smoothly.
Ingvar tried to find ways to get products to customers at cheaper prices.
He found that there was a high demand for pens which were a novelty in the early 1940s.
He took what he personally referred to as his first and last loan in his entire life
and used the money to import pens. To attract customers, he offered a free
cup of coffee and a bun to everyone who came to his shop. This turned out to be a wonderful
idea as people kept flocking to his small shop in their numbers. As he promised, everyone got their
free food. However, he quickly discovered that selling pens didn’t have a future as a business.
So he stepped out of the pen trade and kept the profits to invest somewhere else. Fortunately,
even though the pens didn’t work out as a business, the idea of opening a restaurant
at IKEA stores stemmed from the way food attracted customers to his store. And that idea
has been a profitable one for IKEA even till now. Ingvar stumbled into the furniture business as a
mere experiment. After deciding to invest his money from pens into something else,
he saw an ad in an agricultural magazine from a furniture seller who was his main competitor.
And according to him, he decided to try his hand in the furniture business.
And what would you know? It turned out to be a successful experiment.
So successful in fact, that most of IKEA’s profits today comes from the sales of furniture.
“Furniture sale which I started out by chance and solely in order to outdo my competitors,
has determined my fate.” , Ingvar once said,
accurately describing the wonderful turn of events.
Before he began selling furniture, he looked for places where he could find the cheapest
furniture to buy. He began by selling replicas of his uncle's kitchen table. With time,
he expanded his collection and added more pieces of furniture for sale. Each piece of furniture
sold in his store was given a special name because his dyslexia didn’t allow him to remember numeric
names of items. So for instance, a chair that didn’t have an armrest was known as ‘Root’.
IKEA began to distribute booklets among its customers. Over the years, these booklets
evolved and have eventually become the modern IKEA catalogs. When his furniture range debuted, Ingvar
told his customers that IKEA would offer more furniture options if customers were interested.
They were. And that was how he continued to expand his business.
The Boycott
Things took an unfortunate turn for IKEA in 1955. Ingvar had bought a small, old factory in Sweden
and began producing his own furniture. This way, the furniture was produced at a much cheaper rate
for sale at his stores. His low prices were strange for Sweden where furniture had, prior
to that, been seen as an expensive commodity. This definitely did not go unnoticed. Furniture
manufacturers boycotted Ingvar and IKEA. They protested against his low prices and asked that
they be increased. The Swedish Federation of Wood and Furniture Industry persuaded loggers
to cease all business interactions with IKEA. This however, did not deter Ingvar. He maintained
his mission to provide affordable furniture to customers while still
making a profit. As he was known to say, “The vast majority of people don’t have
six-figure amounts in the bank and don’t live in enormous apartments… It is for such people
that I created IKEA. For everybody who wants a comfortable house in which to live well.”
In response to the actions of the loggers and the rest of the Swedish furniture industry,
Ingvar Kamprad decided to import furniture components. Which he was able to get at
cheap prices from polish suppliers. To the displeasure of the people who
boycotted him, Ingvar opened up the first IKEA showroom in 1953 in Älmhult. Five years later,
a 72 000 square-foot store was opened. All the attempts to shut him down proved futile.
The Innovation That Changed the World of Furniture Retail
In the early years of IKEA, the delivery trucks that they used were milk trucks.
This cost of delivery was something Ingvar wanted to reduce as much as possible. He got the solution
to his dilemma in the early 60s when he went on a visit to the United States. That was where he was
first exposed to the Cash & Carry trade system. Ingvar liked the fact that customers could pay in
cash and carry the goods away themselves. No need for a delivery truck. He began using this method,
but he improved on it. The IKEA parking lots were more spacious, in anticipation of the car boom
that had begun in Sweden. People were more willing to travel far distances to do their shopping.
Ingvar’s visit to the United States also led to the creation of flat-pack
furniture which has now been adopted by furniture suppliers all over the world.
With the flat-pack system, the furniture is ready to assemble. The buyer takes it home
and follows detailed instructions within the pack to set up the furniture. The assembly
process is simple and can be carried out without any special woodworking skill.
This made the furniture easier to carry and cheaper to transport. This greatly reduced
transportation as well as labor costs and Ingvar noticed that customers actually enjoyed assembling
their furniture themselves. To encourage people to shop at IKEA, they started selling their customers
roof racks for carrying furniture on top of cars. The spacious parking lots, the roof racks, and
especially the introduction of flat-pack furniture did a wonderful job in driving customers to IKEA.
As a result of these brilliant, well-executed plans, the company's
sales doubled in just one year. It was a breakthrough for the company.
In 1963, IKEA began expanding beyond the borders of Sweden. It opened its first overseas store
in Oslo, Norway. Over the next 50 years, about 300 IKEA stores opened up all over the world.
Now, almost six decades later, IKEA has over 400 stores around the world,
more than 200,000 employees, and makes a revenue of billions of dollars every year.
Before Ingvar Kamprad died at the age of 91 years old, he was one of the richest people
worldwide and currently, IKEA is the largest furniture retailer in the entire world.
His story teaches us that everyone can rise above their circumstances and achieve success
through dedication. Taking advice from Ingvar Kamprad himself:
“The word ‘impossible’ has been and must remain deleted from our dictionary”.
This is the story of how a dyslexic kid turned a small shed
into a billion dollar furniture empire. For more inspiring business stories, don’t forget
to subscribe to our channel. This is Planet Biz.