How Ikea Became America's Furniture-Selling Powerhouse

Ikea fired a shot heard round the retailing world when it landed on American soil in 1985, opening its doors in a shopping mall just outside of Philadelphia. I was there—writing a story about the Swedish retailer for Metropolitan Home magazine, where the store's advance buzz had preceded its arrival. Amazingly to a cynical New Yorker, reality more than met the hype. The low prices were awesome: who ever heard of industrial steel towel racks selling for $5 to $24? Where could you find a three-seat sofa for $329? (Even more amazingly, similar products—the 1985 pieces are no longer around—sell for roughly the same prices today).

The designs themselves were clean-lined and appealing in a Euro-Style way. Even more impressive was the obsessive attention to detail: all the fabric in the store was sewn with the same color thread. Everything was in stock unassembled, of course—and tags included the size of the packing carton, even indicating the dimensions that would fit into specific car models.  Then there was the playroom for kids—a safe place to leave them so parents could shop at their leisure. A cafeteria served Scandinavian food that was cheap and tasty. It was the most user-friendly store I had ever seen.

Ikea ads from 1990 and 1991.

Shoppers apparently thought so, too. The crowds were overwhelming. The store had to close its doors because it had run out of merchandise, and it posted a sign saying, "Ikea is full. Please come back next week." The company rang up $50,000,000 in sales its first year.

The retailer expanded slowly, largely because it hadn't found a way to meet the overwhelming demand. Before it could open more locations, it had to make sure that there would be enough inventory for them.

When Ikea finally arrived in the New York area, opening an Elizabeth, New Jersey, story in May 1990, shoppers were ready. Twenty-seven thousand people visited it on opening day, buying close to $1.5 million worth of furniture. By the time the first weekend was over, the store had sold over $3 million worth of Swedish-designed products, clogging major traffic arteries and filling auxiliary parking fields to overflowing.

In August of this year, the company opened its 40th U.S. store in Merriam, Kansas. St. Louis and Las Vegas are on the drawing boards. And it has aggressive plans to open even more in the next five years. "We see 25 possible markets," says Rich D'Amico, Ikea's deputy marketing manager. For new store locations, explains Joseph Roth, Ikea's expansion public affairs manager, Ikea seeks an area with a population of two million people living within a 40 to 60 mile radius, or, alternatively, a 40 to 60 mile drive time.

While Ikea now has 350 stores in 43 countries, 139,000 employees, and annual sales of $36 billion in 2013, it is still driven by the vision of one man, its founder Ingvar Kamprad, 87, who has officially retired but still sits on the board. Kamprad's story has often been told: at the age of 17—in 1943—he started a small mail order business from his home selling ready-to–assemble furniture.

He opened his first retail shop in the nearby village of Älmhult in 1958. The name Ikea is an acronym derived from the first letters of Ingvar Kamprad, Elmtaryd—the farm on which he was raised—and Agunnaryd—the small town nearby. Famous for his frugality—he always flies tourist class and has been observed clipping discount coupons—Kamprad is one of the richest men in the world. He is a driven man who has never let the company stop growing and evolving.

What has made it so successful in America? The same characteristics that have made it a global shopping phenomenon: Ikea pays an almost religious attention to the details, and price, quality, and design are its three core principles. The stores are also places where families can spend big chunks of time, thanks to the play area for children and the large cafeteria. D'Amico claims that the biggest reason for the brand's success is that it listens to and becomes involved with its customers. "It's co-creation. We deliver on what they want."

"They think on a big scale," says Rob Forbes, founder of Design Within Reach, the retail chain that sells high-end contemporary furniture. "And they think globally. How many US retailers do you know who have succeeded on a world-wide scale? Their pricing and their simplicity is incredible. They sell decent lamps that were cheaper than the shipping charges for them would have been at DWR. They were really the first design within reach people."

But in the beginning of its American expansion Ikea did make serious missteps. It expected no problems selling its beds and bedding despite the fact that all the items were produced for the European market, where everything was made to metric measure. The sofas were too shallow, the curtains too short, and U.S. appliances didn't fit into the kitchen cabinetry. The same problems cropped up in tableware, where dinner plates and glasses were too small for American customers. "We had to learn and evolve," says D'Amico. "Before, the wine and water goblets looked like orange juice glasses."

"They had never heard of Thanksgiving," says Forbes. Consequently, the stores lacked big tables and large serving platters. Then there were complaints about quality. One wag joked, "Ikea is Swedish for chipboard."  Another recurring gripe was the frustration and the time it took to assemble pieces from Ikea's picture-only instructions.

D'Amico says that all of these issues have been addressed. "We have listened to consumers over the years. A $10 table for a college dorm is not going to last 30 or 40 years, but we have better pieces with the same price/value ratio at all levels today," he says. The retailer learned that some people didn't want to do it all by themselves, so Ikea now delivers orders and sends someone to assemble them—for a price, of course. It also has a planning and design department to assist customers with outfitting a kitchen or a home office.

The company has been criticized for being environmentally unfriendly—its subsidiary, Swedwood, cuts down about 1,400 acres of forest a year and uses up 1 percent of the world's wood supply. Worse, its cheap furniture frequently winds up in landfills. In answer to these charges, the company has become almost fanatical in its quest to be perceived as green, energy efficient, and socially responsible. In 1989, it named its first environmental manager, and today there is a separate division dedicated entirely to environmental concerns. Its goal is to run all stores and operations with renewable energy and make its products as sustainable as possible. Ikea obsessively touts its green credentials.

In 1995, to emphasize that it was a design-driven company, Ikea launched the PS collection, which employed a host of noted designers to create a fresh, forward–looking line that didn't lose sight of the retailer's basic tenet of affordability. And in a masterstroke of showmanship—something in which the company has always specialized—it introduced PS during the Milan Furniture Fair, stealing the spotlight from the Italians. Because the line attracts so much attention from the global press, a new PS collection is introduced every two or three years. In 2007, to strengthen its credentials in the quality department, Ikea introduced the Stockholm Collection, an upscale line employing full grain leather, hardwoods, and natural fabrics like wool and mohair.

Ikea is zealous in its goal to understand its customers. In California, it realized that it might not be reaching the Golden State's large population of Hispanics, so Ikea's designers visited the homes of its Hispanic staff members and, after observing their living spaces, added more large-scale furniture, bold colors, and elaborate picture frames to the Ikea offerings. The store's staff is now visiting customers' homes in Philadelphia to help solve design problems, both to be helpful and to get inside customers' heads.

Ikea wins praise from many design pros. "They take risks," says Bonnie McKay, for many years the retail director of creative, marketing and merchandising for the Museum of Modern Art who is today an influential design and retail consultant. She believes that the furniture is comfortable and people-friendly. "I wonder if most designers actually think about how people are going to live with the things they create. Do they know who the product is really for?" McKay lauds the retailer's marketing skills as well. "In the catalog and in store the rooms look like someone actually lives there." As for durability, or lack thereof, McKay is still living with pieces she bought at Ikea in 1986.

In retailing, success breeds envy—and knock-offs. In 1987, a California company opened Stør (choosing the name to give it a Scandinavian identity), aping as much as it could the Swedish company's signature ingredients, from children's playrooms to a warehouse filled with flat-pack furniture. It failed, lacking the incredible resources that Ikea has at its disposal. "We are the designer, the partner in the manufacture and the retailer and that makes us hard to copy," says D'Amico. In fact, Ikea took over many of Stør's Southern California locations.

The huge global business has become a Rubik's Cube-like organization of different divisions—including one devoted to various charities—all of which Ingvar Kamprad controls. It's a complicated array of for-profit and
 not-for-profit corporations, with the main businesses registered in the 
Netherlands. The Kamprad family itself lives in Switzerland. What will happen to the company when Kamprad is gone? Many wonder if Ikea's almost cult-like dedication to consumer-friendly retailing, with its obsessive focus on the tiniest details and its humor-driven marketing, will continue. Can the company keep those core founding values alive?

Forbes is someone who votes yes. "They only hire people that fit into their culture. Everyone I've met from Ikea are devotees and believers and consider themselves on a mission."

Editor: Sara Polsky

· Here Now, a Dozen Amazing and Marvelous Vintage Ikea Ads [Curbed]

· 70 Years of Ikea as Told by Show Apartments [Curbed]

· Ikea archive [Curbed]