Furniture shops

The secret of IKEA's success

Lean operations, shrewd tax planning and tight control

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Readers' comments



"The firm is doing well in Bulgaria and Romania and planning to expand further in central and eastern Europe."
This is incorrect, the bulgarian IKEA is still in construction and maybe it will open in 2011.


MyopicTailor111 has it completely correct.
He states he does not want to go into suppliers, but I will.
I ran a company in Poland for a year turning it round using a large Dutch order for quality bedroom furniture. It had a small but skilled workforce proud of their workmanship.
IKEA bought it out for a song (owner wanted out), did not carry on with the order, ripped out the innards and dumbed down the factory to make crap pressed chipboard panelling for their furniture. Workforce demotivated and the best left.
Follow the value chain and you will find IKEA has a distinctive rapacious and anti-social attitude to its bought out, and contracted suppliers.


I would say, that this old good structure is widely used and is no wonder at all. Dutch were the first one to engineer it this way and they excel in it. Other copied the idea, but not the scope.

A propos, here are so similar articles from your paper on the matter: http://✯.ws/~17O [ ]

Curiouser 3

Ikea's quality continues to decline as does its customer service. Its' claustrophobic stores are becoming fodder for late night comedians in the U.S. There are succession issues. There may be less here than meets the "I"Kea.


So IKEA is careful about cutting costs so that it can offer low priced furniture to persons who could otherwise not afford it and it gets criticized for being anti-social because it doesn't pay even higher taxes to governments who, no matter how much tax revenue they receive, are unable to balance a budget.

I'd prefer it if governments were run like IKEA. Modest salaries, no travel perks, committed to reducing waste and cutting costs and doing something genuinely decent for both society as a whole and, in particular, for lower income folks. Unfortunately for us, governments, in everyone of these respects, behaves in precisely the opposite manner.


What a random order of the paragraphs. It would have been easier for me to understand if the paragraphs were in the right order. Can you tell me the right order?


Never understood why globalisation critics leave those stingy Swedes of Ikea out of their hooliganism, vandalism and fire bombing when they go on their periodic rampages of the mostly benign and generous (and tax paying) if ubiquitous but locally owned outlets of McDo, Coca Cola and Starbucks.


I am with the people who say that assembling IKEA's furniture is so easy. All the tables (kitchen, TV, bedside x2, PC...) in my recently furnished apartment is from IKEA. I think it is amazing how easy it is. It took 15-30 hour for my (working alone) to do it with... a Swiss knife!
Having assembled few soviet era furniture I know what i am talking about. It takes some kind degree in engineering to do it properly and a set of professional tools.


The very first job I applied for out of university was a casual rotating role at my local IKEA.

Since I had graduated mid-year, did not intend to start anything full-time until the coming January and had some travel plans the IKEA gig seemed perfect.

The first group interview was great fun and I thought the second one-on-one interview couldn't have gone better. That combined with my First Class Honours degree and work experience I thought I had it made.

Soon after a former co-worker who was also my 1st referee on my CV called me in a fit of excitement telling me she'd just done a phone reference for me and wished me all the best working for such a fun employer.

Seconds after hanging up with phone I got an email from IKEA: "application for position not successful".

I called my friend back to ask how her phone call with IKEA had gone to try and figure out what went wrong. "Oh when they asked me to list your weaknesses, I didn't know any. They pressed me so I said you had a bad back".

Application immediately terminated.

For the record IKEA, my back isn't any serious medical concern. I have and continue to play club football without any worry.


Of the 4 pieces of furniture I have ever bought from Ikea, I still have 3. My ex-girlfriend still has the other. Hardly crappy. I have read a similar number of articles about the elusiveness or opacity or whatever-ish-ness of Ikea and still cannot bring myself to care. I'll assemble my own opinion, please - it's cheaper that way.

kristina brooker

I found a product that they could build for me to buy.

It's a fold out couch, it has arm support, cushions,

here is the difference, it doesn't come with a matress, it comes with two sides of a bed frame folded up at the sides of the couch.

These two sides of a bed frame are folded out and wood racks are placed between the sides of the bed frame, they don't fold out they sit in a corner somewhere.

Then the consumer has the capacity to place a matress that they have on top of the bedfram that is attatched to the couch.

Kristina Brooker.


According to the article, IKEA's global net profit margin was 12% in 2010. Would IKEA still be profitable if it did not employ alleged hyper tax-efficiency through Holland and Liechtenstein?


Too bad governments aren't run more like IKEA. Then taxes wouldn't seem so much like theft but more like good value for money paid.

Fazal Majid

In Mumbai, street peddlers hawk Ikea catalogs ("Ikkya!", goes the cry) even though it does not yet have a presence in India. Middle-class Indians buy the brochures and have their carpenters copy the Ikea designs to order.

I have no doubts Ikea will do well in India when it finally gets there.


I like Sweden and Swedes, and I like IKEA, hell 80% sawdust and breadcrumbs or not I love köttbullar. From what I know and have read MyopicTailor111 is correct. My critique is that I think Kamprad and IKEA illustrate Swedishness very well. Swedes know about Kamprad's perfidy better than anyone, his cleverness is what they value. I'd argue that he's built to Pippi Longstockings specs, or cultivated a similar aura of characteristics which Swedes tend to value.

Swedes gladly "work black," get paid under the table, when they can. I think one of the handmaidens of high income taxes is a certain respect for tax avoidance. Whether they admit any of that in public or private is a totally different issue.


One question comes to mind: How on earth can IKEA be doing well in Bulgaria when the store has not even opened?


IKEA is both a fantastic case study of a successful corporate culture and an appalling example of hypocrisy and systematic lies.

IKEA is a master in using social cohesion and corporate culture as a corporate governance method. All IKEA:ns are strongly indoctrinated in how fantastic IKEA is and how important it is to be a frugal miser and try to save on small expenses. Never travel business class and always stay at cheap hotels, etc. They are told that IKEA:s mission is to supply the masses with cheap furniture and that it is extremely important to be commercial in everything in order to afford to open new stores and spread the blessings of IKEA to new parts of the world. A sense of urgency over low profit margins is communicated throughout the operational organization. The Swedishness in another part of the corporate culture, even though IKEA hardly pays any taxes in Sweden. The salaries are average and the staff is supposed to accept all the unpaid extra efforts to spread the gospel of IKEA. IKEA is a sect.

At the same time IKEA is built on systematic deception and lying. Ingvar Kamprad communicates a message that he has given IKEA away in order to defend the ”IKEA idea”. At the same time his family controls the charitable foundation and (most certainly) the 15 billion dollars Lichtenstein foundation that receives money from IKEA every year. (By the way, the Dutch-registered, foundation is tax-exempt because the charter states that the proceeds should be donated. Since the 1982 when the Stichting Ingka Foundation was founded, it has hardly given away any money in donations.) His tax planning is very aggressive and extremely smart. The financial results are manipulated to make them impenetrable.

Kamprad also claims that he is severely dyslexic, that he has problems with numbers and that he is slightly stupid. He drives around in a ten year old car. His most hypocritical statement was when he said in the 1980s that: I don’t really have any influence over IKEA any longer, I just hang around, kind of.

Their cheap furniture is of sloppy quality. You just get what you pay for. They copy successful designs from small innovative furniture makers but rarley pay any compensation to these firms. And don’t get me started on how ruthless they are when dealing with their suppliers. IKEA should be viewed in the same way as Wal Mart.

Kamprad’s accomplishment is stunning. He managed to get his thousands of employees to work hard and sacrifice for a rather mediocre salary. They believed that they were a part of something bigger and one big happy family. The ultra-high profit levels and the ugly truth that it was all about enriching the Kamprad family and were deliberately hidden with deception and outright lies.

Don’t get me wrong. I like successful profitable companies. But not when the success is built on lies.

(More details can be found in the book “The Truth About IKEA” by one of Kamprads former closest collaborators, Johan Stenebo.)


Thinking tax-efficiency is contrary to social values is highly utopian and ideological. You'd have to assume that the tax is directly a benefit to society, when in fact can be a social cost; and that the government spends their money wisely, so the more it collects the better, when the reality provides strong evidence of the opposite. Personally, I admire a company that has it in its core to cut cost, whatever they may be. If it were publicly traded, I'd be prone to own some stock.



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