In this success story, we are going to share the life story of Ingvar Kamprad, a Swedish entrepreneur, billionaire and was considered one of the richest men in the world. He is the founder of IKEA, a network of furniture stores with affordable prices. Ingvar Kamprad always wanted people around the world to be able to buy beautiful furniture and home furnishings, at an affordable cost, and this desire became his mission.
Ingvar Kamprad childhood
Ingvar Feodor Kamprad was born on March 30, 1926, in a small province Smalandiya in Pjätteryd (now part of Älmhult Municipality), Southern Sweden. Kamprad’s biographers believe that the trading hobby was passed to Ingvar by inheritance. In 1897, the company, which belonged to the grandfather of the future billionaire was on the verge of bankruptcy. His grandfather could not pay the mortgage and committed suicide. However, the Ingvar’s grandmother managed to save the business. So she taught her grandson to bridge over the difficulties with willpower and perseverance. Ingvar’s grandmother Francis had a huge positive impact not only on him but the entire family. She was a very intelligent woman, although a simple origin though.
People who closely worked with Ingvar Kamprad said that he was a brilliant marketer, wise man who never made mistakes. Indeed, the strategy of Kamprad is studied and examined by major entrepreneurs from around the world. Ingvar used to say about himself artfully that he was a dropout. Moreover, this is true as he never attended a university (school teachers could not teach him to read for a long time). The lack of a university degree Kamprad always replaced with enthusiasm. Once he remarked: “If you work and do not feel incorrigible enthusiasm, consider that at least a third of your life has gone down the drain.”
First bargains young Kamprad made in childhood. He bought pencils and matches in bulk, which he then resold to classmates for a profit. During the study, Ingvar managed to try a variety of activities: from fish to Christmas cards trading. That was the real school of life. He was neither trained to do the business, nor he read books on this subject. However, what we know exactly today is that the IKEA company that came through thanks to the personal experience and care of the founder.
The first major thing – the Foundation of IKEA
The future entrepreneur set money aside. While school peers spent their time at football fields and dating with girls, Ingvar Kamprad was thinking about how to expand the business. In 1943, when he was 17 years, he added some money to the accumulated capital and opened his IKEA. He borrowed the money from his father who was convinced that he was giving money for Ingvars’’ studies.
The name IKEA is derived from Kamprad’s initials (I.K.) plus the first letters of Elmtaryd and Agunnaryd, the farm and village where he grew up.
At the beginning of its operation, the young Kamprad engaged in the trade of different things (from matches to discount stockings). However, the biggest demand was for pen. At the beginning of the 1940s, they were a novelty even in Sweden. Kamprad ordered 500 pens from Paris, taking a loan of 500 SEK in a district bank (at the time around 63 USD). According to Kamprad, this was the first and the last loan that he had taken in his life.
To attract prospective customers to the presentation of the store, the young entrepreneur promised a free cup of coffee and a bun to everyone who would come. Imagine his surprise when this modest event attracted more than a thousand people! The first presentation of the day was about to become the last one. Nevertheless, everyone got a cup of coffee and a bun. The idea of opening a fast food restaurant in each store looked great for the owner of IKEA. The time was passing by, and each IKEA store got a fast food restaurant.
Furniture – this is what we need!
Further, the young entrepreneur draws attention to a feature of life in Sweden: furniture was luxury for most people due to the high cost. In 1948, Ingvar Kamprad came up with a fresh idea, and he decides to engage in the trade of furniture. Further, it will be the primary source of profit for IKEA.
After finding places where he could buy the cheapest furniture, Ingvar agreed with fine upholstery manufacturers. The range of his store was replenished with a coffee table and a chair without armrest. The chair was called ‘Root.’ Since then, each good in the store had its own name. The names were invented by the owner of the company, due to his inability to remember the numeric items.
In 1951, IKEA started spreading booklets among its customers called “IKEA News”. They were those booklets that became a prototype of the modern IKEA catalogs. Young entrepreneur’s business was targeted at customers with medium and low income. For this, he ordered cheap furniture at local furniture factories. It was then when he invented his famous formula: “It is better to sell 600 chairs at a lower price than sell 60 chairs at a high price.”
From Ingvar Kamprad biography we learned that in the early 50’s he bought an old small factory in Sweden, which let him put on a production flow even cheaper furniture for his stores. It was ‘nonsense’ to the country where the furniture had always been considered an expensive commodity. Such a risky move could not remain unnoticed by competitors. Kamprad was boycotted. The Swedish Federation of Wood and Furniture Industry was so outraged by IKEA’s dumping prices that persuaded leading loggers to cease all cooperation with IKEA.
Perhaps such turn for any businessman could be tragic, but not for Ingvar Kamprad and not for the IKEA brand. Any problem and its solution generate new stages of a company’s development. As a result, the entrepreneur had to make an unusual step for the Swedish business at the time: he began to acquire some furniture components on the cheap from Polish suppliers. This is how the founder of IKEA laid the future strategy of the company and purchased furniture components in those countries where they are cheaper.
The first IKEA furniture showroom was opened in 1953 in Älmhult, Sweden. Сustomers could see and touch IKEA home furnishings before purchasing them. Five years later a new 6,700 square meter store was opened which was more or less similar to what we see today under huge IKEA signboard. By the way, initially, the traditional company’s colors were red and white. Nowadays the IKEA network is painted in yellow and blue, the national colors of Sweden.
During that period, Ingvar Kamprad was no longer a miracle child of Småland. He turned into a confident, sleek and dangerous competitor, whose methods sometimes were perceived with contempt and resentment.
In the early 60’s, Kamprad made a cognitive trip to the United States. There he first saw how the Cash & Carry trade system worked. He liked that form of trade where customers paid in cash and carry the goods away themselves. In 1965, the largest 31,000 square meter IKEA Kungens Kurva store was opened near Stockholm. Things were arranged there taking into the account the American experience. However, they were creatively improved. First, the store was located in a suburb. Rental land costs there were much lower, and there was built a spacious car parking lot. Second, to reduce the transportation costs, the company ordered ready-to-assemble furniture, where every detail was placed in a flat package. It was easier and cheaper to transport it, and customers had to assemble the furniture themselves. Kamprad had noticed that people liked to self-assemble cabinets and sofas. Especially, if the assembling process was so simple thanks to the detailed instructions. Also, Ingvar knew that a car boom began in Sweden and he realized that people were ready to go shopping to distant areas. To encourage customers to go shopping in IKEA, they started selling them roof racks for cars for a knockdown price. Thanks to this policy the company’s turnover has doubled in one year.
The largest store in Sweden looked like The New York’s Guggenheim Museum, which Kamprad found very attractive. However, when Ingvar Kamprad opened it, he did not take into account one thing: a possible shortage of goods on the store’s shelves. A huge number of people literally swept the IKEA products from the store’s shelves. Thirty thousand Swedes would certainly want to buy furnishings at low prices. And even in such large store, there weren’t so many goods to sell and a considerable part of them left at warehouse unpacked.
Ingvar Kamprad made the only right decision in this situation and opened a self-serve warehouse. So, quite by accident, IKEA found a formula for success, which provided profits for many years. The self-serve warehouse was just the right thing what a modern client needed. Now every IKEA furniture store is a kind of showroom, where there are exhibited not only sofas and cabinets, but any little things of everyday life: tablecloths, curtains, bedspreads, towels and candle holders. Thus, the visitor can see ten children’s rooms in a row, and then twenty-five dining rooms or living rooms and so on. By imagining what a particular furniture will look in his interior, a customer should go for it to the self-serve warehouse. Then a customer transports the furniture in comfortable packages to his home and then assembles it by reading clear and sensible instructions.
IKEA explores overseas markets
Once the success was achieved in Sweden, IKEA had nothing to do but to explore overseas markets. In 1963, IKEA starting its expansion with Norway and opens the first store outside Sweden in Oslo. In addition, in the 1960s, IKEA introduced a quality control system that allowed the company’s products to be recognized as the best quality ones by several Swedish reputable journals. Decisions were made spontaneously. For example, the head of the company’s hesitated for a long time whether to open a store in Switzerland. The country was known for its conservative tastes, besides there were two local furniture chains that operated quite well. But once Ingvar Kamprad, walking around Zurich, overheard a young couple. “What a beautiful chair!” – a young woman said, looking into the window. “Yes, but it is still too expensive for us. Let’s buy it next year”, – her husband replied. This episode was crucial. Soon, in 1973, IKEA appeared in Switzerland. Then in Australia, Netherlands, France, USA. Now IKEA operates 338 stores in 40 countries.
In 1986, Ingvar Kamprad retired from Group Management and became an advisor to the parent company INGKA Holding B.V. Anders Moberg was assigned as the President and CEO of the IKEA Group. In the 1990s, the IKEA Group developed and introduced the first an environmental policy to make sure that the company and its co-workers take environmental responsibility for all activities conducted within its business. Anders Dahlvig replaced Anders Moberg and became the President and CEO of the IKEA Group. In 2000, IKEA realized how the Internet was important and introduced its customers e-shopping in Sweden and Denmark. Since then many IKEA stores launched online shopping in many other countries.
Ingvar Kamprad has been married twice. His first wife was Kerstin Wadling who born him a daughter, Annika Kihlbom. However, it was his second wife Margaretha Kamprad-Stennert who helped him to fulfill the dream of IKEA. His wife passed away due to an undisclosed disease in 2011 at the age of 71. She born him three sons: Peter, Jonas, and Mathias.
Further history of IKEA cannot be called cloudless as there are many competitors such as Argos (Italy), IIva (Denmark) and others. But Ingvar Kamprad knows that his stores offer customers everything essential where they can get visual and tactile sensations and the real pleasure of being there. Ingvar Kamprad net worth was $3.8 Billion as of November 2014. The current IKEA Group’s President and CEO is Peter Agnefjäll, who was assigned to this position on September 01, 2013, and who gained deep and broad knowledge, experience from IKEA.
Ingvar Kamprad died in his sleep on January 27, 2018. The cause of death was natural causes. He aged 91.
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