IKEA’s Humble Beginnings
The Strategy Story Behind IKEA the Affordable Furniture Powerhouse
Last Updated: By TRUiC Team
IKEA is one of the world's most popular and successful furniture businesses. Known for almost as much for its meatballs as for its DIY furniture, the Swedish company operates more than 460 stores in 63 markets globally.
But despite being one of the most valuable brands in the world, IKEA had humble beginnings: teenage founder Ingvar Kamprad started the company in 1943 by selling mail-order household goods and delivering them via milk wagon.
Here's how IKEA got started — and how it turned into today's global furniture empire.
How IKEA Became a Furniture Store for Everyone
IKEA founder Ingvar Kamprad was an entrepreneur from the start. At just 10 years old, the Swedish country boy was selling pens, pencils, flower seeds, and holiday decorations to local families. In 1943, at just 17, he took cash earned for good grades and used it to start IKEA.
The company — an acronym of his first two initials (I and K) and the first initials of Elmtaryd (the farm he grew up on) and Agunnaryd (a nearby village) — started by selling small items like pens, wallets, and picture frames. Ingvar delivered his goods via milk wagon.
When talking about their founder, IKEA says, people from Småland “are said to be thrifty and innovative, with a ‘no-nonsense’ approach to everyday problem-solving” — an aesthetic that Ingvar definitely reflected in his work.
The company began selling furniture just five years after its launch. Soon after, in 1951, to reach customers outside his rural hometown, Kampard published IKEA’s first furniture catalog (something the brand recently stopped doing in 2021). It featured his favorite piece, the MK Wing Chair.
People were skeptical of the quality of merchandise sold so cheaply, so in 1953, Ingvar opened his first showroom in a small workshop near his home. This allowed potential customers to come in and try furniture before buying. When manufacturers began to balk at the store’s low prices, complaining that there wasn’t enough markup, he solved the problem by bringing design and production in-house.
By 1956, the young founder came up with another ingenious way to bring value to his customers. Shipping bulky furniture was difficult and expensive, and customers often complained that items arrived damaged. To make the process easier (and to avoid high shipping costs), Ingvar took the legs off a coffee table so it could be packed flat. (The table, now called the LÖVBACKEN, is still available in stores today.)
The system is still used today, and IKEA furniture is almost synonymous with its flat packing and do-it-yourself assembly.
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IKEA’s Growth and Global Influence
The brand’s popularity was undeniable, and in 1958, IKEA opened its first store in Älmhult, Sweden (the company’s headquarters for design is still located there). At 6,700 square meters (over 21,000 square feet), the store was the largest furniture outlet in Scandinavia and quickly became a tourist destination.
With a playroom for kids and a family-friendly food court, the first IKEA store was very similar to what shoppers still find today. Likewise, the early showrooms also showcased various furniture displays set up to look like a room in your house — with a living room sofa, chair, and table.
It was a rousing success, despite initial doubts about whether a giant furniture store could do well in small-town Scandinavia. The company soon expanded and by 1963 had moved into
other countries such as Denmark and Norway. Not long after, the brand later went global, launching stores in Japan, Australia, and Canada, where thousands of people would line up for the opening day.
In 1985, IKEA finally came to the US, opening its first store in a shopping mall outside of Philadelphia. Crowds were overwhelming, and the outlet had to shut its doors because it ran out of merchandise. By 1990, they expanded to the New York area (in Elizabeth, New Jersey), selling close to $1.5 million in merchandise on opening day.
Today, IKEA’s "inexpensive but not cheap" business model can be seen reflected in many other retailers, from H&M to Walmart. Likewise, the store's layout — which gets you to buy more than you initially intended — is copied far and wide.
In addition, studies show that when IKEA opens a new store, durable goods revenue increases by roughly 20% locally, and employment grows by about 20%.
At the time of his death in 2018, founder Ingvar Kamprad was worth an estimated $3.3 billion — down from his peak of $33 billion. Kamprad donated most of his fortune to philanthropic efforts during his lifetime.
As of 2021, IKEA boasted 433 stores in 38 countries. Germany is the company's biggest market with 54 stores, followed by the US with 51. IKEA continues to grow, with plans to expand into several more countries, including Brazil and Luxembourg.
As the brand finds new ways to create expensive-looking furniture that is both affordable and sustainable, you can expect their success to continue.
