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IKEA

                   
IKEA International Group
Type Private
Industry Retail
Founded Älmhult, Småland, Sweden (1943)
Founder(s) Ingvar Kamprad
Headquarters Delft, Netherlands
Area served Worldwide
Key people Mikael Ohlsson (Chairman and CEO)
Omar Gulay (President and CEO, Inter IKEA Group)
Sören Hansen(VP and CFO, Inter IKEA Group)
Products Self-assembly furniture
Revenue increase 23.5 billion (2010)[1]
Net income increase €2.7 billion (2010)[2]
Owner(s) Stichting INGKA Foundation
Employees 127,000 (2010)
Website www.ikea.com

IKEA (IPA: [i'keːa][3]) is a privately held, international home products company that designs and sells ready-to-assemble furniture such as beds and desks, appliances and home accessories. The company is the world's largest furniture retailer.[4] Founded in 1943 by 17-year-old Ingvar Kamprad in Sweden, the company is named as an acronym comprising the initials of the founder's name (Ingvar Kamprad), the farm where he grew up (Elmtaryd), and his hometown (Agunnaryd, in Småland, South Sweden).[5]

The firm is known for the attention it gives to cost control, operational details and continuous product development, allowing it to lower its prices by an average of two to three per cent over the decade to 2010, while continuing its global expansion.[6]

The groups of companies that form IKEA are all controlled by INGKA Holding ., a Dutch corporation, which in turn is controlled by a tax-exempt, not-for-profit Dutch foundation.[7] The IKEA trademark and concept is controlled by a series of corporations that can be traced to the Netherlands Antilles[8] and to the Interogo Foundation in Liechtenstein.[9]

INGKA Holding B.V. owns the industrial group Swedwood, which sources the manufacturing of IKEA furniture, the sales companies that run IKEA stores, as well as purchasing and supply functions, and IKEA of Sweden, which is responsible for the design and development of products in the IKEA range. INGKA Holding B.V. is wholly owned by Stichting INGKA Foundation, which is a non-profit foundation registered in Delft, Netherlands. The European logistics centre is located in Dortmund, Germany, and the Asian logistics centre is located in Singapore.

Inter IKEA Systems B.V. in Delft, also in the Netherlands, owns the IKEA concept and trademark, and there is a franchising agreement with every IKEA store in the world. The INGKA Group (not to be confused with INGKA Holding B.V.) is the biggest franchisee of Inter IKEA Systems B.V. Inter IKEA Systems B.V. is not owned by INGKA Holding B.V., but by Inter IKEA Holding S.A. registered in Luxembourg,[8] which in turn is controlled by the Interogo Foundation in Liechtenstein. Ingvar Kamprad has confirmed that this foundation is controlled by him and his family.[10] The company which originated in Småland, Sweden, distributes its products through its retail outlets. As of October 2011, IKEA has 332 stores in thirty-eight countries. In fiscal year 2010, it sold $23.1 billion worth of goods, a 7.7 percent increase over 2009.[11] On February 17, 2011, IKEA announced its plans for a wind farm in Dalarna County, Sweden, furthering the furniture giant's goal of running on 100 percent renewable energy.[12]

The IKEA website contains about 12,000 products and is the closest representation of the entire IKEA range. There were over 470 million visitors to the IKEA websites in the year from September 2007 to September 2008.[13] IKEA is the world's third-largest consumer of wood, behind The Home Depot and Lowe's.[11]

Contents

  IKEA stores

  The first IKEA store, located in Älmhult in Sweden not far from where the founder was born.

The first Möbel-IKÉA store was opened in Älmhult, Småland in 1953,[11] while the first stores outside Sweden were opened in Norway (1963) and Denmark (1969). The stores spread to other parts of Europe in the 1970s, with the first store outside Scandinavia opening in Switzerland (1973), followed by Germany (1974).

Things were going so well for the company, that in 1973, the company's German executives accidentally opened a store in Konstanz when they had meant to open one in Koblenz.[11] Later that decade, stores opened in other parts of the world, including Japan (1974), Australia and Hong Kong (1975), Canada (1976), and Singapore (1978). IKEA further expanded in the 1980s, opening stores in France & Spain (1981), Belgium (1984), the United States (1985), the United Kingdom (1987), and Italy (1989), among other areas. The company expanded into more countries in the 1990s and 2000s. Germany, with 44 stores, is IKEA's biggest market, followed by the United States, with 37. At the end of 2009 financial year, the IKEA group had 267 stores in 25 countries.[14] The first IKEA store in Latin America opened on February 17, 2010 in Santo Domingo, Dominican Republic.[15][16] However, the company has thus far not shown much of a presence in the developing countries.

The world's five largest IKEA stores are:

  1. Stockholm Kungens Kurva, Sweden: 55,200 m2
  2. Shanghai, China: 49,400 m2
  3. Shenyang, China: 47,000 m2
  4. Tianjin, China: 45,736 m2
  5. Berlin Lichtenberg, Germany: 45,000 m2

The biggest store in the Southern Hemisphere is in Tempe, Sydney, Australia: 39000 m2[17] IKEA opened its largest store in Canada on December 7, 2011. Located in Ottawa, the store has an area of 39670 m2[18] In 2012, IKEA plans to open its first shopping center in Croatia that will be one of the 5 biggest in Europe and among 10 biggest IKEA stores in the world.[19][19][20][21] In 2013, IKEA plans to open its first shopping center in Vilnius, Lithuania that will be the biggest furniture-selling mall in Baltic states.[22]

  Layout

  An IKEA Store along Alexandra Road in Queenstown, Singapore.
  IKEA store in Frisco, Texas, USA.
  IKEA, Southampton, England, UK.
  The Bargain Corner at a branch of IKEA in Wembley, London.

Older IKEA stores are usually very large blue buildings with yellow accents (also Sweden's national colors) and few windows. They are often designed in a one-way layout, leading customers along what IKEA calls "the long natural way" designed to encourage the customer to see the store in its entirety (as opposed to a traditional retail store, which allows a consumer to go directly to the section where the goods and services needed are displayed). However, there are often shortcuts to other parts of the showroom. Newer IKEA stores, like the one in Mönchengladbach, Germany, make more use of glass, both for aesthetics and functionality. Skylights are also now common in the self-serve warehouses; natural lighting reduces energy costs, improves worker morale and gives a better impression of the product.

The sequence first involves going through furniture showrooms making note of selected items. The customer then collects a shopping cart and proceeds to an open-shelf "Market Hall" warehouse for smaller items, then visiting the "Self Serve" furniture warehouse to collect previously noted showroom products in flat pack form. Sometimes, they are directed to collect products from an external warehouse on the same site or at a site nearby. Finally, customers pay for their products at a cash register.

Today, most stores follow the same layout of having the showroom upstairs with the marketplace and warehouse downstairs. Some stores are single level, while others have separate warehouses to allow more stock to be kept on-site. However, this occasionally results in challenges in finding the items, as well as a perception of having to queue in line twice. Single-level stores are found predominantly in areas where the cost of land would be less than the cost of building a 2-level store, such as the Saarlouis, Germany and Haparanda, Sweden locations. Some stores have dual-level warehouses with machine-controlled silos to allow large quantities of stock to be accessed throughout the selling day.

Most IKEA stores offer an "as-is" area at the end of the warehouse, just before the cash registers. Returned, damaged and formerly showcased products are displayed here and sold with a significant discount, but also with a "no-returns" policy. Most IKEA stores communicate the IKEA policy on environmental issues in the "as-is." In the United Kingdom, this is referred to as "Bargain Corner."

In Hong Kong, where shop space is limited and costly, IKEA has opened three outlets across the city, most of which have the one-way layout. They are part of shopping malls, and while being tiny compared to common store design, are huge by Hong Kong standards. An exception is the outlet in Telford Plaza, where the three independent floors can be accessed freely from each. However, following IKEA tradition, the cashiers are only located on the lowest floor.

IKEA stores were first opened in Greece in 2001 in Thessaloniki. It has become a phenomenon with large numbers of Greeks re-furnishing their homes from the store. Some years later IKEA opened 3 new stores in Athens, Larisa and Ioannina.

The vast majority of IKEA stores are located outside of city centres, primarily because of land cost and traffic access. Several smaller store formats have been unsuccessfully tested in the past (the "midi" concept in the early 90s, which was tested in Ottawa and Heerlen with 9,300 m2, or a "boutique" shop in Manhattan). A new format for a full-size, city centre store was introduced with the opening of the Coventry (UK) store in December 2007 as a response to UK government restrictions blocking retail establishment outside city centres,[citation needed]. With seven levels and a different flow from other IKEA stores, the format is expected to be used for future IKEA stores in the UK. Southampton IKEA (which opened February, 2009) is also in the city centre.

Another feature of IKEA stores are their long opening hours. Many stores are in operation 24 hours a day with restocking and maintenance being carried out throughout the night. However, public opening hours tend to be much longer than most other retailers, with stores open well into the evening in many countries. In the UK, almost all stores are open past 8pm and open around 9 to 10am. IKEA Saudi Arabia stores have some of the longest opening hours worldwide being open from 10am to midnight, 7 days a week.

  Restaurants and food markets

  The cafeteria of the Red Hook, Brooklyn IKEA in New York City.

Many stores include restaurants serving traditional Swedish food, including potatoes with Swedish meatballs, cream sauce and lingonberry jam, although there are variations. In Kuala Lumpur, Malaysia the usual boiled potatoes have been switched to french fries. Besides these Swedish staples, hot dogs and drinks are also sold, along with a few varieties of the local cuisine, and beverages such as lingonberry juice. Also items such as Prinsesstårta — Princess cake are sold as desserts. IKEA stores in Saudi Arabia and the United Arab Emirates serve chicken shawarma at the exit café as well as beef hot dogs.

In many locations, the IKEA restaurants open daily before the rest of the store and serve an inexpensive breakfast. In Canada, this breakfast includes eggs, sausage, and hash browns and various add-ons like bacon and pancakes at additional costs. In the United States, the local variation serves scrambled eggs, bacon, country potatoes and choice of Swedish pancakes or french toast sticks. In the Netherlands, it consists of a croissant, a small bread roll, butter or margarine, jam, a slice of cheese, a boiled egg, and coffee or tea. In Australia, it consists of hash brown, bacon, scrambled eggs, a sausage, and tomato, with a vegetarian option with baked beans which omits the sausage and bacon.[23][24][25] In Germany, this breakfast consists of two bread rolls, one slice of smoked salmon, one slice of cheese, one slice of salami, two portions of butter, one portion of jam, and coffee. IKEA Canada, for a limited time, served dim sum alongside its original breakfast menu. Refills of coffee, tea, and soft drinks are, as is traditional in Sweden, free of charge, even in countries where this is uncommon in other restaurants. In Austria IKEA restaurants offer a free refill policy for soft drinks, a practice that is otherwise unknown in Austria.

Many stores also have a Swedish Food Market that until the fall of 2011 sold Swedish-made, Swedish-style groceries, such as Swedish meatballs, packages of gravy and various Scandinavian cookies and crackers, as well as salmon and salmon roe. IKEA also sells lingonberry jam in a wide array of sizes, including buckets. IKEA has extended its product range with the introduction of the IKEA food label. The new label has various different foods including, chocolates, meatballs, jams, pancakes, salmon, and various drinks. All IKEA Food products are based on Swedish recipes and traditions. The majority of the food production still takes place in Sweden by small, medium and large manufacturers.

  Småland

Many stores have a play area, named Småland (Swedish direct translation small land, can mean a lot of things but here it means land for the small ones. Småland is also the name of the province of Sweden where Ingvar Kamprad was born). Parents drop off their children at a gate to the playground, and pick them up after they arrive at another entrance. Parents are also given free pagers by the on-site staff; the staff will set off these pagers should a child need his or her parents sooner than expected.

  Furniture

Rather than being sold pre-assembled, much of IKEA's furniture is designed to be self-assembled. The company claims that this helps reduce costs and use of packaging by not shipping air; the volume of a bookcase, for example, is considerably less if it is shipped unassembled rather than assembled. This is also practical for many of the chain's European customers, where public transport is commonly used, with the flat-pack methods allowing for easier transport via public transportation.

IKEA contends that it has been a pioneering force in sustainable approaches to mass consumer culture.[citation needed]. Kamprad refers to the concept as "democratic design," meaning that the company applies an integrated approach to manufacturing and design (see also environmental design). In response to the explosion of human population and material expectations in the 20th and 21st century, the company implements economies of scale, capturing material streams and creating manufacturing processes that hold costs and resource use down, such as the extensive use of MDF (medium-density fiberboard). MDF, often called "particle board", is engineered wood fiber glued under heat and pressure to create a building material of superior strength which is resistant to warp. IKEA uses cabinet-grade and furniture-grade MDF in all of its MDF products, such as PAX wardrobes and kitchen cubboards. IKEA also uses wood, plastic, and other materials for furniture and other products. The intended result is flexible, adaptable home furnishings, scalable both to smaller homes and dwellings as well as large houses.

Not all furniture is stocked at the store level, such as particular sofa colors needing to be shipped from a warehouse to the customer's home (for a delivery charge). The item can also be shipped from the warehouse to the store. Some stores charge an extra fee for this service, but not all.[clarification needed]

  Houses, flats

IKEA has also expanded their product base to include flat-pack houses, in an effort to cut prices involved in a first-time buyer's home. The product, named BoKlok was launched in Sweden in 1996 in a joint venture with Skanska. Now working in the Nordic countries and in UK, sites confirmed in England include London, Manchester, Leeds, Gateshead and Liverpool.[26]

  Family Mobile

On August 8, 2008, IKEA UK launched Family Mobile, a virtual mobile phone network, running on T-Mobile.

  Manufacturing

Although IKEA household products and furniture are designed in Sweden, they are largely manufactured in developing countries to keep costs down. With suppliers in 50 countries, roughly 2/3 of purchasing is from Europe with about 1/3 from Asia. A small amount of products are produced in North America. Comparatively little production actually takes place in Sweden, though it still remains the fourth-largest supplier country (behind China, Poland and Italy).[citation needed] China accounts for about 2.5 times as much supply as Sweden. For most of its products, the final assembly is performed by the end-user (consumer).

  Product names

  Lighting department in a Russian IKEA store, showing item names in Russian.

IKEA products are identified by single word names. Most of the names are Scandinavian in origin. Although there are some notable exceptions, most product names are based on a special naming system developed by IKEA.[27]

  • Upholstered furniture, coffee tables, rattan furniture, bookshelves, media storage, doorknobs: Swedish placenames (for example: Klippan)
  • Beds, wardrobes, hall furniture: Norwegian place names
  • Dining tables and chairs: Finnish place names
  • Bookcase ranges: Occupations
  • Bathroom articles: Scandinavian lakes, rivers and bays
  • Kitchens: grammatical terms, sometimes also other names
  • Chairs, desks: men's names
  • Fabrics, curtains: women's names
  • Garden furniture: Swedish islands
  • Carpets: Danish place names
  • Lighting: terms from music, chemistry, meteorology, measures, weights, seasons, months, days, boats, nautical terms
  • Bedlinen, bed covers, pillows/cushions: flowers, plants, precious stones
  • Children's items: mammals, birds, adjectives
  • Curtain accessories: mathematical and geometrical terms
  • Kitchen utensils: foreign words, spices, herbs, fish, mushrooms, fruits or berries, functional descriptions
  • Boxes, wall decoration, pictures and frames, clocks: colloquial expressions, also Swedish place names

For example, DUKTIG (meaning: good, well-behaved) is a line of children's toys, OSLO is a name of a bed, BILLY (a Swedish masculine name) is a popular bookcase, DINERA (meaning: (to) dine) for tableware, KASSETT (meaning: cassette) for media storage. One range of office furniture is named EFFEKTIV (meaning: efficient, effective), SKÄRPT (meaning: sharp or clever) is a line of kitchen knives.

A notable exception is the IVAR shelving system, which dates back to the early 1970s. This item is named after the item's designer.

Some of IKEA's Swedish product names have amusing or unfortunate connotations in other languages, sometimes resulting in the names being withdrawn in certain countries. Notable examples for English include the "Jerker" desk, "Fukta" plant spray, "Fartfull" workbench,[28] and "Lyckhem" (meaning bliss). Similar blunders happen with other multinational companies.[29]

Company founder Ingvar Kamprad, who is dyslexic, found that naming the furniture with proper names and words, rather than a product code, made the names easier to remember.[30] IKEA uses a sales technique called "bulla bulla" in which a bunch of items are purposefully jumbled in bins, to create the impression of volume, and therefore, inexpensiveness.[11]

  Catalog

IKEA publishes an annual catalog, first published in Swedish in 1951.[31] IKEA published 197 million catalogues in 2010, in twenty languages and sixty-one editions.[11] It is considered to be the main marketing tool of the retail giant, consuming 70% of the company's annual marketing budget.[32]

The catalog is distributed both in stores and by mail,[33] with most of it being produced by IKEA Communications AB in IKEA's hometown of Älmhult, Sweden where IKEA operates the largest photo studio in northern Europe at 8,000 square metres.[34] The catalog itself is printed on chlorine-free paper of 10–15% post-consumer waste, and prints approximately 175 million copies worldwide annually,[35] more than 3 times as much as The Bible.[36]

According to Canadian broadcaster, CTV, "IKEA's publications have developed an almost cult-like following online. Readers have found all kinds of strange tidbits, including mysterious cat pictures, apparent Mickey Mouse references and weird books wedged into the many shelves that clutter the catalogues."

  IKEA Family (Loyalty Card)

In common with some other retailers, IKEA has launched a loyalty card in some of its locations called "IKEA family". The card is free of charge and can be used to obtain discounts on a special range of products found in each IKEA store. In conjunction with the card, IKEA also publishes and sells a printed quarterly magazine titled IKEA Family Live which supplements the card and catalogue. The magazine is already printed in thirteen languages and an English edition for the United Kingdom was launched in February 2007. It is expected to have a subscription of over 500,000.[37]

  Corporate structure

  IKEA in Athens, Greece
  IKEA Anagnina in Rome, Italy
  IKEA in Dhahran, Saudi Arabia
  IKEA Twin Cities in Bloomington, Minnesota, USA
  IKEA store at Netanya, Israel, before a fire burned down the store.

IKEA is owned and operated by a complicated array of not-for-profit and for-profit corporations. The corporate structure is divided into two main parts: operations and franchising. Most of IKEA's operations, including the management of the majority of its stores, the design and manufacture of its furniture, and purchasing and supply functions are overseen by INGKA Holding, a private, for-profit Dutch company. Of the IKEA stores in 36 countries, 235 are run by the INGKA Holding. The remaining 30 stores are run by franchisees outside of the INGKA Holding.[38]

INGKA Holding is not an independent company, but is wholly owned by the Stichting Ingka Foundation, which Kamprad established in 1982 in the Netherlands as a tax-exempt, not-for-profit foundation. The Ingka Foundation is controlled by a five-member executive committee that is chaired by Kamprad and includes his wife and attorney.[8]

While most IKEA stores operate under the direct purview of Ingka Holding and the Ingka Foundation, the IKEA trademark and concept is owned by an entirely separate Dutch company, Inter IKEA Systems. Every IKEA store, including those run by Ingka Holding, pays a franchise fee of 3% of the revenue to Inter IKEA Systems. The ownership of Inter IKEA Systems is exceedingly complicated and, ultimately, uncertain. Inter IKEA Systems is owned by Inter IKEA Holding, a company registered in Luxembourg. Inter IKEA Holding, in turn, belongs to an identically named company in the former Netherlands Antilles that is run by a trust company based in Curaçao.[8] In 2009, the company in Curaçao was liquidated. The company responsible for this liquidation traces back to the Interogo Foundation in Liechtenstein[9] Ingvar Kamprad has confirmed that this foundation owns Inter IKEA Holding S.A. in Luxembourg and is controlled by the Kamprad family.[10]

In Australia, IKEA is operated by two companies. Stores located on the East Coast including Queensland, New South Wales, and Victoria are owned by INGKA Holding. Stores elsewhere in the country including South Australia and Western Australia are owned by Cebas Pty Ltd.[39] Like elsewhere, all stores are operated under a franchise agreement with Inter IKEA Systems.[40]

The IKEA food concessions which operate in IKEA stores are still owned directly by the Kamprad family which provides a major part of the family's income.

  Profits

The net profit of IKEA Group (which does not include Inter IKEA systems) in fiscal year 2009 (after paying franchise fees to Inter IKEA systems) was €2.538 billion on sales of €21.846 billion. Because INGKA Holding is owned by the nonprofit INGKA Foundation, none of this profit is taxed. The foundation's nonprofit status also means that the Kamprad family cannot reap these profits directly, but the Kamprads do collect a portion of IKEA sales profits through the franchising relationship between INGKA Holding and Inter IKEA Systems.

Inter IKEA Systems collected €631 million of franchise fees in 2004, but reported pre-tax profits of only €225 million in 2004. One of the major pre-tax expenses that Inter IKEA systems reported was €590 million of "other operating charges". IKEA has refused to explain these charges, but Inter IKEA Systems appears to make large payments to I.I. Holding, another Luxembourg-registered group that, according to The Economist, "is almost certain to be controlled by the Kamprad family." I.I. Holding made a profit of €328 million in 2004.

In 2004, the Inter IKEA group of companies and I.I. Holding reported combined profits of €553m and paid €19m in taxes, or approximately 3.5 percent.[8]

The Berne Declaration, a non-profit organization in Switzerland that promotes corporate responsibility, has formally criticized IKEA for its tax avoidance strategies. In 2007, the Berne Declaration nominated IKEA for one of its Public Eye "awards", which highlight corporate irresponsibility and are announced during the World Economic Forum in Davos, Switzerland.[41]

  Control by Kamprad

Along with helping IKEA make non-taxable profit, IKEA's complicated corporate structure allows Kamprad to maintain tight control over the operations of Ingka Holding, and thus the operation of most IKEA stores. The Ingka Foundation's five-person executive committee is chaired by Kamprad. It appoints the board of Ingka Holding, approves any changes to Ingka Holding's bylaws, and has the right to preempt new share issues. If a member of the executive committee quits or dies, the other four members appoint his or her replacement.

In Kamprad's absence the foundation's bylaws include specific provisions requiring it to continue operating the Ingka Holding group and specifying that shares can be sold only to another foundation with the same objectives as the Ingka Foundation.[8]

  Charitable giving

The INGKA Foundation is officially dedicated to promoting "innovations in architecture and interior design."[8] With an estimated net worth of $36 billion, the foundation is unofficially the world's largest charitable organization, beating out the much better known Bill and Melinda Gates Foundation, which has a net worth of approximately $33 billion.[42] However, most of the Group's profit is spent on investments, the foundation expects to spend €45 million on charitable giving in 2010 (compare the Gates Foundation, which made gifts of more than $1.5 billion in 2005.[42])

IKEA is involved in several international charitable causes, particularly in partnership with UNICEF, including:

  • In the wake of the 2004 Boxing Day Tsunami, IKEA Australia agreed to match dollar for dollar co-workers donations and donated all sales of the IKEA Blue Bag to the cause.
  • After the Pakistan earthquake of 2006, IKEA gave 500,000 blankets to the relief effort in the region[43]
  • IKEA has provided furniture for over 100 "bridge schools" in Liberia.[44]
  • In the 2008 Sichuan earthquake in China, IKEA Beijing sold an alligator toy for 40 yuan (US$5.83, €3.70) with all income going to the children in the earthquake struck area

IKEA also supports American Forests to restore forests and reduce pollution.[45][46]

IKEA, is not, in fact, a Swedish company, but a company controlled by the Dutch stichting – a tax exempt, nonprofit foundation – to which Ingvar Kamprad transferred his ownership shares in 1982.Netherlands Tax Law provides a number of tax effective opportunities for Intellectual Property and royalties related revenue. Kamprad also created a company called Inter IKEA Systems B.V., which owns IKEA concept and trademark. In theory, three percent of the revenue of each IKEA store goes to Inter IKEA.[11]

  IKEA Social Initiative

In September 2005, IKEA Social Initiative was formed to manage the company's social involvements on a global level. IKEA Social Initiative is headed by Marianne Barner.

The main partners to IKEA Social Initiative are UNICEF[47] and Save the Children.[48]

On February 23, 2009, at the ECOSOC event in New York, UNICEF announced that IKEA Social Initiative has become the agency's largest corporate partner, with total commitments of more than US$180 million.[49][50]

Examples of involvements:

  • IKEA through IKEA Social Initiative contribute €1 to UNICEF and Save the Children from each soft toy sold during the holiday seasons, raising a total of €16.7 million so far.[51]
  • IKEA Social Initiative provided soft toys to children in cyclone affected Myanmar.[52]
  • Starting in June 2009, for every Sunnan solar-powered lamp sold in IKEA stores worldwide, IKEA Social Initiative will donate one Sunnan with the help of UNICEF.[53]
  • In September,[when?] the IKEA Foundation pledged to donate $62 million to help Somali refugees in Kenya.[11]
  • According to The Economist, however, IKEA's charitable giving is meager, "barely a rounding error in the foundation's assets."[11]

In 2009, Sweden's largest television station, SVT, revealed that IKEA's money—the three per cent collection from each store—does not actually go to a charitable foundation in Holland, an IKEA has said. Inter IKEA is owned by a foundation in owned by a foundation in Liechtenstein, called Interogo, which has amassed twelve billion dollars, is controlled by the Kamprad family.[11]

  Environmental performance

After initial environmental issues like the highly publicized formaldehyde scandals in the early 1980s and 1992, IKEA took a proactive stance on environmental issues and tried to prevent future incidents through a variety of measures.[54] In 1990, IKEA invited Karl-Henrik Robèrt, founder of The Natural Step, to address its board of directors. Robert's system conditions for sustainability provided a strategic approach to improving the company's environmental performance. In 1990, IKEA adopted The Natural Step framework as the basis for its environmental plan.[55] This led to the development of an Environmental Action Plan, which was adopted in 1992. The plan focused on structural change, allowing IKEA to "maximize the impact of resources invested and reduce the energy necessary to address isolated issues."[55] The environmental measures taken, include the following:

  1. Replacing polyvinylchloride (PVC) in wallpapers, home textiles, shower curtains, lampshades, and furniture—PVC has been eliminated from packaging and is being phased out in electric cables;
  2. minimizing the use of formaldehyde in its products, including textiles;
  3. eliminating acid-curing lacquers;
  4. producing a model of chair (OGLA) made from 100% post-consumer plastic waste;
  5. introducing a series of air-inflatable furniture products into the product line. Such products reduce the use of raw materials for framing and stuffing and reduce transportation weight and volume to about 15% of that of conventional furniture;
  6. reducing the use of chromium for metal surface treatment;
  7. limiting the use of substances such as cadmium, lead, PCB, PCP, and AZO pigments;
  8. using wood from responsibly managed forests that replant and maintain biological diversity;
  9. using only recyclable materials for flat packaging and "pure" (non-mixed) materials for packaging to assist in recycling.[55]
  10. introducing rental bicycles with trailers for customers in Denmark.[56]

In 2000 IKEA introduced it's code of conduct for suppliers, called the IKEA way of purchasing.... shortened to IWAY. Today IWAY is a totally integrated part of IKEA's purchasing model. IWAY covers Social, safety and environmental questions.

More recently, IKEA has stopped providing plastic bags to customers, but offers reusable bags for sale. The IKEA restaurants also only offer reusable plates, knives, forks, spoons, etc. Toilets in some IKEA restrooms have been outfitted with dual-function flushers. IKEA has recycling bins for compact fluorescent lamps (CFLs), energy saving bulbs, and batteries. In 2001 IKEA was one of the first companies to operate its own cross-border freight trains through several countries in Europe.[57]

In August 2008, IKEA also announced that it had created IKEA GreenTech, a €50 million venture capital fund. Located in Lund (a college town in Sweden), it will invest in 8–10 companies in the coming five years with focus on solar panels, alternative light sources, product materials, energy efficiency, and water saving and purification. The aim is to commercialise green technologies for sale in IKEA stores within 3–4 years.[58][59]

In order to make IKEA a more sustainable company a product life cycle has been created, and there is now a never ending list. The idea stage says that products should be flat packed so more can be shipped at once, and that products should be easy to dismantle and recycle. Raw materials are used, and since wood and cotton are two of the most important products in IKEA production so IKEA makes the most out of every tree and cotton plant, and works with environmentally friendly forests and cotton without the excessive use of chemicals and water. Manufacturing comes third in the life cycle and includes IWAY which is IKEA's code of conduct for manufactures and suppliers which makes and enforces requirements for working conditions, social and environmental standards, and what suppliers can expect from them in return. Marketing is another part of IKEA's life cycle and as much of their paper for their catalogs comes from responsibly managed forests. The catalog is also now made smaller which requires less paper, and less waste in the process. This also enables more catalogs to be shipped per load. IKEA stores recycle waste, and many run on renewable energy, and energy-saving bulbs and sensors are used. All employees are trained in environmental and social responsibility, and IKEA strives to give customers access to good public transit, and well as the stores being involved in the local community. IKEA products help customers to live a more sustainable life at home. The coffee served is also certified organic. The last stage of the life cycle is the end of life. Most IKEA stores take back burned out light bulbs and drained batteries and makes sure they are recycled responsibly. IKEA is also currently working on developing a way to take back recycled sofas and other home furnishing products that have reached their own end of life.[60]

  Community impact

IKEA's goals of sustainability and environmental design in their merchandise have sometimes been at odds with the impact a new IKEA store can have on a community.

  • In September 2004, when IKEA offered a limited number of free $150 vouchers at the opening of a new store in Jeddah, Saudi Arabia, three people were crushed to death in a stampede that followed the store's opening.[61]
  • IKEA has demolished historic buildings[62] in at least one case for a parking area.[63] (At the College Park, Maryland, USA, store there is an interactive digital display which tells the history of a tavern which used to exist where the store is currently located.)
  • IKEA was refused planning permission for a future store in the United Kingdom in 2004 (to be based in Stockport, Greater Manchester) by the Office of the Deputy Prime Minister. It applied for judicial review but lost in 2005.[64][65] However, they later received permission to build a store within Greater Manchester a few miles from the originally planned site in Ashton-under-Lyne.[66] An estimated £10,000 was spent on traffic policing, and even more on rerouting traffic from the M60 motorway around Ashton.
  • After viewing the 100-foot-tall (30 m) sign of an IKEA under construction near Portland International Airport, Randy Leonard, the city commissioner in charge of sign permits in Portland, Oregon, placed a moratorium on all pending and future sign permits in the area.[67]

  Criticisms

  Paris Nord 2, Roissy, France
  • As a teen, IKEA founder Ingvar Kamprad was directly involved in the pro-Nazi New Swedish Movement (Nysvenska Rörelsen) until at least 1948, causing tensions when IKEA began opening stores in Israel,[68] although one source has claimed that the movement was not pro-Nazi.[69] Kamprad devotes two chapters to his time in Nysvenska Rörelsen in his book, Leading By Design: The IKEA Story and, in a 1994 letter to IKEA employees, called his affiliation with the organization the "greatest mistake of my life."[70] After the revelations came to light, he pledged £1 billion to charity.[71]
  • Former Norwegian prime minister Kjell Magne Bondevik has criticized IKEA for not depicting women assembling furniture in its instruction booklets, despite the fact that many sets of instructions do, in fact, show women.[72]
  • In 2004 there was controversy about an Irish law restricting the maximum size of a retail outlet to 6,000 m2. IKEA's plan to build a much larger store in Dublin caused the law to be put up for debate. The law was changed to remove the size limit for retail outlets selling durable goods in designated areas.[73] The Minister for the Environment was criticized for allegedly changing the law to suit one company and other agencies protested the law change as damaging to small businesses while the government defended their decision stating that the move was a positive one for Irish consumers. IKEA Dublin has since opened on 27 July 2009.[74]
  • June 2007: the designated nationalist Social Democratic and Labour Party complained about an artist's rendering of IKEA Belfast that included both the Union Flag and the Ulster Banner flag as two of the three flags in front of the store. After being labelled "an upmarket Orange hall" by the party, IKEA assured customers and coworkers that only the Swedish flag would be seen outside the actual store.[75]
  • June 2007: The BRUNKRISSLA bedding notes said, "Brightens up your grad's dorm. Unlike a creepy gothic roommate, who can be a bad influence." Members of the goth subculture took offense at the stereotype.[76]
  • A researcher from the University of Copenhagen pointed out that for years, IKEA has named their cheap rugs after Danish places, while the more expensive and luxurious furniture was named after Swedish places. The researcher, Klaus Kjøller, who is well known for tongue-in-cheek statements, accused IKEA of imperialism.[77]
  • IKEA has been criticized by Citytv in Canada for charging as much as twice the price in their Canadian stores for the same items sold in their American stores, this despite the Canadian dollar reaching parity with the U.S. dollar.[78]
  • In 2008, IKEA sent an email to their British customers advising that "IKEA Shop Online is open everywhere", however this only applied to England and Wales. As of June 2011 Northern Irish and Scottish customers are unable to shop online, however some Scottish customers may get items delivered via IKEA Edinburgh.[79] This scheme called IKEA DIRECT only applies to certain postcodes and costs between £35 (City of Edinburgh) to £120 (Aberdeenshire) for delivery.[80] Even today, IKEA customers in Australia cannot shop online.
  • In November 2009, IKEA, along with Abercrombie & Fitch, Gymboree, Hanes, Kohl's, LL Bean, Pier 1, Propper International, and Walmart, was added to the 2010 Sweatshop Hall of Shame by labour rights group International Labor Rights Forum.[81]
  • In 2011, IKEA and its Swedwood affiliate came under criticism for its treatment of workers at a U.S. factory in Danville, Virginia and its decision to hire the law firm Jackson Lewis, which is often employed by companies to counter labor demands, to consult with IKEA on attempts to form a union at Danville. A petition on Change.org has received more than 70,000 signatures urging IKEA to respect workers rights.[82]
  • In 2012, IKEA in France was accused by the independent newspaper Le Canard enchaîné and the investigative website Mediapart of spying on its employees and clients by illegally accessing French police records. The head of risk management at IKEA feared his employees were anti-globalists or potential ecoterrorists.[83][84]

  Verdana typeface

In 2009 IKEA caused a flap in the graphic design world when it changed the typeface used in its catalog from Futura to Verdana, expressing a desire to unify its branding between print and web media. The controversy has been attributed to the perception of Verdana as a symbol of homogeneity in popular typography.[85]

Time magazine and the Associated Press ran articles on the controversy including a brief interview with an IKEA representative, focusing on the opinions of typographers and designers.[86] Design and advertising industry-focused publications such as Business Week joined the fray of online posts. The branding critic blog, Brand New, was one of those using the "Verdanagate" name.[85] The Australian online daily news site Crikey also published an article on the controversy.[87] The Guardian ran an article asking "Ikea is changing its font to Verdana – causing outrage among typomaniacs. Should the rest of us care? Absolutely."[88] The New York Times said the change to Verdana "is so offensive to many because it seems like a slap at the principles of design by a company that has been hailed for its adherence to them."[89]

  Advertising

  German-Turkish advertisement in Berlin-Neukölln

In 1994, IKEA ran a commercial in the United States widely thought to be the first commercial featuring a homosexual couple; it aired for several weeks before being pulled due to bomb threats directed at IKEA stores.[90] Other IKEA commercials feature the gay community, once featuring a transgender woman.[91]

In 2002, the inaugural television component of the "Unböring" campaign, titled Lamp, went on to win several awards, including a Grand Clio,[92] Golds at the London International Awards[93] and the ANDY Awards,[94] and the Grand Prix at the Cannes Lions International Advertising Festival,[95] the most prestigious awards ceremony in the advertising community.

IKEA launched a UK-wide "Home is the Most Important Place in the World" advertising campaign in September 2007 using estate agent signs with the term "Not For Sale" written on them as part of the wider campaign. After the campaign appeared in the Metro newspaper London the business news website www.mad.co.uk remarked that the IKEA campaign had amazing similarities with the marketing activity of UK home refurbishment company Onis living who had launched their own Not For Sale advertising campaign[96] two years prior and was awarded the Interbuild 2006 Construction Marketing Award for best campaign under £25,000.[97]

  Onis's Not For Sale sign.

A debate ensued between Fraser Patterson, Chief Executive of Onis and Andrew McGuinness, partner at Beattie McGuinness Bungay (BMB), the advertising and PR agency awarded the £12m IKEA account.[98][99] The essence of the debate was that BMB claimed to be unaware of Onis's campaign as Onis were not an advertising agency. Onis's argument was that their advertising could be seen in prominent landmarks throughout London, having been already accredited, showing concern about the impact IKEA's campaign would have on the originality of their own.

After some negotiations BMB and IKEA agreed to provide Onis with a feature page on the IKEA campaign site linking through to Onis's .co.uk site, for a period of 1 year. Onis is possibly the only company to have ever been advertised by IKEA in such a fashion. In 2008, Onis Homes limited was placed into voluntary liquidation and the website www.onishome.com closed.

The Intellectual Property and trading rights of Onis Homes Limited were later purchased by new shareholders with the strategy to grow the Onis brand throughout the U.K as a one stop shop home refurbishment franchise using the trading name Onis living.

IKEA recently paired up with the makers of popular video game The Sims 2 to make a stuff pack called The Sims 2 IKEA Home Stuff, featuring many IKEA products. It was released on June 24, 2008 in North America and June 26, 2008 in Europe. It is the second stuff pack with a major brand, the first being The Sims 2 H&M Fashion Stuff, which are both coincidentally companies of Swedish origin.

IKEA has taken over title sponsorship of Philadelphia's annual Thanksgiving Day parade in 2008, replacing Boscov's, who filed for bankruptcy in August 2008.

In November 2008, a subway train decorated in IKEA style was introduced in Novosibirsk, Russia. Four cars were turned into a mobile showroom of the Swedish design. The redesigned train, which features colourful seats and fancy curtains, carried passengers until June 6, 2009.

Oyster cards (the ticket-free system for London Underground) are now given with wallets sponsored by IKEA who also sponsor the tube map.

  The Isle of Wight ferry Red Osprey in her IKEA livery.

In January 2009, just before the new store opened in Southampton, the MV Red Osprey of Red Funnel was re-painted in an entirely yellow and blue livery to celebrate the opening of the new IKEA store in Southampton. This is the first time a Red Funnel ferry has been re-painted out of its own red and white colour scheme. It stayed in these colours for 12 months as part of a deal between Red Funnel and IKEA to provide home delivery services to the Isle of Wight. It was repainted with Red Funnel's red and white livery when the deal ended in January 2010.

In March 2010, IKEA developed an event in four important metro stations in Paris, in which furniture collections are displayed in high-traffic spots, giving potential customers a chance to check out the brand's products. The subway walls were also filled with prints that showcase IKEA interiors.

In September 2010, IKEA launched an advertisement for UK & Ireland called "Happy Inside" which had 100 cats lying on IKEA furniture in the flagship IKEA store in Wembley, London.[100]

In April 2011, an advertising campaign for which aims to discover whether men or women are messier in the home launched. Created by Mother, the campaign will begin with a TV advert shot in front of a live audience, featuring four stand-up comedians, two men and two women, having the debate over which gender is the messiest. The strategy behind the campaign is that domestic clutter leads to arguments, leading to an unhappy home, which Ikea wants to prove can be avoided with better storage. Viewers will be directed to a new Facebook page for the brand, where they are able to vote as to who they believe is the messiest, and submit proof using videos and photos through an app created especially for the campaign. Meanwhile, online display banners will allow off users the opportunity to vote, with online adverts promoting Ikea products also demonstrating the problems people have shared, and offering solutions.

Anna Crona, marketing director at IKEA UK and Ireland, explained: "We are committed to understating how our customers live life at home so we can provide solutions to make life happier. Everybody has storage needs in the home and by encouraging debate and providing solutions we will show that IKEA is relevant to everybody, no matter what your home is like or how much money you have." Press adverts will also support the campaign, as will a handbook entitled "Peace, Love and Storage", which will be available through the Facebook site.[101]

In August 2011, IKEA launched a first advertisement for Thailand in Sukhumvit, Bangkok Metro Station. The advertisement has shown a box and a manual of POANG product, and shown a slogan of company "A better everyday life at home".

  Awards

IKEA was named one of the 100 Best Companies for Working Mothers in 2004 and 2005 by Working Mothers magazine. It ranked 96 in Fortune's 100 Best Companies to Work For in 2006 and in October 2008, IKEA Canada LP was named one of "Canada's Top 100 Employers" by Mediacorp Canada Inc., and was featured in Maclean's newsmagazine.[102]

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