Love It or Hate It, IKEA Set to Expand in U.S.
Cox News Service
Friday, January 18, 2008
STOCKHOLM — When American shoppers hear that Swedish home-furnishings giant IKEA is opening a store nearby, they circle the opening date on their calendars and camp out in the parking lot the night before.
How does a chain emphasizing simple design and quirkily named merchandise — think Swedish, such as a bed mattress called the Sultan Hogbo — inspire such passion?
 IKEA The front cover of one of the first IKEA mail-order catalogs, this one from 1951. Founded in Sweden in 1943, IKEA now has 267 stores in 36 countries including 33 in the United States.  IKEA Ingvar Kamprad, the 81-year-old Swede who founded IKEA in 1943. IKEA now has 267 stores in 36 countries including 33 in the United States.  IKEA/HANDOUT Founded in Sweden in 1943, IKEA now has 267 stores in 36 countries including 33 in the United States. It recently opened stores in Atlanta and Round Rock, Texas (just outside Austin). IKEA also just opened a 309,000-square-foot store in Orlando and has plans for more stores in Tampa, West Chester, Ohio, and Charlotte, North Carolina.  IKEA/HANDOUT A family loads items onto their cart while shopping at an IKEA store in Europe. Founded in Sweden in 1943, IKEA now has 267 stores in 36 countries including 33 in the United States. |
"They have an astonishing array of products at reasonable prices," said Swedish shopper Ilze Filks.
That simple mix has made IKEA a global leader in economical, assemble-it-yourself home furnishings, with 237 stores in 36 countries. The company has 33 stores in the United States and plans to expand in the American market this year and next.
All of its sprawling, cobalt blue-walled outlets are exactly the same — the stores in Atlanta and near Austin are virtually identical to one in Jeddah, Saudi Arabia.
It's the kind of place where intrepid shoppers can find a three-seater sofa for less than $100.
And fearlessness is just the quality that many shoppers say they need to visit IKEA. Like many Americans, Filks and other Swedes have a love-hate relationship with the retailer.
Filks finds the mix of products colorfully eccentric, but she also finds it daunting to navigate the massive, crowded stores.
"I would never shop on weekends — not ever," she said. "And on the weekdays I always arrive exactly when the store opens."
Even in Sweden, where founder Ingvar Kamprad has become one of the world's richest men, people either rave about IKEA or they've visited one and vow never to step foot inside again.
"The idea of going to IKEA to buy coffee mugs is overwhelming because it's just such a huge place," said Sofia Hilden, a Finnish woman living in Stockholm. "You need a GPS [device] to figure out how to get out of there once you manage to finish your shopping."
While the in-store experience may deter some customers, many analysts say the privately held company is well positioned for growth, particularly with the looming threat of recession.
"I think that IKEA will weather any storms better than many of its competitors," said Nick Gladding, an analyst at Verdict Research in London. "When consumers' finances are squeezed they always turn to retailers that offer strong value for money."
That's not to say competing American retailers, such as Target, have anything to worry about.
"A chain like Target has many more stores than IKEA so it's more convenient for customers and so they'll continue to go there," Gladding said.
Clearly IKEA is doing something right to rack up $28.9 billion in global sales in the fiscal year that ended August 2007.
The retailing giant got its start in 1943 when Kamprad, an energetic 17-year-old farm boy, started peddling everything from fish to wallets to stockings on his bicycle to earn extra money.
He went on to launch a mail-order catalog that began selling furniture and home products in 1950. Eight years later, he opened his first store.
Kamprad, now 81, was raised on a farm called Elmtaryd near the village of Agunnaryd. His initials, joined with those of the farm and town, created the acronym that has brought modern design to the masses.
In Stockholm, where IKEA provides a free bus service from the city center for those wanting to visit stores in the suburbs, shoppers use the Swedish word "lagom" to describe the retailing behemoth's mentality.
The word, which has no direct English equivalent, means "enough, adequate, sufficient."
"People in Sweden don't like to stand out a lot and certainly no one wants to be seen as being more special than anyone else," Hilden said. "This is a concept that IKEA has managed to globalize."
A measure of IKEA's success? An estimated half-billion people visited the stores last year. The United States is IKEA's second-largest market after Germany.
IKEA plans to open another 25 stores worldwide this year, including in West Chester, Ohio, and in Brooklyn, N.Y. Stores in Charlotte, Tampa and Summerville, Texas, will open in 2009.
In coming years, IKEA "could quite easily treble its store numbers in the United States ... and there are many smaller markets across the world where it has yet to open its first stores," said Bryan Roberts, a research manager at Planet Retail, a consulting firm in London.
Nicki Craddock, a European spokesperson for IKEA, said the chain is considering opening stores in South Korea and India.
"The IKEA concept definitely has a universal appeal," she said.
No matter where an IKEA store is situated, its Scandinavian roots would be hard to miss. The blue and yellow coloring of IKEA's signage is reminiscent of the colors of the Swedish flag.
And if the Scandinavian minimalist styling of the products doesn't give it away, surely the Swedish meatballs sold in the chain's cafeterias do.
"We always joke in Sweden that people go to IKEA not really needing anything but then wind up with tea lights and washing-up brushes," Filks said. "It's hard to resist buying something there."