It is time for another Episode of Hang Your Hat and this time I am taking on the Furniture giant Ikea. In this episode, I dig a bit into the history of the furniture mega store, divulge some of it’s dark secrets, and discuss why, despite it’s failings, I still love the store. I will also review it’s new and much lauded 2017 PS line, and talk about a recent accolade that we should all be excited about.
See the Better Shelter in Action: http://www.bettershelter.org/better-shelter-awarded-beazley-design-of-the-year/
Learn More about How Natural Light Can Reset Your Sleep Cycle: http://www.cell.com/current-biology/fulltext/S0960-9822(16)31522-6
Welcome to Hang your Hat: Ideas that are Close to Home.
This is Episode 7: How's the Kullen coming along?
Of all the multi national, tax evading, global conglomerates that dominate a single industry and use a mind boggling amount of natural resources to do it, Ikea is my favorite.
In this episode, I dig a bit into the history of the furniture mega store, divulge some of it’s dark secrets, and discuss why, despite it’s failings, I still love the store. I will also review it’s new and much lauded 2017 PS line, and talk about a recent accolade that we should all be excited about.
Since this episode is full of swedish words and names, and I do not speak Swedish, I want to apologize in advance for my atrocious pronunciation. Believe it or not, I am trying my best to get it right.
Ikea PS 2017 Review
For the first time since 2014 Ikea has come out with a new PS collection. 21 designers collaborated with Ikea to make 60 new products, ranging from furniture to drink mixes. According to Ikea this new line was made for the “fiercely independent” who “give convention a wedgie.” That is actual copy from their website - give convention a wedgie. I think it is pretty clear that they are targeting millennials, particularly those that are living in transient or shared conditions. As a result, most of the furniture is small and foldable, and looks pretty unconventional.
For example the collection has a love seat that is made from two strapped together corner seats constructed from a metal grid covered with 36 pillows. It looks like metal outdoor furniture covered in an angry pointy cloud. I think it is safe to say that I am not a fan of this particular piece of furniture, but I can see how it might be really great for people that move a lot. The fact that it can be separated into two smaller pieces means that it could fit in multiple home layouts, including ones that don’t have enough room for a love seat. The metal frame is durable enough to survive several moves, and looks like it would be a lot lighter weight than a traditional wood and upolestry love seat, and the fact that it can be broken into pieces makes it easier for a single person to move, and easier to carryupstairs or fit through narrow doorways. Even though I am not a fan of this piece, it is a really good design for the target audience.
There is also a chair that is covered in a mesh fabric that I am a fan of, it looks fantastic. The chair has a metal frame and wooden seat with the mesh fabric, that forms the body of the chair stretched over the frame. The chair is mostly a horse shoe shape, that is a bit squeezed in on the sides for the arm rests. It also has araised back that sort of flows into the sides. My overall impression of it, is that it looks like a really comfortable, inexpensive office guest chair. It also comes in a pretty plum color, or a soft grey.
I am also a fan of the collection’s rocking chair. It is shaped like half a sphere suspended on rockers. Firebeard said it looks like one of the wheeled standup chairs the kids had before they could walk, and it kind of does, but I still kind of like it. It looks like it might be a great place to cuddle up to read a book, or plot an evil scheme - it looks like it might be a good super villain lounger too.
There are a couple of things in the collection that I think are just duds. The coffee table looks like a short folding TV tray made from metal. It is at best the size of a side table. If they had called it a side table, I might have been able to get behind the design, but as a coffee table, it really misses the mark for me.
They also have a USB powered flash light in a cage, that just doesn’t make any sense at all. I think the idea is that it is a lamp that can be powered by your laptop or a car charger, so you don’t need to be in a house to use it, but it just seems like a flashlight with portability issues.
My absolute favorite from the collection is a 3 in one self watering plant pot set. It is a 3 piece set that consists of a metal plant stand, an off white water proof outer pot, and an unglazed terra-cotta inner pot. The metal plant stand cradles the outer pot so that it is suspended above the floor which looks quite nice and keeps your floors from being ruined. The outer pot acts as a water resivoir. You fill it up from a hole on the side, and the inner pot slowly sucks up the water keeping the plant moist. I love this thing. It is attractive, useful, practical. After my next trip to Ikea my house will be filled with them.
The collection has a lot of other really great pieces and several not so great pieces, that I plan to cover in detail on the blog. For now I’m just going to mention a few. There is a very pretty emerald green knit throw with a wavy texture, some smokey glass vases that would work with a lot of different decorating styles, a room divider that would be great to make a private space for guests when you don’t have a guest bedroom, some travel mugs with a really interesting shape, and a truly bizarre lounging blanket that looks a bit like a quilted vest made for someone 7 or 8 feet tall.
Another quick mention, around the same time that the PS collection came out Ikea also released a bicycle. It is belt driven rather than chain driven, which according to ikea makes it easier for novicesto work on, and it comes with quick attachment points that make it easy to add on some of their accessories like a pull behind trailer and panners, which are like square bags that fit next to the back wheels. It also comes with a 25 year warranty. I am a tiny bit of a bike snob, so I am reserving judgement on this one until I see it in person. I have doubts that the belt drive will really work that well, especially under a load, but I hope that I am wrong and that this is a good inexpensive transportation option.
Ikea’s founder, Ingvar Kamprad, was born in Smaland Sweden in 1926, and seems to have become a business man at the point of exiting the womb. At 5, he was already buying matches in bulk and selling them to his neighbors at discounted prices, and by 7 he had expanded into other markets - nearby towns selling things like Christmas cards and pencils.
Kampradstarted IKEA in 1943, at the age of 17 using money that his father had given him for doing well in school, despite his dyslexia. Initially the company sold things like pens, picture frames, and watches at reduced prices, but in 1948 he expanded the line to include furniture produced by local manufactures.
By 1951 IKEA was already producing the IKEA catalogue, much like the Ikea catalogue we know today, and in 1953 the first IKEA furniture showroom was opened. The showroom was a response to a price war with an Ikea competitor. Since people could see the quality of the Ikea products in the showroom, buyers could make their furniture choice based on both cost and quality rather than just cost alone. This proved to be a good move for Ikea, and their sales continued to grow.
Ikea began the move to manufacturing their own flat pack furniturein 1956, after Competitors encouraged furniture suppliers to boycott Ikea. In my opinion, this is when Ikea as we know it today was really born. Soon after, in 1958, the first IKEA store, like the Ikea stores we know now was opened in Almhult Sweden.
The ikea brand really took off from there. The first IKEA restaurant was opened in 1960, and the first store outside of Sweden was opened in 1963. Ikea finally reached US markets in 1985.
Ikea has actually been fairly slow to expand. They seem to want to get things right the first time, and are willing to slow their expansion to do it. For example, it took 6 years to open it’s first store in south Korea. Their strategy seems to work though, when they expand they do it right, selling a mass produced product internationally, while still somehow catering to the needs of the local market.
Now there are more than 318 Ikea stores in more countries than Walmart, and additional expansion into emerging markets like China and India is still very much on the agenda.
Ikea’s net income has increased 31% in the last 5 year up to$4.5 Billion.
Why is Ikea so successful? It’s model is based on volume. It produces a lot of the same item and sells them in many different markets. That lets them get lower prices from their suppliers, and in turn charge their customers lower prices. The more volume the greater that discount becomes, which is why many IKEA favorites have actually become cheaper over the years, despite inflation.
For example, as of 2015 one Billy bookcase was sold every 10 seconds, that kind of volume allowed the company to lower their 2015 price by an average of 1% below the 2014 price.
Is is actually so ubiquitous a product, that Bloomberg has created a Billy bookcase index as an indicator of the fiscal strength of each of the countries they are sold in. In case you were wondering, in 2015, the latest year I could find, Slovakia was the cheapest, followed by several other European countries that use the Euro. The price reflected decreasing prices in the Euro zone at that time. Egypt was the most expensive, reflecting rampant price growth in the country.
The Ikea has not escaped controversary however. We probably all rememberthe horsemeat meatball scandal of 2013. Ikea was of course, not the only company impacted. After investigation, by the European Union, food adulteration was found to be far more widespreadthan had been previously thought; however, Ikea seemed to become the name that was most closely associated with the scandal.
Ikea also uses a really absurd amount of natural resources, particularly wood. All of my sources differed slightly in the amount of wood they said IKEA uses, but most agreed that it was just about 1% of the world’s commercial wood supply every year, and that Ikea is likely, at least in the top 5 of commercial wood consumers in the world.
Critics argue, that given the lifespan of most Ikea products, that using that much wood is a terrible waste of natural resources. I think that this argument has some validity. Using that much wood does seem environmentally irresponsible. However, Ikea is currently attempting to mitigate it’s impact. As of last year about 40% of the wood they used came from either recycled sources or Forest Stewardship Council certified forests. Forest Stewardship council certification means that the wood is sourced in an environmentally friendly, socially responsibly and economically viable way. It is a huge step toward sustainability. Ikea plans to have at least 50% of the wood it sources to be sustainablethisyear, and 100% of it by 2020.
What I think is really important here is that since IKEA is SO big, and it’s part of the consumer wood market share is SOO huge, that it’s move toward more sustainably harvested wood could actually impact the entire consumer wood market. No supplier is going to want to miss out on a large portion of the market share, and that may mean a greater move toward sustainable wood production over all.
Ikea also used East German prisoners as slave labor to reduce costs in the late 70’s in early 80’s. In 2012 the practice came to light after an independent audit by Ernst and Young. The Ernst and Young report said that while Ikea had had a policy of visiting production facilities to control working processes, access to East German suppliers had been restricted. In 2012 The company made a public apology for it. Peter Betzel, the head of Ikea Germany, stated "It is not and never was acceptable to Ikea that it should be selling products made by political prisoners and I would like to express my deepest regret for this to the victims and their families.” Betzel further stated that the companyhad received tipoffs that it had been using forced labour, but had taken insufficient action against the claims, and that since 2000 it has had had a strict system of checks and balances in place. The company now does over over 1000 control checks every year.
Anita Gossler, an east german prisoner that was forced to make goods for other companies stated that "There were many companies involved in this practice," “ they should all be named and shamed. Ikea has put its head above the parapet and admitted its guilt but there are plenty of others who should also be approached for compensation." She also said that she welcomed Ikea’s announcement that it planned to donate funds to research projects on forced labour in the former GDR.
This accusation about forced German labor came at about the same time that the company was accused of using cuban political prisoners for the same purpose. It turned out that the cubans had made sample goods for the company, but the company never actually sold goods made by cuban prisoners, and that Ikea was unaware of any involvement of cuban prisoners.
There have also been allegations that Ingvar Kamprad had Nazi ties. In 1994 Kamprad’s Nazi ties initially came to light when the letters of Per Engdahl, the leader of the New Swedish Movement, and supporter of Nazi Germany (but not Nazism), came to light. The letters showed that as a teen Kamprad had given money to and recruited for the organization, and that Kamprad was friends with Engdahl. Then in 2011, a book by the Swedish journalist Elisabeth Åsbrink showed that Kamprad had been a member of the the fascistgroup, the Swedish Socialist Union (SSS), at the time that he founded Ikea. There is even some evidence that he recruited for the organization, although it is unclear how official that capacity might have been.
In 1998 Kamprad made a public apology for his Nazi ties, calling them a part of my life which I bitterly regret, youthful sins, and the biggest mistake of his lifeMost at the time seemed to believe that Kamprad was truly remorseful, and most groups, including the Anti-Defamation League, accepted his apology.
In addition, Asbrink’s 2011 book, “And in Wienerwald the trees remain”, the book that brought further Nazi ties to light, also details Kamprad’s long term friendship with a Jewish refugee that came to work on Kamprad’s family farm and later was a member of the team that launched Ikea. Perhaps this friendship helped show Kamprad there error of his ways.
Back in 1998, Kamprad stated that The IKEA he created is based on democratic principles and embraces a multicultural society. I think support for that vision of Ikea was given on January 30, when Ikea came out with a letter in support of their immigrantemployees in the US after the US travel ban restricted movement of people from 7 primarily Muslim countries into the US.
Last, but certainly not least, IKEA is a tax dodger. Technically, IKEA is a charity. In 1982, Ingvar Kamprad gave his ownership stake in IKEA to the Stichting Ingka Foundation, which is a dutch charity. The charity runs IKEA through Ingka Holdings, a subsidiary of the Stiching Ingka Foundation, that operates as a for profit company.
As of 2006, the charity had an estimated endowment of $36 billion dollars, but it wasn’t very charitable in it’s giving. The foundation has been giving Sweden’s Lund Institute of Technology 1.7 million Euros a year, which is a lot, but it is very little in comparison to the foundation’s gigantic endowment.
So why the complicated structure? Since Ikea is owned by a charitable organization, all of it’s profits are tax free. And guess who is in charge of the Stichting Ingka Foundation, it is a board, headed by Kamprad.
Ikea, as you probably think of it is actually many companies, and subsidiary companies with an extremelycomplex organizational structure that make it difficult to tell who owns what, and who benefits from the company’s success.
The result is very little tax being paid on a huge amount of profit, and it appears to be completely legal.
So why, after the horse meat, huge resource usage, forced labor, Nazi affiliations, and tax doging do people still like Ikea? I think there are two reasons.
For one, Times are tough. Millienials earn on average 20% less than their parents did at the same age. Many have to stay at home with their parents to make ends meet, and those that do get out on their owndon’t have a lot of extra money for furniture. Low cost furniture suppliers, like Ikea, make it possible for a millennial to both move out of their parent’s basement, and have a bed to sleep on in their new place. That is a powerful motivator to forget a company’s past misdeeds.
The 2nd reason isa little less concrete. I think that, for the most part, Ikea really do seem to be trying to learn from their mistakes and do better. Whether that is from an inherent desire to make the world a better place, or because it is good for sales, the end result is that you can feel ok about buying an Ikea product. While your purchase probably isn’t making the world a better place, it probably isn’t making the world a worse place, and that it not something that you can often say at a similar price point.
On the environmental front, ikea is working toward sustainability. They have switched to all LEDs, make high efficiency appliances and low water use faucets. They are working toward completely sustainable wood and cotton. They have cut out polystyrene and are cutting out palm oil. They are investing in renewable energy, reducing carbon emissions, increasing efficiency, and reducing waste. Many of their stores are at least partially solar powered, and they have begun to offer solar panels to consumers in test markets. Half of the food they serve is from local sources, and most of the fish they serve is sustainably sourced, and they are working toward all of their products coming from renewable, recyclable, or recycled sources in the near future.
They are also working toward social justice. 48% of their managers are women. They are enforcing a conduct for their suppliers that enforces things like good working conditions, and recently they have begun employing Syrian refugees that have had difficulty finding jobs. In addition, the Stichting Ingka Foundation - Ikea’s non profit parent company, has committed to providing additional support to communities negatively impacted by climate change, and providing clean drinking water.
However, I think their most important contribution to social justice recently is the Better Shelter, A flat pack home for refugees that won the prestigious 2016 Beasley Design of the year award.
The better shelter is a lightweight rigid polymer structure that can be set up by a team of 4 in a matter of hours. They sleep 5, are far more durable and weather proof than a tent, and havea solar panel on the roof that provides enough energy to power a light, or charge a cell phone.
In other words, it is a tenable living situation for refugees, that provides a modicum of security and a sense of home.
Follow up from Episode 6
Before I go, I have a quick update from Episode 6: Sweet dreams are made of these. On February 2, just a few days after the episode aired, a new study came out in the journal current biology, called Circadian Entrainment to the Natural Light-Dark Cycle across Seasons and the Weekend. The study focused how exposure to natural light, as opposed to the electrical light we are exposed to all of the time impacts the body clock. Exposure to electrical light delays the body clock, so we go to bed late and wake up late. They wanted to find out if exposure to natural light would reset the biological clock so that a person would go to sleep around sunset and wake up around sunrise. So they sent study participants camping. The participants were exposed ONLY to natural light, no flash lights, no phones, nothing. They found that the natural light DID reset the biological clock. The participants went to bed earlier and woke up earlier. It even helped prevent cases of the Monday’s. So if you are in need of a biological clock reset, it may be a good time to go camping, or failing that, at least spending a bit more time outdoors and away from screens.
If you want to learn more I will link to the study in the show notes.
Thank You for listening, I hope you enjoyed the Show. If you did, please rate the show or leave a review on I tunes. Due to travel obligations, I will be back in three weeks rather than the typical 2 weeks. If you would like to get in touch in the meantime please send me an email at email@example.com. You can also visit the website hangyourhatpodcast.com.
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