IKEA, every mention

IKEA (Audio) · Acquired Nov 18, 2024 · 100 mentions

• ▶ 1:00:44 David Rosenthal But by the end of the 19 fifties, flat pack and then self assembly by the customer is expanded across the entire range, like all of Ikea's furniture.
• ▶ 1:02:57 Ben Gilbert In preparation for this episode, I talked to Jim Senegal, who's the co-founder of Costco, because I was asking about Ikea and the similarities, and he said he used to love going to Ikea to look at the KD furniture that they stocked.
• ▶ 1:03:11 Ben Gilbert I was like, oh, maybe this was like a brand that Ikea used to stock.
• ▶ 1:03:24 Ben Gilbert Another research call was with Bjorn Bailey, who ran Ikea in the U.S. in the late eighties, and he mentioned that Ingvar always looked up to Costco and thought they were, like, the greatest retailer in the world, so there's a lot of shared…
• ▶ 1:04:07 David Rosenthal So legend has it that right around this time, as the whole IKEA range is shifting to flat pack, Ingvar goes on a trip to the Milan furniture show in Italy.
• ▶ 1:05:24 Ben Gilbert So we're all familiar with the simple Scandinavian design that IKEA furniture is, and it's become extremely popular, basically universally adored.
• ▶ 1:05:40 Ben Gilbert The question is, is there something intrinsic to simple Scandinavian design that makes it universally applicable, or is it IKEA's success that
• ▶ 1:05:51 Ben Gilbert That now we all sort of look at it and have some reverence for it, because it really is beneficial to Ikea that we all like simple designs instead of ornate designs at this point, because it makes it work much better for flat pack, for…
• ▶ 1:06:26 David Rosenthal I mean, I'm not a expert in design history, and people who are might contradict me here, but I don't think there was necessarily that much about Scandinavian or Swedish design that was particularly light, simple, minimal, before Ikea.
• ▶ 1:07:30 David Rosenthal So entering into the 19 sixties here and all the demographic change that's happening, Ikea is perfectly positioned and it's just explosive growth for the company.
• ▶ 1:07:56 David Rosenthal Sweden itself, even if they didn't have these problems, just doesn't have enough capacity for all this new furniture that IKEA needs to source.
• ▶ 1:09:14 David Rosenthal So in 1961, IKEA goes to Poland to
• ▶ 1:09:19 David Rosenthal Help local manufacturers, state-sponsored manufacturers there, set up furniture production of the IKEA designs.
• ▶ 1:09:28 David Rosenthal And by the end of the decade of the sixties, Poland is producing 50% of IKEA's furniture, including some of the first modern classics like the Billy Bookcase, the Ogla Cafe chair.
• ▶ 1:09:58 Ben Gilbert The other thing that they're doing here is Ikea is investing in bringing up these factories.
• ▶ 1:10:15 David Rosenthal And I mean, they get really, really intertwined to the point where eventually in the, this is a little later in the seventies after Ikea invests a ton in developing a board on frame quote unquote technology or sandwich board construction…
• ▶ 1:11:20 David Rosenthal It perfectly illustrates the new consumer dynamic and demand explosion that IKEA is about to head into.
• ▶ 1:11:39 David Rosenthal Add every product that Ikea sells in its range should be high quality, great value, ideally way better on both dimensions than any competition.
• ▶ 1:11:58 David Rosenthal Yes, but over and above just kind of like the standard products in the range, Ikea should always have a few products.
• ▶ 1:13:55 David Rosenthal Today, IKEA sells almost twenty million lakh tables every year and has been for decades.
• ▶ 1:14:39 Ben Gilbert Okay, so I brought this up with Jim when I was talking about similarities between Costco and Ikea.
• ▶ 1:14:44 Ben Gilbert He did not believe that Ikea copied the Costco hot dog.
• ▶ 1:14:53 Ben Gilbert I know Ikea started doing it in 1995.
• ▶ 1:15:22 David Rosenthal The IKEA hot dogs today are priced at one dollar, which is cheaper than the buck 50 at Costco.
• ▶ 1:15:55 David Rosenthal Anyway, I refuse to believe that the ability to buy just a hot dog at Ikea is not a nod to the Costco deal because Ikea also has the hot dog and drink combo for one 50.
• ▶ 1:16:25 David Rosenthal The even more amazing thing is he codifies this into the official policy of the company, which is we must have at least, at first it's 10 quote unquote hot dog products across the range.
• ▶ 1:16:52 Ben Gilbert And the fact that they just keep whittling it down year over year over year.
• ▶ 1:17:02 Ben Gilbert I think they've sold thirty million of these since 1976.
• ▶ 1:17:06 Ben Gilbert They've just been maniacal about optimizing.
• ▶ 1:17:19 Ben Gilbert By 2016, they had it down below a hundred dollars, and it's effectively flattened out.
• ▶ 1:17:44 Ben Gilbert No, but that's not what they're trying to be.
• ▶ 1:18:18 David Rosenthal Which brings us to the other, I think, really uniquely Ikea piece of this hot dog policy that even Costco doesn't really have.
• ▶ 1:18:31 David Rosenthal Ikea, thanks to the catalog, controls all parts of the demand and the supply chain.
• ▶ 1:18:40 David Rosenthal They control the supply chain, obviously, as we've been talking about.
• ▶ 1:18:51 David Rosenthal So it's not like they're having to buy advertising.
• ▶ 1:18:54 David Rosenthal They fully control the marketing channel.
• ▶ 1:18:57 David Rosenthal And so they can use these hotdog products strategically and promote them in each market in the catalog to then drive the visits
• ▶ 1:19:06 David Rosenthal To stores, drive the huge demands, position them with other products, then they do the layouts in the showrooms.
• ▶ 1:19:15 Ben Gilbert It's kind of amazing that because in many ways they are their own customer acquisition channel with the catalog, that they never turned into a customer acquisition channel for other businesses.
• ▶ 1:19:26 Ben Gilbert They should sell advertising.
• ▶ 1:19:38 Ben Gilbert And I flipped through decades worth of Ikea catalogs.
• ▶ 1:20:01 David Rosenthal So, now, what's also interesting, though, is, like, this element that I was just saying of they control the whole demand and supply chain is no longer true in the internet world.
• ▶ 1:20:33 Ben Gilbert So as we've been talking about, IKEA's big innovation was finding a way to make high-quality, well-designed furniture available to anyone at crazy affordable prices.
• ▶ 1:20:41 Ben Gilbert And you know the three ways they did this.
• ▶ 1:21:16 Ben Gilbert Okay, so back to the IKEA similarities.
• ▶ 1:22:17 Ben Gilbert Third, Statsig makes their products super affordable because like Ikea, they make it up on volume.
• ▶ 1:22:43 David Rosenthal Statsig is the IKEA of product tools.
• ▶ 1:23:11 Ben Gilbert Okay, so David, I'm taking us back here to the late fifties, where we have a few more pieces of the puzzle of modern IKEA that kind of are coming together.
• ▶ 1:24:05 David Rosenthal I think at Ikea, it's Ingvar, just his background in being religiously opposed to losing money.
• ▶ 1:25:42 Ben Gilbert Does 10% of the world really eat in IKEA's?
• ▶ 1:25:47 David Rosenthal There are only 476 IKEA's in the world.
• ▶ 1:25:59 Ben Gilbert 30% of people who visit IKEA do so just to eat.
• ▶ 1:26:19 Ben Gilbert oh my god, I loved getting the catalog growing up, and oh, I've furnished so many apartments in IKEA, and I was kind of thinking, like,
• ▶ 1:26:28 Ben Gilbert And like, I've never eaten at an Ikea just to eat lunch, and I kind of realized Ohio did not get an Ikea for a really long time.
• ▶ 1:26:36 Ben Gilbert Like, I grew up without an Ikea near me, and even when I went to college in Columbus, they got one in Cincinnati, but it was until after I left Columbus that they got one there.
• ▶ 1:26:45 Ben Gilbert So until I got to Seattle, I don't think I had ever experienced Ikea.
• ▶ 1:26:50 David Rosenthal And the Seattle Ikea is so great.
• ▶ 1:26:59 David Rosenthal You grew up very close to an Ikea, and you just didn't realize it.
• ▶ 1:27:03 David Rosenthal Because Ikea has been part of my life pretty much my whole life, and again, I didn't realize why.
• ▶ 1:28:03 David Rosenthal In June of 1965, IKEA opens its second showroom location.
• ▶ 1:28:22 David Rosenthal I think it is still, I believe, the flagship IKEA store.
• ▶ 1:28:39 David Rosenthal That does not last in, in the IKEA playbook.
• ▶ 1:30:02 David Rosenthal And this is the first real modern IKEA.
• ▶ 1:30:19 David Rosenthal So it doubles the company's revenue.
• ▶ 1:30:31 David Rosenthal And a few more elements of this Stockholm store that you might recognize if you're an IKEA customer today.
• ▶ 1:31:09 David Rosenthal Hop on the bus, hop in your car, go on over to Ikea, buy some furniture.
• ▶ 1:31:33 David Rosenthal So then, this is tragic, but ends up being great for the company.
• ▶ 1:31:43 David Rosenthal In 1971 night, the neon IKEA sign on top of the building catches fire and the building burns down.
• ▶ 1:32:02 David Rosenthal But I think this is really part of the culture of IKEA, the company, and certainly Ingvar's mindset is like, every challenge is an opportunity.
• ▶ 1:32:11 David Rosenthal When they reopen the store a year later, it's got the full customer self-service checkout that you know of IKEA today, where like, yes, there are, you know,
• ▶ 1:32:49 David Rosenthal Two, they add a children's playroom at the front of the store with a ball pit for kids to be entertained while your parents shop because lord knows, you know, how on earth are you gonna do your Ikea shopping with your crazy little kiddos…
• ▶ 1:34:26 Ben Gilbert So across the sixties, they opened more Denmark and Norway stores.
• ▶ 1:34:30 Ben Gilbert In the seventies, they opened in Japan, Australia, Austria, Canada, Germany, Hong Kong, and Singapore.
• ▶ 1:34:37 Ben Gilbert In 75, they entered Japan for the first time.
• ▶ 1:34:41 Ben Gilbert They try real hard for 12 years to make it work.
• ▶ 1:34:44 Ben Gilbert But it fails, and they withdraw in 1986.
• ▶ 1:34:48 Ben Gilbert A few of the reasons are, the furniture's too big, they just didn't understand the needs of that market well.
• ▶ 1:34:53 Ben Gilbert Self-assembly was kind of an anathema to Japanese culture, and the delivery industry hadn't really been built out in the way that they need it to be.
• ▶ 1:35:03 Ben Gilbert There's like a necessary precondition to IKEA entering a market, which is, there's robust delivery services to make it work if you're gonna rely on the catalog model.
• ▶ 1:35:21 Ben Gilbert In these dense urban areas in Japan, that's not really possible, and so they pull out after 12 years.
• ▶ 1:35:27 Ben Gilbert They did eventually go back in in 2006 and make a bunch of changes to make it work today, but I think Japan was kind of this, after they saw success in all these other markets, it was a little bit of humble pie.
• ▶ 1:35:39 Ben Gilbert For them not seeing it work there.
• ▶ 1:35:41 Ben Gilbert And I think it spooked them a little bit for further global expansion.
• ▶ 1:35:45 David Rosenthal It is amazing in the seventies, really until they go to Japan laughing using the word, uh, well, we'll come back to another reason why I shouldn't be laughing using the word.
• ▶ 1:35:58 David Rosenthal It's almost like they did blitzscaling, you know, across Europe and even beyond Europe in the seventies.
• ▶ 1:36:04 David Rosenthal They went all throughout continental Europe.
• ▶ 1:36:06 David Rosenthal They expanded to Canada, Australia, Singapore.
• ▶ 1:36:17 Ben Gilbert And they're rapidly scaling with profit dollars.
• ▶ 1:36:20 David Rosenthal They're not raising money to do this.
• ▶ 1:36:23 Ben Gilbert As we've talked about, they have very thin profit margins, and so what it means is they are just doing tons and tons and tons of volume to enable them to do their future growth with their current profit dollars.
• ▶ 1:36:34 David Rosenthal It's hard to get consistent revenue data on the company because it was a private company still is a private company, but by the 19 eighties, they're doing two billion dollars a year in revenue.
• ▶ 1:36:52 Ben Gilbert It's a company that is rapidly scaling at the same time that in their DNA, they're unbelievably thrifty.
• ▶ 1:37:02 Ben Gilbert Wouldn't expect both of these things to be true of the same company.
• ▶ 1:37:34 Ben Gilbert An IKEA product without a price tag is always wrong.
• ▶ 1:37:48 Ben Gilbert It's amazing that this level of thriftiness and paying attention to the details is also the same company that is in a decade expanding all over the globe.
• ▶ 1:38:15 David Rosenthal With Ikea, they view all of the profits that they are making as, like, compounded value of future investment here.
• ▶ 1:38:24 David Rosenthal So, in the seventies, during this, you know, decade of blitzscaling, if you will, for Ikea, Ingvar is in his early fifties, and for a couple reasons, as the company is doing this massive scaling outside of
• ▶ 1:38:44 David Rosenthal He starts to become really concerned about succession and what will happen to IKEA when he inevitably dies.
• ▶ 1:39:11 David Rosenthal The comp rad and estate and Ikea as an asset would definitely be one was over 60%.
• ▶ 1:40:23 David Rosenthal Anyway, this kicks off for Ingvar and the Comprads a whole saga of wealth, succession, corporate planning that ultimately has a huge impact on the company.