Why You Spend So Much Money At Ikea

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  • Published on:  Saturday, October 5, 2019
  • Ikea was founded in 1943 by a young Swedish man named Ingvar Kamprad. Today, there are 433 stores in 53 countries. The name Ikea comes from Ingvar's first and last initial, the farm he grew up on — Elmtaryd — and the village he lived near — Agunnaryd. Initially the company started by selling pencils and postcards. In 1948, it began selling furniture, and the rest is history. In fiscal year 2019, Ikea sold 7 million Billy bookcases, and brought in $45 billion in retail sales.

    At the heart of Ikea's success is value: You know what you're going to get when you shop at Ikea, and it's going to be affordable.

    In fact, price is so important to Ikea's strategy that the company first decides on the price of a piece of furniture and then reverse engineers the construction, the company says.

    Ikea has a "democratic design approach," according to Antonella Pucarelli, the chief commercial officer of Ikea retail U.S., which means that it "deliver[s] form, function and quality products at a low price. Even though our products are affordable, we don't compromise on quality," she says. (Ikea has had high profile recalls of millions of chests and dressers after several tipped over, killing children. In response, Ikea admitted the chests and dressers could be dangerous and offered free kits to anchor the chests and dressers to the wall, as well as refunds.)

    Some of Ikea's furniture is made from wood, some is made from particleboard (recycled wood chips fused together), keeping production more affordable. Ikea furniture is shipped and sold in flat-packs, which makes transporting it cheaper, and customers put it together themselves (or pay for someone to do it for them), keeping labor costs down.

    And the trademark simple style of the furniture Ikea sells is not just because it's a Scandinavian aesthetic. It's easier and cheaper to make affordable versions of such furniture look good.

    "Ikea's aesthetic is pared down and minimal, which is not an accident. Uncomplicated forms with very little applied decoration are easier to manufacture. More can be produced in a shorter amount of time, increasing efficiency and decreasing production costs," Ashlie Broderic, interior designer for Broderic Design, tells CNBC Make It. "The Malm bed is an excellent example of simple rectangular shapes combined to create a very chic bed."

    And "most of Ikea's furniture is available in black, white, or unfinished wood. By producing more items in fewer finishes, Ikea takes advantage of economy of scale," she says.

    All this makes Ikea's "aesthetic per dollar" ratio very high, says neuromarketer and author of "The Buying Brain" Dr. A. K. Pradeep. Ikea's affordable style is its "category-busting-metric," or what makes it stand out from all the other brands in that space, he says.

    The brain looks for a single defining characteristic to differentiate among brands, products and services, and if that's not easily identified, the brain falls back to price, says Pradeep, who has worked with companies including Coca-Cola, Procter & Gamble, Pepsi, Subway and Mondelez in the neuromarketing space.
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    Why You Spend So Much Money At Ikea
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  • Ebba Eriksson
    Ebba Eriksson  yesterday

    Hahahaha im sorry but as a Swede, the pronunciation of “färgrik” has me dying 😂😂

  • Megan Otten
    Megan Otten  2 days ago

    I wish I spent money at ikea or had money period🥶

  • Patricia Carmichael

    I always put my furniture together, it's not that hard. If it's a big one that require extra help, I can always bake a pizza and have a friend to hold a piece for me and help.

  • Mariel Ang
    Mariel Ang  3 days ago

    this narrator is so bad no offense

  • Mariel Ang
    Mariel Ang  3 days ago

    the pronunciation is killing me lmao

  • A Ng
    A Ng  4 days ago +1

    They run mom and pop stores all around the world into the ground

  • Jessica Adjemon
    Jessica Adjemon  4 days ago

    They need to open in Ivory Coast!!! I miss IKEA 😁

  • Blue Dot
    Blue Dot  4 days ago

    "Discovery" more trapped in the maze that is IKEA.

  • Kay Nandlall
    Kay Nandlall  5 days ago

    Ikea is the best I so love the Indian dude he is spot on

  • Oskar winters
    Oskar winters  6 days ago

    2 years of warning videos from IKEA and other companies about the dangers to children, a warming on the product not to climb it and free brackets to prevent furniture falling ....and the ignorant parents still get 46Million, i'm sorry but this is natural selection. That's why IKEA still has customers most people don't blame the company.

  • Oskar winters
    Oskar winters  6 days ago

    I just use IKEA for ideas, it's not cheap anymore it's just low quality. But it's rooms give some nice ideas.

  • Silverback Gorrilla

    7:46 Not sure about the US, but IKEA stores in Europe do have delivery and installation as payable post-sale services. You just pay a flat fee for home delivery (depending on range and weight bracket) and another flat fee for installation. This is mostly used for kitchen cabinets and such as they are delivered from a separate warehouse. Kitchens in the store are for showcase purposes only. You can still pick it up personally from that separate warehouse, if you want to skip delivery fees. You can also install them yourself if you feel confident enough and don't have money for a fee, although the fee is not that high and can spare a lot of stress.

    They even advertise these services on their website. I hate pretentious people like her who after all these years don't get the whole concept of IKEA - they sell cheap flat-pack furniture BECAUSE they cut down transport and assembly fees from the retail price. Then, if you're too stupid to assemble it yourself (even with very explicit guides), you can pay only for your convenience while not forcing that cost on other customers, especially since most of them don't need it.

  • Raoul Shah
    Raoul Shah  7 days ago

    'what if you're a single mom, you don't have anybody to do that for you' (7:55). Cause women are can't do handiwork...? s.e.x.i.s.m.

  • Zuzanna Karolina Filutowska

    A man can't assembly a cabinet, so he will call the big, black woman to do it for him. :-D Seriously?

  • Alissa Z.
    Alissa Z.  7 days ago

    I don't like that woman's comment regarding women not be able to assemble the furniture on their own! Like, girl h do it yourself, wdym "what if no one is there to do it for you" lol

  • cafsixtieslover
    cafsixtieslover  7 days ago

    It drives me mad that you get in there and you can't find your way out again.  I presume this is deliberate.  When I went there last year I bought three of the item I went in for so I didn't have to go there again.

  • Choco Cat
    Choco Cat  7 days ago

    I don't really think ikea stuff is all that affordable

  • Instrumental Studios

    i shop at Ikea online for big items like tables and king size bed, but i have to pay extra $70 for delivery.

  • Kathy R
    Kathy R  7 days ago +1

    Definitely I’ll stick with IKEA 👌🏼
    I Relly like it 💯% 👍🏼 and I love their meatballs and desserts! 😋
    p.s. Also the filosofy of the store with his employees and the tree 🌳 environment is Huge, very good!

  • Lucas Pierre
    Lucas Pierre  14 days ago +1

    Why do most Americans read ‘ee’ as ‘ai’ Ikea is pronounced ‘eekia’ not ‘aikia’. As the correct pronunciation of ‘eeran’ (Iran) is not ‘airan’ or ‘eeraq’ (Iraq) is not ‘airaq’. Get it right with your ‘ee’ and ‘ai’ please.