Price wars

To reach out to even more people, beyond Älmhult and Småland, in 1950 Ingvar Kamprad decided to exhibit at the S:t Eriksmässan trade fair in Stockholm. The idea behind S:t Eriksmässan was to enable producers and retailers to make contact, but it was also a chance for retailers – i.e. companies like IKEA – to reach out directly to the public. Meeting the general public was something Ingvar specifically wanted to do. This was an ideal marketing opportunity. Ingvar took out ads in the Stockholm newspapers, telling people that IKEA would be at the fair. When the event opened, all the showcased IKEA products were neatly marked with consumer prices, which went against the grain for trade fairs. This angered the other exhibitors. There was turbulence at the IKEA stand, and competitors started jeering at Ingvar and his colleagues. Someone shouted, “What a disgrace to ruin prices and the market in that way!” Some exhibitors asked the event’s management to throw IKEA out. Nothing like this had ever been seen before.

In December the same year Ingvar received a letter saying that S:t Eriksmässan would not accept him at any future events. Ingvar was quick to reply that he had followed all the rules. He explained that customers could not exactly pick up a sofa bed and carry it home in their arms – they had to place an order. It turned out to be virtually impossible for the establishment to keep Ingvar away from trade fairs. In the years to come IKEA turned up at S:t Eriksmässan, either under its own name, as a new company or via a representative. One of the co-conspirators in the trade fair fight was the upholstery factory Rune Rings Tapetserarverkstad of Diö. According to an anonymous informant – working in the furniture industry in Älmhult – IKEA covered all the costs for Ring’s participation. The brochures and signs were already finished, the whistleblower told the fair managers. The nerve!

IKEA must be stopped

The established furniture industry made intensive efforts to stop the low-price rebel from Älmhult. Meetings were held, letters were written, regulations were clarified and rules were changed. A committee was appointed to prevent “undesirable firms” (IKEA, basically) from exhibiting. But nothing seemed to work on that stubborn little Smålander. Ingvar distributed brochures, wrote advertisements, took orders and invited the public to the trade fairs. Meanwhile, the competition grew increasingly desperate. One furniture dealer in Pajala, northern Sweden, described IKEA as “an ancient beast with seven heads. Cut one off and a new one immediately grows out.” Which to be fair, was quite an accurate description. If there was a problem, the solution was to think innovatively and let a new idea emerge. Eventually, Ingvar stopped exhibiting at established fairs. Instead he rented his own premises on Drottninggatan in central Stockholm, where he could meet customers and suppliers alike. And they rushed to meet him, as it turned out that everyone loves a fighter. 1–0 to the beast.

Boycott!

But Ingvar and IKEA not only had problems at trade fairs. The low prices, a catalogue, a permanent showroom in Älmhult and direct delivery from the factory… The whole business model shook traditional furniture retailers, and shook them good. As early as 1952, the furniture retail association had started threatening suppliers that sold to IKEA. The message was clear: sell to IKEA and we’ll stop buying from you. The boycott started to be a real problem for IKEA. The company was doing well, with sales increasing from one to six million kronor (EUR 100,000 to 600,000) in three years, but survival would be tough with no products to sell. So the late 1950s were very much about finding suppliers.

Courage and creativity

In the 1950s, the director of a traditional furniture retail company would never be out at the factories choosing which models to buy. Instead, a middleman would come to the company and show off its range. A middleman that got paid a commission. Ingvar, on the other hand, had long questioned the idea of middlemen – they just made the products more expensive. So when Ingvar was looking for suppliers, he went out to the factories himself. He looked at the different models, chatted to the factory manager and showed an interest in the production process. Because despite the ongoing boycott, there were a few brave suppliers who were on Ingvar’s side. Suppliers who liked the charming Smålander who showed an interest in what they did. And he also always paid his invoices on time. So some suppliers tried to get round the furniture retail association’s boycott by selling discontinued models, selling under another name, or sending the goods to a neutral address in Älmhult rather than to IKEA. And Ingvar in turn had founded the purchasing company Ikano, thus finding a way around the boycott by purchasing via that company instead of IKEA. Creative solutions were born, both at IKEA and among its suppliers.

And one particular supplier’s creativity would come to represent a revolution for IKEA: Bröderna Franssons Möbelfabrik in Rörvik. They suggested modifying an existing piece of furniture. The company had promised not to sell this particular model to any other furniture retailer than their client, but if Ingvar could modify the design slightly, they could produce it for IKEA. So they suggested Ingvar make a sketch, which of course he did.

“The boycott only made us stronger, and the crisis became a non-crisis as we were constantly coming up with new solutions.”

A non-crisis

So what was the result of all the bans and boycotts on IKEA? Ingvar Kamprad himself later said that he had let go of most of the unpleasantness to do with the boycott – it never pays to dwell on the negative. The competition acted negatively: they tried to ban and stop rather than competing positively and meeting IKEA with their own moves. Ingvar once said, “The boycott only made us stronger, and the crisis became a non-crisis as we were constantly coming up with new solutions.” These early years of the company laid the foundation for some aspects of the IKEA philosophy – to see every problem as an opportunity. The boycott opened up new opportunities: when IKEA was unable to buy the same furniture as everyone else, it was forced to design its own furniture. Eventually a distinct IKEA look evolved. To secure production and be able to keep its delivery promises, IKEA started to look beyond Sweden’s borders.