Sensible company practices help IKEA deliver affordable prices
Furniture World Magazine
Flat packed products. By packing products such as bookcases and tables in flat boxes, IKEA is able to reduce its transport volume and storage space by nearly 70%. As a result, shipping to IKEA stores is extremely affordable, while waste from damaged goods is minimized. Flat packing also allows IKEA to keep more items in stock and readily available for customers. All of this, and consumers' willingness to complete simple assembly steps at home, enables IKEA to provide substantial savings.
Location, location, location. IKEA stores are often located just outside of cities, where land prices are comparatively inexpensive. These relatively low real estate costs allow IKEA to have large showrooms and spacious parking lots -- and also contribute to IKEA's ability to offer better prices.
Quality commensurate with need. While IKEA furniture is comparatively inexpensive, quality and function are never neglected for savings. A secret of
IKEA's success is their philosophy that quality should be commensurate with consumers' needs -- the underside of a table that isn't seen may be made from a simpler material, a top that will be painted doesn't need to be as beautiful as one being varnished. When things must cost more, they do! When they don't, they don't!
But, of course, in order to be sold at IKEA, all products must pass the stringent requirements of Mobelfakta -- the Swedish Furniture Research Institute -with regard to durability, function, choice of material and workmanship.
Control of the creative process. Because IKEA develops nearly all of its own products, design, development, quality and durability testing and manufacturing are all handled from within. IKEA designers work closely with a trusted network of suppliers and understand production technology .enabling them to know what can be done and how to keep prices low.
Reaching good results with small means. Wasting resources is downright sinful at IKEA. Whether building a new warehouse or sending a fax in lieu of a phone call, every IKEA co-worker is encouraged to find smart solutions in relation to cost. As Ingvar Kamprad says: "Expensive solutions to all kinds of problems are often signs of mediocrity." The customer benefits from this conscientious use of resources.