Supply and demand are predicated on getting the balances just right, making sure factories fulfil existing orders, avoiding excessive surplus, and that someone, somewhere, is stimulating demand for new stock. Ikea sits atop one of the most sophisticated and efficient supply chains in the world. The Swedish furniture giant is a logistical titan, a multi-billion-euro business -- sales across the globe between September 2013 and August 2014 were €29.3 billion (£20.9bn) -- that owes its success to the relentless pursuit of the margin, eking out efficiencies in every part of its vast and disparate corporate structure.
Älmhult, in southern Sweden, is Ikea's spiritual home. Company founder Ingvar Kamprad opened the first Ikea store here in 1958, turning his burgeoning mail-order business into a bricks and mortar outpost. Served by a modest railway station about an hour's drive from Malmö, Älmhult lies in low, forested hills, a landscape of baked red cabins with white trim and neat lawns. The original Ikea building is still there, buried in six decades of accreted industrial structures and offices, and is in the process of being turned into a museum. The town, which has a population of less than 10,000, is at the heart of a company that claims not to have a dedicated HQ or flagship location, and which remains under the control of the Kamprad family.
Ikea is logistics -- a manifestation of the early-twentieth-century obsession with time, motion, efficiency, supply and demand. Frederick Winslow Taylor, American pioneer of "time and motion" management theory, could scarcely have predicted Ikea's seamless translation of efficiency into profit. For the Ikea method doesn't just apply to the various ways it designs, manufactures, markets and distributes its products, but to the opaquely structured web of corporations, franchises and foundations that control the company, maximising the flow of capital back into the blue and yellow coffers.
All manufacturing businesses live in the near future
There are 370 Ikea stores in 47 countries. The next big target is India, where a period of intense market research and product development is currently underway. The Ikea Industry Group, the manufacturing arm of the business, has 44 production units scattered around 11 countries, supplying not just the parent company but others as well. It's here that the magic happens, and that the fabled efficiencies and capacity are exploited to the full to keep the golden tenet of the business relevant and viable: a low price. More than half of production happens in Europe, with infrastructure that runs from planting trees through to processing the raw materials that make the furniture. Ikea currently has 1,046 suppliers, necessary to service a product range that hovers at around 9,500, with every item specifically created for the company and christened with crisply guttural Scandinavian functionalism.
Älmhult is also home to the Ikea design department, overseen by design manager Marcus Engman, a true company man. He holds the same post his father once did, and his mother and wife were also both Ikea employees. In 2012, after a decade in private practice -- "external education", in Ikea speak -- Engman returned. Grey-haired and boyish, Engman explains Ikea's approach with a gentle bemusement at the suggestion there is any other way.
Today, the department has its own building on the Älmhult campus and a new building and designation -- the Ikea Democratic Design Centre -- where 20 in-house designers work for Engman. They collaborate closely with Ikea's design centres in India and China, each assembled to combine on the spot information with the Ikea approach. As a result, there's plenty of cross-pollination between the three studios, with the two satellites serving up vital local knowledge about taste, technology and materials. Each feels like an Ikea store of the future, a gallery of as-yet-unseen products and new materials without price tags or customers -- the equivalent of walking into a newsagent and finding every magazine datelined January 2017.
The design team works on around 2,000 new products every year, assisted by up to 75 freelancers and bigger names brought in for one-off projects, such as a planned 2016 line with fashion designer Walter Van Beirendonck. A similar quantity of products is refreshed and enhanced. This is retail evolution at its purest: the strongest sellers survive; others evolve to meet demand and fashion; and the weakest are culled. The most efficient place to save money is in the manufacturing process, hence this campus-sized facility dedicated to shaving every last millimetre of material to its optimal size, exploiting the latest in material advances and finding new, faster and simpler ways of putting together furniture. Furniture that, ultimately, has to be put together by its purchaser.
Walk into any Ikea and you're assaulted by novelty. By the time you wind your way through to the distant checkout, you will have traversed a landscape of modern domesticity, drunk on choice and dazed by price tags. Engman knows his constraints. For a start, the physical experience of the store can't change. "We need to keep each department the same size, with the same number of articles," he says, "but we change according to consumer behaviour." This means reams and reams of data and analysis. "We start with consumer insights, usually from home visits," Engman says. These home visits have most recently arrived in China, where designers pad around family homes, inspecting the storage and asking how Ikea might make an impact. On top of that, the other driver is capacity. "We also look for the value chain and our existing production capacity," he says, explaining how the aim is to run every production line at maximum efficiency. It's these pockets of potential that often inspire new ideas. "We start with 200 to 300 ideas, then cut to 35 -- we are constantly discussing how things evolve," says Engman. But the core beliefs are immutable. "The identity of our range should be the same all over the world." Typically, this approach ends up flattening cultural differences, finding the best way of making what might be a relatively indigenous object and then transforming it into a global product. "We had to have a wok in China, although it was not a typically Scandinavian product," Engman says, "so we take those learnings and spread them around the world." Similarly, in India, where Ikea will shortly be opening its first store in Hyderabad, Engman explains that there is a much larger demand for low-price items. "In our vision we have to reach as many people as possible. We're looking for similarities as well as differences, because that means volumes, which in turn means low prices." Expansion means taking the time to understand new markets. Early forays into North America faltered due to cultural differences. According to Fortune, Americans bought vast quantities of flower vases but used them as tumblers, as the Swedish glasses were too small for ice-filled drinks -- an object-lesson in the value of good research.
The first UK Ikea store opened in Warrington in 1987, injecting stripped-back simplicity into a nation that was groaning under the weight of traditionalist furniture. The 80s are often cited as the designer decade, thanks to the advent of a masculine aesthetic of matt black, chrome and shiny push-button technology. Yet these were metropolitan ideals, clearly distinct from the soft-furnishing world dominated by big warehouse operations such as DFS. By 1996, Ikea UK was bold enough to launch its "Chuck Out Your Chintz" campaign, which encouraged disposal of great swathes of fringed furnishings in favour of the clean and self-evidently superior Scandinavian alternative.
Chuck Out Your Chintz let Ikea tap into a parsimonious streak of British culture that can be traced back to the days of William Morris. "Good" design -- objects that are innately morally wholesome or beneficial, with embodied craft or functional supremacy -- is periodically touted as an antidote to a lethargic, overstuffed and reactionary culture. The exhortation to chuck out one's chintz was a modern retelling of the post-war drive for functional simplicity in furniture and home goods, an officially sanctioned programme under the auspices of the Council of Industrial Design -- now the Design Council.
Then, as now, the design industry imbued products with characteristics that reflect our personalities, ambitions and aspirations. Ikea's stripped-back Scandinavian style was deemed symbolic of a more progressive, modern, caring Britain. Even the rise of the casual sofa as a focal point of the home was partly driven by Ikea's ruthless pricing. "The Ikea sofa was disposable furniture for urban nomads and serial monogamists," wrote Joe Moran in his social history Queuing for Beginners. "It was light, unfussy and impermanent, with none of the baggage of the family heirloom or the bought-for-life wedding present."
The spinning wheel of fashion has brought pattern and colour back into our soft furnishings, be it the retro geometry of Orla Kiely or the naked revivalism of Cath Kidston; Ikea would be insane to ignore it. Today, the company's product ranges are divided into four style groups: Scandinavian Modern; Scandinavian Traditional; Popular Modern; and Popular Traditional. "We have more modern than traditional," Engman says, but adds the division isn't as stark as it once was. "We go into each product with an extremely open mind."
Teams aren't just made of designers. Range strategists analyse future trends and set palettes. Technical co-ordinators liaise with production facilities. And designers exploit every facility in the building to find the best solution. The Ikea of today is more receptive to outside ideas than before. The concept product is now an accepted part of the modern manufacturing landscape, a canny synthesis of market research, public relations and design experimentation. The motor industry has used concept cars for decades, not just to gauge public opinion but also to preview new features and forms. Anyone with access to a copy of design software Rhinoceros and some modelling skills can whip up a convincing image of a next-generation smartphone or superyacht and set the internet abuzz for a few minutes.
How Ikea and Ideo rethought the kitchen
Ikea has kept its futurist leanings to itself up to now, preferring its customers to live in a present where they can buy what they see. However, its Concept Kitchen 2025 project, initiated with Ideo, is a first foray into a more speculative strategy. A company that claims more than two billion combined store and site visits every year and distributes 217 million copies of its annual catalogue is sitting on some big data and statistics -- 12.8 million mattresses and eight million BILLY bookcases sold in the UK alone as of 2012.
Up until now, the flow of information has been very one-sided, but a future in which customers talk back, consciously or not, could have huge ramifications in a business that's relentlessly driven with honing the margins. To predict is to innovate. To understand psychology is to have even more of an advantage.
The Concept Kitchen 2025 was a popular display at Milan's Salone di Mobile. Steeped in embodied technology, it had a crude appearance, with modular elements -- a sort of culinary Black+Decker Workmate. Rough prototypes were made at Ideo in London, then refined at the Älmhult workshops. "It was super important that what we showed in Milan removed all sorts of style. We almost wanted it to look like a printed prototype," says IKEA kitchen strategist Gerry Dufresne.
The Ikea Concept Kitchen 2025 was developed with Ideo and two leading European design schools, the Ingvar Kamprad Design Centre at Lund University, and the Industrial Design department at Eindhoven University of Technology. Gerry Dufresne, Ikea's kitchen strategist, says the brief asked a simple question: "What will be our behaviour around food in 2025?"
Ikea's kitchen is not so far from the ideas of Margarete Schütte-Lihotzky's 1926 Frankfurt Kitchen, or the Whirlpool Miracle Kitchen of 1956. The intensive research period -- overseen by Ideo -- came up with ideas about food storage, presentation and eating itself. The result is a hybrid of ideas and materials. "We usually work three to four years ahead, but this project was planned as an aspiration to ourselves," Dufresne says.
Ideas include a Mindful Water System to separate toxic (black) water from recyclable grey water, and a more interactive waste disposal system to promote recycling. Storage is given a particular push. "Fridges are all wrong - how can you improve vegetable storage?" Dufresne asks. The solution is low-tech: a pantry that places food on display rather than hides it away to be forgotten.
The company is also reading deeply into the shifts in diet and behaviour. "There are changing relationships with food -- waste, nutrition, buying habits. Our consumers live in big cities with 24-hour supermarkets, so purchasing habits change," Dufresne says.
The kitchen's Table for Living (TFL) is particularly interesting. Replacing the typical slab of IKEA laminate, the TFL is a multi-modal surface with embedded induction coils, so food can be prepared and cooked in one area. It also scratches the futurist itch of interaction, with cameras and software designed to recognise ingredients and make suggestions. "Design is about managing constraints in the best possible way," explains Ideo designer Juho Parviainen, from the company's Clerkenwell studios, who ran the project. "The kitchen explored the future through actual making, rather than just commissioning and reading reports."
Ikea is a machine for making. "We like physical prototypes," says Engman. "We do rough ones very early -- dirty prototypes -- in our workshop. This all enhances Ikea's evolutionary advantage. You have to innovate in the way things are put together," he continues. "Fittings are about 30 per cent to 50 per cent of the cost of the product, so could we create products without any fittings?" One prototype is a wedge dowel, a fixtureless fitting that allows table and chair legs to be slotted together with a twist.
Henrik Holmberg is head of department at the Ikea Model Workshop. He oversees a staff of 14, dedicated to "moving ideas forward into physical samples", using a vast array of tools and processes across five departments: 3D printing, upholstery, wood, metal and surface treatment. The challenges presented by Ikea furniture are very singular -- can it be packed flat, transported, assembled, used and potentially dissembled again? According to Holmberg the workshop gets some 2,000 tasks a year, of which approximately half go through its four 3D printers. The biggest of these -- a Fortus 900MC -- has a build space that allows whole chairs to be prototyped.
Cost, inevitably, is at the heart of the process. Even the properties of paper are being explored through innovations such as M-board, a lightweight structural sheet made of 90 per cent recycled paper and formed on a short production line. In time, paper-based materials will form more and more of the constructed heart of Ikea's product lines. "To design some of these items you have to have your own factory," a pragmatic Engman says. "Ikea is about designing on the factory floor - what processes and situations they have at hand," Ideo designer Juho Parviainen, a former Ikea staffer, confirms.
Only factory-led design can fulfil the Ikea ethos. "Democratic design is an impossible formula to achieve," says Marcus Engman. "An object with great form and function that ages beautifully and is sustainable -- then top that off with a low price. There are no short cuts to achieving that". Ikea has mastered the art of modern design without ideological baggage, and has a strong sense of the social utility of the company as a whole, not just the undeniable value and sheer consistency of its products. Yet its big-box model won't live forever in the urban plan of the future, at least in the west, so expansion is dependent on maintaining the urban status quo in the developing world.
From supplier to production line to pallet and distribution, Ikea is chasing margins through research and analysis. But as data becomes easier to capture and richer in meaning, the company could find itself with a stake in the domestic realm that's just as powerful as the search engines' knowledge of our desires, frustrations and obsessions. To survive and grow, Ikea must determine what we need and want just like any other retailer -- through a network of focus groups, trend forecasters, customer clinics, futurologists, and good old-fashioned instinct. The evolutionary advantage stays with the strong. This behemoth of the flat-pack will do everything to stay ahead.
Jonathan Bell is editor at large at Wallpaper magazine.
This article was originally published by WIRED UK
