How Ingvar Kamprad Created the IKEA Family Business Empire

How Ingvar Kamprad Created the IKEA Family Business Empire
Hans Ax (left), IKEA's first store manager, shakes hands with IKEA founder Ingvar Kamprad. [Public domain], via Wikimedia Commons

He was once believed to be the single wealthiest man in the world. He is straight out of central casting for the role of frugal billionaire. He is famous for flying coach on business and bringing his lunches to work, and known for taking salt and pepper packets from restaurants and replacing hotel mini bar water bottles with cheaper ones bought at the grocery store. He is, of course, Swedish furniture magnate Ingvar Kamprad, founder of the IKEA empire.

Much has been written about his incredible work ethic, his finely honed business sense, his unparalleled frugality, and his love of what he does. And yet none of these traits truly encapsulates what propelled Kamprad from successful Swedish businessman to one of the world’s elite billionaires with a presence around the globe. In fact, what sent him into the business stratosphere was something not often associated with the business elite – a desire to serve the everyman. That, and a chance overheard conversation made all the difference in the world.

Origins Story

Kamprad was born near the small village of Agunnaryd, Sweden in 1926. He grew up on a farm called Elmtaryd, where made his first business profit at the tender age of five. He discovered he could buy matches very cheaply in bulk and sell them to the farmers in his area. While making these sales, he learned that ballpoint pens were in high demand due to their rarity in Sweden, opening his eyes to the real world affect of supply and demand. When he turned 17 in 1943, he took a cash gift from his father and decided to start a company. For a name he decided to use his initials along the those of his town and his farm – IKEA.

Four years after IKEA’s founding, Kamprad decided to add furniture to his business. He found that he could use local craftsman and keep costs down, and this model became such an overwhelming success that in 1951, he discontinued all other product lines and focused only on furniture.

The business grew steadily, over the next decade, seeing a significant spike in the early 1960’s after Kamprad introduced the North American cash-and-carry model to his stores. He discovered that with more and more people owning cars, they preferred to go to the store and leave with their purchase immediately rather than waiting for it to be shipped. This led him to introduce the flat-packing system where the customer would assemble the furniture themselves when they returned home. 

International Explosion

As the 1960’s drew to a close and the 1970’s came around, IKEA was one of Sweden’s biggest furniture retailers but virtually unknown anywhere else in the world. There had been talk of international expansion but Kamprad dismissed the idea, as he preferred to keep his focus on Sweden. But this would soon change when he overheard a life-changing conversation.

Kamprad’s original intent to get into the furniture business was driven a desire to make nice furniture available to everyone. He didn’t see why it should only be the wealthy and the elite who have beautiful looking furniture in their homes. He believed this should be available and accessible to everyone.

He was reminded of this original mission one sunny afternoon while walking the streets of Zurich in 1973. He came across an young couple looking at a beautiful piece of furniture in a store window. “What a beautiful chair!” the young woman said. The man agreed but recognized their financial reality. “Yes, but it is still too expensive for us. Let’s buy it next year.”

This was all Kamprad needed to hear.

Before the year was over, he would open an IKEA in Switzerland, which was quickly followed by stores across Australia, the Netherlands, France, and the USA. In no time, Kamprad grew the business to be the behemoth we know today with 338 stores in 40 countries.

Testament of a Furniture Dealer

In 1976 Kamprad published Testament of a Furniture Dealer, a business manifesto that outlined how the business should operate and its philosophical underpinnings. The document starts out by identifying their mission:

To create a better everyday life for the many people by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them. We have decided once and for all to side with the many.”

Where others spent millions to craft their image as catering to the elites, Kamprad saw his business as a societal equalizer. The philosophy that has guided him to level the playing field for the betterment of the average man has truly paid off, and IKEA is now synonymous with fine inexpensive furniture across the world.

Whoever said nice guys finished last obviously never met Ingvar Kamprad.