T I M E
G L O B A L
B U S I N E S S
For workers, flexibility sometimes means that their schedule starts 20 minutes later, so they can go to day care and drop off their kid without worrying about being two minutes late. I’ve found that very small things can make a huge difference to people. If you’re a cashier, you can’t work at home, you’ve got to be in the store.
Is Ikea growing up? The Swedish furniture giant races to expand, with a new emphasis on quality
Q From Tempe, Arizona,
How is Ikea changing? DAHLVIG We’re expanding much faster than
we have historically. Compared to Wal-Mart, it’s nothing, but we’re building about 20 stores a year now. We’re also aggressively reducing our prices, by about 17% over the past five years. And we’re moving into new markets.
How do you respond to those who say your furniture is hard to put together and its quality is inconsistent? DAHLVIG Quality is something we need to
constantly improve. And we’re always working with our suppliers to make our products easier to put together. We have a chair, for instance, that just snaps together. We’ve already made progress. Our return statistics are improving, and our product-quality reports are also getting better. But it takes time for perceptions to change.
Ikea’s Global Growth $20 Revenue
What challenges did you face in opening your first store in Japan in April? DAHLVIG We spent
five years planning. We had to find a site, and then there were regulations to adapt to, and customs du-
TIME, JULY 31, 2006
ties. And we had to understand how Japanese people live. We looked at 100 homes. We sit down with people. We ask, “What do you do? Where do your kids sleep? How do you work or play with them?” What have you learned? DAHLVIG When we opened the store, we in-
What’s your strategy for marketing, as Ikea’s mix of products evolves? LOPEZ We change
cluded a nursery for our workers, and of the women who came to work for us there, 70% said that was the reason they looked for a job with us. In Japan most women are housewives. So there is no government structure for day care. Of course, a lot of women want to work, and some have to work, whether they’re divorced or single mothers. Our nursery closes at 9, the same time the store closes. That makes a huge difference to mothers. When they have this opportunity to work and have day care, they’re tremendously motivated and dedicated.
30% of our products every year. Many people have the perception that Ikea is for college students, a first apartment, the ! Lopez plans 11 new Ikeas in North America by 2010. She says communities need time to get used to big-box stores
What’s unique about Japanese customers? DAHLVIG In Japan a lot of people use public
transport to get to our stores, so home delivery is a huge aspect of the business, about 50%, as compared to other places, where it’s often 5% to 10%. We planned for that, but it still took us a little by surprise. You’re known for flextime and job sharing. How does that apply to in-store workers?
BONNY HAKANSSON FOR TIME
When you buy in other furniture stores, you have to wait three weeks, then stay home for delivery, so the four hours you might spend to put together Ikea furniture, you spend waiting at home. So there are pros and cons. My son loves putting it all together.
I K E A
T H E
countries have a total of 236 Ikea retail stores, with about 8,500 products on average in each
kids’ room or the basement. But people in the U.S. need to rediscover Ikea because we were small when we came in, we were considered quirky and the furniture too small, but now we’ve expanded and learned and have more to offer. One segment we believe in is small business. We specifically focus on women, who make up 70% to 80% of our consumers. And a lot of businesses all over the world are being opened by women. They’re using Ikea not necessarily just for desks and chairs but for storage solutions, shelving and decorations. What’s your strategy in China? DAHLVIG We open in Chengdu
next year, then in Shenzen, Nanjing and a second store in Beijing. We’re aiming at the middle class. We can source products there, and our labor costs are lower, so we can sell everything for less. The products themselves are the same everywhere. What’s different is how we group them together because people live differently. The size of homes is a big differentiator between places. How will Ikea change in the next five years? LOPEZ We’ll reach our goal of having 50
stores in North America by 2010. We want to open five stores a year in North America. In Sweden we have 25% market share; in the U.S. overall, we have 2%, but that number will grow. In the past the Internet hasn’t been an emphasis, but it will become a source of information to complement our stores on a totally different level. We have more than 200 million visitors to our website worldwide and more than 400 million visitors to our stores. In three years we’ll have more visitors to the Net than to our stores. This autumn you’ll be able to tour rooms 360 degrees, walk in, click and pull out a drawer unit, and access all kinds of new product information. That’s just a starting point. The whole interaction will be different in five years. π
N U M B E R S
million meatballs are sold every year at Ikea stores. The environmentally friendly retailer is moving to organics
million copies of Ikea’s free catalog were printed last year in 25 languages, from Icelandic to Turkish
PETER MURPHY FOR TIME
How have you avoided the opposition to bigbox stores that Wal-Mart has faced? LOPEZ We’re work-
customers to do the job, that was a unique proposition, and of course it met resistance, because it means you have to do more work yourself. But we have the sense that people have more time than money. So people are prepared to work so they can save some money.
Ikea CEO Dahlvig’s next big growth markets are China, Russia and the U.S.
to Beijing, Ikea is building new stores
Don’t customers hate assembling furniture? DAHLVIG When we came to market and asked
nearly as fast as its customers can put together the friendly and inexpensive modernist furniture the Swedish chain is famous for. ceo Anders Dahlvig and North American president Pernille Lopez spoke with Time’s JEREMY CAPLAN about the company’s rapid expansion, its move into Japan and its strategy for making the Internet a bigger part of its business.
ing with communities much earlier than we did in the past. We are very careful about the sites we pick. And we communicate how we provide great revenue and good employment, so that workers can move up within the company.
But we can be flexible about how we schedule your time.