The IKEA Effect | 6

0:07The Billy, the Lack, the Kallax, the Malm, the list goes on. These Swedish names for furniture from IKEA have become, for better or worse, part of our American lexicon. And if it feels like there is an IKEA in every major city, well, that might become even more of a reality soon. The company already has more than 50 stores stateside, and within the next three years, it's investing$2.2 billion to build more locations. IKEA has hit juggernaut status. Worldwide, it operates close to 500 stores and is valued at$21 billion. But IKEA can also be a source of stress. Trawling the displays and then hefting boxes onto a cart can be downright awful for some.

0:54For others, however, IKEA is a place where you play pretend and make all your home-furnishing dreams come true. So, how did IKEA become so ubiquitous in our lives, homes, and culture? Coming up, we're going deep into the maze to uncover the history and lore of the world's favorite DIY furniture warehouse. It was the sort of wonderland that you could wander through. I had never seen anything like it. Stay with us.

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3:00From Wondery, I'm David Brown, and this is the IKEA Effect.

3:27By day, Holly J. Morris is an NPR editor and journalist who spends her days training reporters on digital systems. But Holly also has another passion. The IKEA concept, I am a super fan of. The kitsch, the nostalgia, the simplicity, all of that I am very into. Holly has been shopping at IKEA for nearly 25 years and still remembers the first time she set foot in this store in suburban Washington, D.C. It was this sort of wonderland that you could wander through. I had never seen anything like it. She was furnishing her first ever apartment and found herself enamored by the clean, accessible, and unpretentious designs.

4:09And she's been hooked ever since. It was colorful and felt like it matched my personality. I didn't think the furniture was intimidating because it wasn't like design within reach furniture. It wasn't like an Eames chair. I didn't feel like I had to have a MFA from Yale to understand the meaning of it. It was just clean lines, colorful, friendly, not complicated. It is classic Scandinavian design, and IKEA definitely isn't pretentious. It has a sense of humor about itself. For more than 80 years, IKEA has been attracting shoppers like Holly, not only with her furniture, but the stores themselves.

4:54IKEA lures shoppers in with its maze-like experience. Arrows on the floor direct you through a pre-planned path, weaving through aspirational displays of living rooms, kids' bedrooms, kitchens, and plenty more. And there's a lot to see. A typical store has about 9 ,500 products to choose from. And at the end of the maze, there's a warehouse where you go hunting for the box containing the furniture you've selected. There's also a little food court that's always serving up Swedish meatballs, of course. A nod to the company's homeland. It's so Swedish in that pretty much everything that ever happened to it feels distinctly Swedish.

5:32That's Katie Dayton, a reporter covering customer experience at The Wall Street Journal. It began in 1943. You know, that was in the middle of a world war in Europe. And because Sweden remained fairly neutral throughout the war, there was an ability for an entrepreneur who was 17 years old to start this company. IKEA founder Ingvar Kamprat started out selling small items like pens and wallets. He got the company name by combining his initials, I-K, the name of his family farm, the E, and the nearby village, that's the A. In 1948, a small financial gift from his dad allowed him to expand, selling furniture by mail throughout Sweden.

6:14A few years later, he adopted the famous flat-packed model, a technique the company still markets to this day. To make things cheaper, we make them flatter. So we can transport more and charge less. By the 1950s, IKEA began opening showrooms throughout Sweden. There were model apartment displays you could wander through and a viewing level intentionally designed for window shopping. It had an upstairs level that even when the store was closed, you could walk upstairs and look at. They really want you to see and to believe low prices with something that looks cool and is of good value and good quality.

7:00In fact, their prices were so low that other Swedish furniture retailers joined forces to pressure suppliers to boycott the company. So IKEA then goes to suppliers in Poland and says, hey, you know, we've been kicked out of Sweden. Could you do us a solid? and the Polish manufacturers were cheaper. And at the same time, they went, well, if we're going to do imports into Sweden, can you also do them into Norway? And the Poles said, yes, that's fine. So that was how the IKEA first expanded out of Sweden and into Norway. And that has snowballed into Denmark and Northern Europe and became what we know it to be now.

7:42This kicked off a decade of international expansion for IKEA, much to the dismay of the Swedish furniture makers who tried to shut Comprat out. The 1960s saw the opening of stores across Scandinavia. Then in the 1970s, they opened in 10 other countries, including Australia, Japan, Canada, and even Kuwait. But IKEA's stateside debut was still a long time coming. It's interesting because the U.S. was clearly very important to Comprat, the founder. He visited the U.S. in the early 1960s. You know, this was before it had really, really taken off as an international company. And he embarked on a huge trip.

8:25He tried to learn all he could about the way American business ran, American furniture was constructed. And he was very interested and intrigued by it. The first stateside IKEA opened outside of Philadelphia in 1985, nearly 20 years after Comprad first got the idea. At the same time, I think they felt a little bit intimidated by the scale of the market here and the economy. At the time, the company's president, Bjorn Bailey, was quoted in the New York Times as saying, quote, the United States is just awesome, just awesome, the largest market in the world, and we were pretty scared. IKEA has just opened its 70th store and its first in America.

9:11Come to the grand opening. It's a fairy tale come true. By this time, a standard store design had been established by studying each new location to find out what customers were responding to the most. Originally, when it started expanding internationally, it had this concept that every store would be different. And that's even, you know, within Sweden and Scandinavia. They wanted that kind of element of interest difference to sort of, you know, make it more of an interesting experience if you're going to shop between different stores. But around the 1970s, they decided that that was actually maybe not the most efficient way of running a business.

9:52And they changed it up. If a new store was getting planned, it would look back to the past store that opened, pick up what it was doing well and what it was doing badly and go from there. So it was this sort of constant evolution. And over the years, it's got to a point where the IKEA store is pretty much the same, no matter where you go. This ultimately led to the iconic Maze, which was modeled partially off the Guggenheim Museum in New York City and debuted as early as the 1960s in one of their largest stores just outside of Stockholm. They wanted to recreate the catalogue, which at the time was much bigger than the stores.

10:32Everyone was getting the mail order catalog. And they wanted to be able to physically walk you through that catalog so you could see what was available. It's truly, it feels like actual, if you pardon the pun, Stockholm syndrome to me. In that we want to be, we complain so much when we go to Ikea that we can't find the thing we need and it's going to take us so long to get there. And, you know, and with due credit to Ikea, they do put in shortcuts through the stores. They do try and help you out a little bit if you're in a rush. Today, the maze is a staple of the IKEA experience, for better or worse.

11:10And the store itself is a household name. So what's keeping it at the top of everyone's billy bookshelf? It's like a canvas for your personality and your collection of frogs with bow ties and cat toys. That's coming up when Business Wars returns.

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14:04Welcome back to Business Wars. When IKEA expanded overseas, it quickly became a household name and a movie star in its own right. How's that Kühlen coming along? IKEA doesn't assemble itself, you know. you're telling me. I don't mind the cunin. It's an improvement on the hoodal. Please. Anything's an improvement over the hoodal. That's a scene in the 2016 film Deadpool where two of the characters are trying to assemble a dresser. It ends up falling apart at the end of the scene. And then of course there was the 2009 sleeper hit rom-com 500 Days of Summer. What are we looking for again? Uh, trivets.

14:43How about a flug? No, I don't think so. No, we don't want a freak. Home sweet home. The lead couple has an IKEA date where they play house by pretending that the faux living room setup is actually their own. 500 days of summer, that sort of, you know, turned IKEA into this rom-com of going there with your new partner and pretending like you're in this domestic partnership. Wall Street Journal reporter Katie Dayton did a bit of hanging out at IKEA herself. For me as a teenager, me and my friends, when we had our first cars, we would drive to IKEA and just hang out there, which sounds insane. But I remember it feeling like a really grown up thing to do.

15:31And I think the wonderful thing about IKEA is no one there is going to kick you out for not buying anything. They want you to enjoy it. At the end of the day, they're not going to be like, what do you mean you lay on that mattress for an hour and didn't buy anything? For many fans, this is part of IKEA's appeal. Holly Morris now does most of her IKEA buying online, but trips to the store have become a form of entertainment for her kids. They view it as some kind of jungle gym slash park slash aunt or uncle's house. You know, because IKEA lets you sit down on the beds and sit on the sofas. They know they're going to leave with a toy.

16:10So going to IKEA now is more of a field trip. Another piece of IKEA lore? Fights, specifically between couples who go in together with the best of intentions, but quickly sour once decision fatigue settles in. The TV show 30 Rock captured this pretty well when main character Liz Lemon tries to warn her partner before going into the store. Have you ever been to an IKEA? Do you know what we're walking into? I have good taste in drapes. I wish I'd died anyway, Jim. I never met you. Whoa. Outlets like BuzzFeed and The Cut devoted a lot of space to this phenomenon, highlighting some of the most outrageous in-store arguments.

16:48One YouTube channel even made a sketch about a fictional IKEA breakup room. We know that IKEA is the number one place couples realize they actually can't stand each other. So now you can end it with your significant other without interrupting your shopping experience. Whether you're fighting or frolicking through the IKEA maze, building a comfortable space where shoppers could come and stay a while was exactly what founder Ingvar Kamprad was trying to do. He found basically if you spend very little on giving somebody some hospitality, they're likely to buy with you and they're likely to stay longer and shop for longer.

17:27This line of thought is what inspired the famous IKEA cafe. Originally, Comprod distributed cookies and coffee at the stores. By the 1960s, he added hot food offerings and even a microwave to the mix, which became an exotic attraction in itself. The restaurant that they opened, they had one of the first sort of precursors to the microwave in there. So people were coming from far and wide, like not only to eat the food and to buy the furniture, but to just check out this like contraption from America. And in 1985, the first meatballs were served after several years of planning and a major oil crisis.

18:05In the 70s, when the oil crisis was happening, IKEA had to stop building a lot of its stores. You had some cash flow issues. So they had all these people on staff that weren't doing anything. And they were tasked with coming up with a cohesive restaurant concept. And, I mean, what a great job. you think you're going to be building a building and you're told to go off and research retail restaurants. And they came up with the concept that we know today. They got this Swedish chef in. He made the meatball recipe. And then that got sort of shipped out. The stores became a little bit more cookie cutter.

18:43The Swedish meatballs went far and wide and were very popular across the world. And the reason they're so cheap? The founder, he always said that the profit margin should never exceed 10 % on the restaurants. He says, we do not want to make money from these things. He sees it as a treat for the people that come to IKEA. He said, we can make our profits on the furniture. We don't need to do it in the restaurant. And that's why you can probably get a plate of food there for$5. Since its founding, the company has prioritized low prices. At a Milan Furniture Fair in 1995, they put a name to that philosophy, democratic design.

19:22Here's a clip from IKEA Canada describing how it works. We put our heads together and work hard to come up with affordable ideas to make everyday life at home a little better by creating home furnishings that combine good quality, form, function and sustainability with the lowest possible price. Maybe there's something in it that brings out the kid in us. You know, it's sort of these low-cost items that we don't feel too bad. We don't feel duped. We don't feel like we've been conned into buying them. But it's just a little surprise on the way home. It's why some of IKEA's most iconic items still remain under$20.

20:01Take the Lack side table, for instance. At just$12.99, this piece has become a staple in homes across the world. And then, of course, there's the beloved Billy bookcase. I have six Billy bookcases in my library. This piece, which was sketched up on the back of a napkin in 1978, is another one of the company's most popular items and one of Holly's all-time favorites. I hauled four of them to many homes around the D.C. area, and then I added two more. And they have glass doors, which is what makes them so classy. People are like, are those built-ins? I'm like, no, those are Billy's. While IKEA has its tried-and-true pieces like the Lack Table and the Billy Bookcase, it also does its fair share of experimentation.

20:49The designers are constantly looking for ways to make everyday life more efficient. This promotional video breaks it down. So, to learn what people really need and dream about, we go out and visit homes all over the world. We talk with people, we measure things, we open closets and look in cabinets. IKEA is known for its try-anything approach to product and store design. Company leadership is not afraid to test out new ideas. And because they're a privately held company, they don't have to answer to shareholders. They can go and do these experiments, and they'll usually just open one or two random stores that are a different format and do a lot of customer feedback surveys to get a sense of whether they're working or not, obviously along with how much money they're making.

21:38One of those experiments included a second-hand store in Sweden in 2020. Customers could donate or recycle damaged furniture and goods, and the store repaired them and resold them. It's done really well, and they've actually, you know, they've tightened up the operations of that store, and they've looked at the financials, and they've been able to make money from it. And now they're going to take the learnings from that store and they're going to apply it, they said, across other Ikeas in Sweden. So we might get to a point where every Ikea has a sort of second-hand store or a place where you can go and drop back your old stuff and feel good about yourself that you're not just putting it out on the curb.

22:19But not every risk Ikea takes has paid off. In the 1970s, the company opened stores in Japan, only to shutter them just 10 years later. The Japanese story of Ikea is fascinating because they really went in and there's so much of Japanese culture when it comes to home and design that IKEA related to, you know, this flat pack, you know, minimalist. But they just didn't bargain for the fact that so many people in Japanese urban areas didn't drive and they couldn't figure out how to get everything home on the bus. And they also made items that were just too big for their apartments and too big for the people because if you put an average Swede up against an average Japanese person, I think there would be quite the height difference.

23:07So the Japanese expansion did not go according to plan. The company itself called the 1986 withdrawal from the market an embarrassing retreat. However, they learned from their mistakes and gave it another shot 20 years later, taking it very slowly and cautiously. I think the thing is that this company is very open to testing out these new formats for the future. Because they do, they are aware that what's worked for them for much of the 20th century is not necessarily going to work in the 21st, and especially in urban areas where so many of their customers are who just don't have cars. Today, IKEA is constantly experimenting in order to keep up with changing consumer needs.

23:53when Business Wars returns, we'll dive deeper into how that's going for the brand and if they can sustain it.

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