Whether we like to acknowledge it or not, there is a new truth occurring in our hyper moving capitalist society. We are what we buy. This of course encompasses a range of options since everything from you house to your shirt has been shaped by globalization and economics in one way or another. Due to how rapidly the new economy and human interaction has sprung up in recent times it is increasingly harder to find companies that remain steadfast in a certain approach for increased periods of time. However one company has done so in an equally unique way. It’s almost as unique as its name, IKEA.
When you think about IKEA your probably think about cheap furniture, massive warehouses, and of course meatballs. Yet you probably don’t think about how the seemingly randomized assortment of food and goods the store offers radically changes from one year to another. To put it simply, IKEA operates its pricing and production schemes on long term goals that we don’t see in many other companies. For instance, this Alvar Alto easy chair sells for nearly 4,000 dollars. Yet a similarly designed chair, the Poang goes for only $129 dollars. This is because over time the more popular items at IKEA go down in price over time. Which leads to a really interesting thing. It turns out that if IKEA cannot keep producing a product at a low price even with an adequate demand to justify that price, it will discontinue products entirely.
Furniture relative to other goods as gotten much cheaper over time due to things like globalization yet IKEA still makes a lot of money selling this relatively cheap furniture. So what does this have to do with civics? Well in many ways the way IKEA operates can possibly reflect the company’s origins as a Swedish company.
Swedes as we know love their socialism and philosophical humanism. Many of these ideas can be seen in the way IKEA not only cuts high cost products off of its catalog but also in the way IKEA offers you so much more than just furniture. Alongside the furniture usually lays a kitchen/restaurant that sells food to costumers while other parts of the store are devoted to fake domestic housing set ups. This of course is laid against the backdrop of a place where you can buy almost anything from solar panels to a fryebo lamp. It was the one store as a kid I remember ACTUALLY ENJOYING TO GO TO, and believe that is saying something. So my question is why don’t other companies do this?
I understand that not every business model can follow the mold of IKEA for various reasons but I do believe that if companies sought to expand variety and keep costs low in their inventory then both consumers and producers would benefit. I also believe an integration of different elements ranging from culinary to electronic ones would help to branch out a stores potential consumer base and attract a wider audience for itself as a whole.
So maybe the best way to be civic as a store owner is to do something really radical. Keep costs low for as long as possible while keeping consumers options as varied as possible, and throwing in some meatballs never hurts.
works cited:
http://fivethirtyeight.com/features/the-weird-economics-of-ikea/
www.ikea.com
www.1stdibs.com
www.instructables.com
http://fivethirtyeight.com
I am in total agreement with you on this one. It is getting harder and harder for physical stores to survive these days, and one way to ensure that they do not lose out to online shopping is to make going to their store an “experience” and based on your fond memories of going to IKEA as a kid, I’d say IKEA has done just that for you. Also, I like your idea that companies reflect the cultures of the countries from which they came from. Great work!
Thanks Andrew. I think as much as we like to rag on capitalism there are some aspects of it that have been really worthwhile and beneficial to people. I think if companies focused on the more positive aspects of it like IKEA does than both the consumer and the company can win. Also IKEA would still be my go to hangout spot if we had one close by.
If we are what we buy, then I must be a walking cup of Instant Chicken Ramen. I think it is really cool how you have taken the time to understand IKEA’s business model, because 100% that is something that I never would have thought I would be interested in. It seems like IKEA is setting a good lead, and is acting as a role model for other furniture companies.