Billionaire Ingvar Kamprad
Who is Ingvar Kamprad?
Does the name Ingvar Kamprad mean anything to you? To most people it doesn't, and it's a testament to the fact that he built up a brand that is so powerful people recognize it immediately, while not tying it into, or even knowing, the genius behind it. The brand? Ikea!
How successful is Ikea? It's only the most successful furniture retailer in the world, with over 90,000 employees serving at over 200 Ikea stores globally.
Yearly revenues come in at over $10 billion, and the Ikea catalog is one of the most anticipated works of any kind on an annual basis, and is only behind the Bible as far as yearly distribution goes.
Depending on what sources you're working from, Ingvar Kamprad is considered anywhere from the richest man in the world to someone in the top 10. Some of that has come about from the falling value of the U.S. dollar and the global economic crisis, which has decimated the wealth of many of the richest people in the world.
Even so, Kamprad would still be among the richest, with a net worth estimated at somewhere around $28 billion from his Ikea fortune as of March 2009, which would place him at No. 5 wealthiest in the world.
A lesson from the start of Ingvar Kamprad's business career
There's a lot of misunderstanding and outright dishonesty concerning entrepreneurs who figure out ways to do things better at a good price, and the jealousy and hatred of capitalism at its best is simply part of the world stage, even though socialism has been proven to be a worthless theory, and unworkable in any successful way, it still thrives in universities where young people are brainwashed into believing it's evil, even though it's helped many in emerging markets live a decent and productive life for the first time in their history.
Anyway, for Kamprad, like most self-made entrepreneurs, started small and mastered what he was doing at the time.
For example, at a young age of about 10, Kamprad found out he could buy matches very inexpensively in Stockholm, and bring them back to his hometown and sell them at very good prices, while also making a nice profit.
Also very wisely for his age (or any age for that matter) Kamprad took his profits and used them to expand his operations, adding to his small line of goods with decorations of Christmas trees, fish, and seeds. He was learning the operational side of retailing, and he was learning it quickly and profitably.
IKEA's Ingvar Kamprad
Gift from his father
When Kamprad did well in school, his dad rewarded his with some money, and that was the seed to launch a company he named IKEA. He got the name from his initials I.K., and then added the EA from the name of the farm and the town he was raised in - Elmtaryd and Agunnaryd.
Don't think the idea of a furniture company was brewing in the mind of Kamprad with his new company, he still focused on smaller items, and for the most part look to the business of securing contracts of supplying pencils.
Like in his younger years, Kamprad soon began to expand into all sorts of other areas, including everything from jewelry to male and female accessories. He soon outgrew individual visits to customers and went into the mail order business on the local level, having the milk trucks deliver his products to his customers.
The IKEA furniture business
When Kamprad first included furniture as part of the product line of IKEA, his idea was to use local manufacturers to keep costs low and under control. That was in 1947.
By 1951, furniture sales were so successful, he decided to drop all other products and focus on the furniture line alone. The first furniture showroom opened in 1953, and the rest is history.
Almost immediately a price war started between IKEA and its chief competitor, and the inclusion of the showroom helped sway potential customers who were able to see and touch the quality before making their purchases.
Obsession with controlling costs and remaining frugal
Like many great retailers, Kamprad was obsessed with controlling costs, and dedicated to finding new ways to do things at a less expensive level. That has been one of the major reasons behind the ongoing success of IKEA furniture sales and profits.
Some people attempt to point out the fact that Kamprad has several properties he owns and so the frugal image is contrived. I have to disagree with that, because the reason he can afford some of these things is because he remained frugal within the construct of his company, and so because he was able to put of instantaneous gratification, could then do whatever he wanted once he became wealthy.
While there is some truth to the image part, it was also very much practiced by Kamprad.
Many people think being frugal is being cheap in a negative way, and yet those best at it are the ones that serve their customers and employees at the highest level by giving customers the best deals possible, while at the same time offering longevity to employees.
As far as setting an example through his actions, Kamprad flies only economy class, drives a 15-year-old vehicle, and focuses on little things for his workers like writing on both sides of the paper, and other frugal practices. That has helped IKEA remain on the top of a highly competitive market.
Ingvar Kamprad Photo
Frugality practices in the business
Frugality goes beyond just the obvious though and small things though, and remains a central tenet of IKEA's success.
Every part of the furniture and its design is included in the frugal strategy, and are made for the purpose of being able to be shipped in flat packaging which cuts down significantly on shipping and damage, while also empowering customers to take it home with them if they choose to, while increasing the furniture inventory space in the store.
Amazingly, the packaging strategy came about from suppliers caving in to competitors' demands and boycotting IKEA, which forced them to creatively come up with alternative ideas, which now have become legendary in the furniture and retail industry.
If you've ever read IKEA literature, catalogs or advertising, they reinforce their and Ingvar Kamprad's motto of not only existing to make improvements in the lives of people, but to improve people themselves.
With that in mind, the way the stores themselves are set up and the design of the furniture built with the idea of being very simple to assemble, it generates the healthy idea of self-sufficiency, which helps empower people and make them feel good about themselves.
So while cost control is a major part of the IKEA success story, the empowerment of its customers is as well, which is brought about from a highly committed and talented design team.
Stichting INGKA Foundation
In another truth that may surprise a lot of people, the Bill & Melinda Gates Foundation isn't the largest in the world, but the Stichting INGKA Foundation, which is named after Kamprad is.
That could of course change depending when you're reading this, but at this time it is the largest charitable foundation in the world.
The foundation actually owns INGKA Holding, which is the parent company of all the IKEA furniture stores.
Kamprad is the chairman of INGKA Holding, which manages over $36 billion.