THE WORLD’S MOST SUCCESSFUL GLOBAL RETAILER, in
terms of profitability, is not Walmart or the French
grocery chain Carrefour, but IKEA—a privately
owned home-furnishings company with origins in
Sweden. In 2012, IKEA had more than 330 stores
worldwide in 38 countries, employed some 140,000
people, and earned revenues of 33 billion euros.
IKEA’s revenues by geographic region are 70 percent
from Europe, with the rest from North America (16
percent), Asia and Australia (8 percent), and Russia
(6 percent) (Exhibit MC5.1). Although IKEA’s largest
market is in Germany (14 percent of total sales), its
fastest-growing markets are the United States, China,
and Russia. Exhibit MC5.2 shows IKEA’s growth in
the number of stores and revenues worldwide since
1974. Known today for its iconic blue-and-yellow bigbox
retail stores, focusing on flat-pack furniture boxes
combined with a large DIY component, IKEA started
as a small retail outlet in 1943 by then-17-year-old
Ingvar Kamprad.
Though IKEA has become a global phenomenon, it
was initially slow to internationalize. It took 20 years
before the company expanded beyond Sweden to its
neighboring country of Norway. After honing and
refining its core competencies of designing modern
functional home furnishings at low prices and offering
a unique retail experience in its home market,
IKEA followed an international strategy, expanding
first to Europe, and then beyond. Using an international
strategy allowed IKEA to sell the same types
of home furnishings across the globe with little adaptation
(although it does make some allowances for
country preferences). Because IKEA focuses on low
cost, it shifted more recently from an international
strategy to a global-standardization strategy, in which
it attempts to achieve economies of scale through
effectively managing a global supply chain. Although