Monday September 3, 2012
Heart of Ikea: Behind the scenes
By LEONG SIOK HUI
In our second story from the ‘heart of Ikea’ in Sweden, we find out what goes into the making of the company’s famously popular products.
APPARENTLY, to understand home furnishings giant Ikea, you need to experience Älmhult in Sweden, aptly dubbed the “heart of Ikea”.
Every day, 4,000 Ikea workers of 48 nationalities knuckle down in this quaint little town to conceive ideas for each Ikea product, strategise the product range, source for materials, test prototypes, and communicate the products to the store’s avid global audience.
On the third day of a media trip for journalists from Malaysia, Singapore and Thailand, we met with product developers and the sustainability, communication and test lab managers to get a rundown on how products meet the Ikea criteria: low-priced, well-designed, functional, and adhering to strict social and environmental standards.
Our first stop is the Ikea of Sweden AB (IOS), responsible for creating the company’s product range for the global market. IOS is where product developers, designers, design engineers and purchasing strategists hash out ideas and solve problems.
Making a product
How does a product idea see the light of day?
“To make people’s lives at home better, we focus on what products are relevant to people and can help them in their everyday lives, and where and how in the home the products work,” explains Gunilla Wåxnäs, the project manager at the Range Strategy department at IOS.
“Low price is the starting point in everything that we do, ” says Wåxnäs. Every year, the company constantly drives its development towards lowering the prices of their products to reach more people.
Ikea posted a net profit rise of 10.3% to ‚2.97bil (RM11.6bil) for its 2011 fiscal year.
“But quality and safety standards are also one of our main priorities. We need to look at what is considered ‘high quality’ for customers so that the products function for a long time.” In some countries, Ikea workers conduct thousands of yearly “home visits” where they visit customers’ homes to find out what frustrates users about the company’s products.
To develop the company’s ranges of products, Wåxnäs and her co-workers need to grasp overall global lifestyle trends.
“Across the world, people are moving more and more into smaller spaces. Today, on average, each person gets about a 15sqm of space,” she explains. “How can we create solutions that can help people live better and organise their lives in small spaces?”
Families with kids are one of Ikea’s most important target markets so product safety is also high on the list of priorities.
“For example, children play under tables a lot so we need to make sure there are no screws sticking out or any sharp edges.”
Despite being as a global company, Ikea creates market-specific products to cater to huge markets like China, for example.
“Our product development centre in Shanghai came up with this five-piece bedroom set after we found out Chinese families like to buy everything together: bed, wardrobe, side tables and chest of drawers,” Wåxnäs cites an example. “The set costs RMB2,496 (RM1,300).”
When it comes to product design, Ikea has 12 in-house designers and collaborate with 100 to 150 Scandinavian and international designers.
“We try to build as wide a range as possible. Say if we launch Modern this year, we’ll do Scandinavian or Traditional next year,” explains Wåxnäs.
Every year, Ikea reviews what is new and popular and what colours and materials influence certain looks. “But we also develop styles based on what possibilities we have to work with certain materials.”
Since 1995, Ikea has launched its annual PS (Post Scriptum) collection that is showcased at the world’s largest furnishing and design trade show, Salone Internazionale del Mobile in Milan. A collaboration with different designers, the PS collection highlights cutting-edge Scandinavian design and serves as a design statement for Ikea.
For the Ikea PS 2012 collection, 46 products by 19 designers were showcased at the Milan event earlier this year. Highlights include chairs, tables, lamps and textiles using materials like bamboo, recycled PET plastic, wood plastic composite and linen. The PS collection is sold at Ikea stores worldwide and priced like any other Ikea products.
“We usually start with a theme, for example, ‘Design belongs to Real Homes’ and we hand over the theme to about 20 designers,” explains James Futcher, a PS range product developer.
Once the designers come back with sketches and ideas and the PS team is happy, the next stage involves the product developer, technician, packaging technician, sourcing developer, and etc. “The product developers then lead and manage the process right until you see the product in the store,” he adds.
To create the PS Wall Lamp, for example, the product developers asked how Ikea could create an energy-saving solution for their customers?
“LED lamps use 85% less energy than your conventional incandescent lamp and last 20 years longer. But the challenge with LED is how do you get even, directed light?” says Futcher. “Also, the starting price for LED is expensive. Ikea strives to find the right price point so that it is easy on people’s pockets.”
The entire process – from design, developing prototypes to the actual product reaching the stores – takes an average of two years.
“Not all ideas are realised, some never see the light of day after the prototype phase,” says Wåxnäs.
If you have always wondered about the tongue-twisting names of Ikea products, well, it’s not a big mystery.
“They are Scandinavian names, for example, chairs are given boys’ names, textiles girls’ names, and rugs are names of Danish towns and places,” Wåxnäs explains, adding that some names are also popular slang words.
Sustainability and ethics
When it comes its green cred and social conscience, Ikea didn’t start off on the high road.
In the 1980s, the company was hung out to dry in the media after it was reported that child labour was used to make Ikea rugs. To add insult to injury, Ikea was accused of depleting forests with its sizable consumption of wood. After US-based retailers Home Depot and Lowe’s, Ikea is the third largest consumer of wood in the world. Almost three-quarter of Ikea products are made from wood.
It was a wake-up call for the company, and it scrambled to draw up a social and environment code of conduct. In 2000, it introduced IWAY: Ikea Way of Purchasing Home Furnishing Products, a checklist of 80 requirements covering social, environmental, health and safety aspects that all Ikea suppliers worldwide have to fulfil. The Iway is a measure to weed out child labour, bad working conditions, and environmental violations.
“Not only should Ikea products be well-designed, functional and affordable, they have to last, they must be made out of good and safe materials, and produced in good working conditions,” explains Jeanette Skjelmose, the sustainability manager for IOS and Supply Chain.
The Ikea Foundation also supports Unicef (the UN Children’s Fund) and Save the Children programmes to protect children’s rights and welfare.
Ikea employs 75 full-time auditors to check on its suppliers (numbering 1,018 in 53 countries in 2011) and use third-party auditors to calibrate their findings to ensure credibility, Skjelmose explains. Every supplier gets either an announced or surprise audit at least once every 24 months. The audits are based on International Labour Organisation standards.
“One of our Chinese suppliers initially thought he couldn’t comply with our Iway regulations but he finally did (each supplier is given a window of two years to fulfil the requirements),” Skjelmose cites an example. “His company’s labour turnover was high, up to 30% especially after the long Chinese New Year holidays. But after the company improved its working conditions and wages, the turnover figure dropped to 10% or less.”
Ikea works with organisations like the World Wide Fund for Nature (WWF) and the Forest Stewardship Council (FSC) to ensure its wood comes from responsibly managed forests. “Forestry monitors” are hired to root out illegal logging, rampant in China and Russia, where Ikea sources most its wood.
“For 2011, 16.2% of the Ikea range used FSC-certified solid wood (over 2.2 million cubic metres) and 100% of the wood we purchase is legally logged,” Skjelmose says proudly. “Our vision is to reach 50% but right now there is not enough of a supply of FSC-certified wood in the market. We prefer to work at a structured pace and work with WWF to increase FSC-certified forests.”
Under the Better Cotton Initiative (BCI), 24% of Ikea products use sustainably grown cotton. Apart from Ikea, BCI is backed by companies like Marks & Spencer, Levi Strauss & Co, H&M, Adidas and Nike with help from NGOs like WWF and Solidaridad, a Dutch NGO that supports social justice.
“We help to educate farmers in India, Pakistan, China and Turkey to grow cotton using sustainable methods like reducing water, pesticide and chemical fertiliser use,” Skjelmose explains.
Half of Ikea’s energy use in 2011 was supplied through renewable resources. As of 2011, the company has 60 operating wind turbines and nine turbines under construction, with plans to generate enough electricity for 15% of the energy needs of Ikea stores and distribution centres globally.
Solar, geothermal and biomass systems are also in operation in different countries, as Ikea strives to get 100% of their energy from renewable sources within this decade.
“We are asking these questions: how do we use our resources? Can we use less material? How much renewable and recyclable material is in the product? Is the product recyclable at the end of its life? And most importantly, is this product helping our customer live a more sustainable life?” says Skjelmose.
“Last year, 734 million customers walked into our stores globally, so we have this fantastic opportunity to influence them by offering green solutions and sustainable products,” she adds. This year, Ikea began using a scorecard method to evaluate each product’s sustainability traits.
But in reality, not all Ikea stores around the world adopt green practices, like the option for recycling furniture or getting replacement parts. In Sweden, for example, there is a huge secondhand market for old Ikea furniture. Back here, I can’t even get a replacement transformer for my husband’s Ikea table lamp. Though it cost less than RM200, why dump it if we can replace the part and the lamp still works?
“Yes, we can definitely improve on the retail front,” says Skjelmose when I tell her of my predicament.
And the million-dollar question lingers: how does Ikea change the perception of “low price equals disposable”?
“We don’t believe that products should be disposable just because they’re cheap. We are constantly working on the quality and to show the value of the products,” Skjelmose replies.
Aside from its twice-a-year sales, one of the most highly anticipated events for Ikea fans is the arrival of the new catalogue. Page after page of stylish and cosy living rooms and bedrooms with eye-catching furniture and accessories are meant to inspire readers’ home makeovers.
Putting together these 300-plus page catalogues is a mammoth task that takes place under the roof of the Ikea Communications (ICOM) building in Älmhult. Almost 300 employees, from art director, interior designers and photographers to carpenters and seamstresses are involved in the catalogue production, from concept to the finished products. A 8,800sqm studio, slightly larger than a football field, is used for the different room settings.
At the time of our visit in June, the shoots for the catalogue had wrapped up and most of the props and fake walls had already been taken down. But we had a peek at a few shoots for new product launches and a tour of the wardrobe and props room. Some of the stylists were already wrapping Christmas presents for the Christmas brochure shoot.
“The whole process of making the catalogue was intensive,” says Anne-Lene Wold, an Icom worker who took us on a tour around the studio.
“For example, we have 36 settings for bedrooms alone; we have to build each in a week, shoot and then tear it down to make room for a kitchen.”
The stylists have to follow a list of dos and don’ts. “We need to make sure there are no religious symbols or sensitive elements like the image of a pig. When there is a lit candle in the room, there has to be someone in the photo,” Wold adds (presumably to emphasise the safe use candles, which should never be left unattended).
And all the happy faces and good-looking families in the photos are good-natured Ikea employees in Älmhult who volunteer to be models!
Since the catalogues are distributed worldwide, there are many variables in the furnishings; for example, the rooms for the Japanese market sport tatami mats or there will be darker wood furniture for the US market.
Interestingly, this year, about 12% of Ikea’s content for the catalogue, brochure and Web are computer-generated 3D images. Which means the sets for kitchen, living or bedroom can be created on a computer screen, another cost-saving measure for Ikea.
Quality speaks, or not?
Our final tour of the Älmhult facilities ended at the Ikea Test Lab where 50,000 tests are carried out each year. As an assurance to customers, Ikea subscribes to “mobelfakta” a European quality label for furniture that meet certain standards.
Pieces of furniture like beds, tables and kitchen cabinets are tested for durability and fatigue. For instance, a cabinet door can be opened and shut thousands of times. There are tests for formaldehyde and rust; how long candles burn and how they drip, or how scratched worktops can get. Textile tests include how well they withstand the washing machine and sunlight, how fire retardant they are and what chemicals they contain.
“At this lab, we basically test prototypes at their product development phase,” says Mattias Andersson, the manager of the Test Lab.
“The reports coming out of here will be the basis for a ‘yes’ or ‘no’ decision to make a new product or change the material of an existing product to improve its performance.”
The 3,500sqm lab has 27 employees and is accredited with international standards ISO 17 025. The lab runs 24/7, 365 days a year to ensure the tests are not disrupted. A pocket spring mattress, for example, has to withstand the pressure of the pounding of a 140kg weight for 30,000 times.
After several days in Älmhult, I felt privileged to have had the opportunity to get an insight into the workings of the world’s largest home-furnishing retailer.
Drawing on the vision of its founder Ingvar Kamprad, Ikea set out to make good designs affordable and to allow the “many people” to have access to comfortable, stylish homes that enhance their lifestyles. Yes, it is hard to shake off that “disposable furniture” tag but Ikea products never claim to be heirloom material either. The company’s wide range and various price points also mean some products may outlive others.
Of course, there are things that can be improved, like substandard customer service, indecipherable instructions for the DIY pieces or missing screws and bolts in the flat-pack packages. How many times have you have been told, after a long meandering trudge to get to the self-serve warehouse, that the item is out of stock?
“We are working to improve the distribution problem,” says one Ikea co-worker.
Maybe the question lies in us, the consumers. Are we always out to get the best possible bargains? Or are we willing to fork out more for long-lasting products that are made responsibly and valued? And will Ikea ever reconcile the two?
Food for thought, perhaps.