Riding out the recession, IKEA style
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There’s an old joke about a couple from Småland, a province in southern Sweden, who win a million kronor on the lottery. “What shall we do with all the begging letters,” asks the wife. “Keep on sending them,” her husband replies.
Perhaps, though, the Smålänningar (as the region’s allegedly tight-fisted inhabitants are known) will have the last laugh as the rest of the world braces for a bumpy economic ride.
The world’s most famous Smålänning, Ingvar Kamprad, appears to have braced IKEA for the downturn by living up to the stereotype. Instead of taking advantage of cheap credit, IKEA borrowed little. Instead of selling boom-time luxuries, Kamprad has always behaved as though every one of his customers was a stereotypical stingy Smålänning.
The words of current CEO Anders Dahlvig in this Time interview are perhaps testament to the virtues of living frugally:
This is a really good time for us. The way we’ve set up our business, we’re planning for a climate like this all the time. We have a very conservative policy when it comes to borrowing money. We basically only use our retained earnings and don’t borrow very much. We also have a very conservative policy when it comes to how we place our cash and our liquidity. We don’t place anything in equities, so we haven’t lost a dime so far. And the way we position our brand is as good value for the money. People know when they have less money what Ikea stands for.
November 24th, 2008 at 4:24 pm
some companies will most surely benefit from an economic downturn. and any company that can offer cheap alternatives should have a bit of an advantage.
IKEA is probably loving its chances.