Performance of the brand

IKEA is a home furnishing company with a fully integrated supply chain, including its own industrial groups Swedwood and Swedspan. The IKEA Group Corp. is the world’s second largest retailer behind Walmart Stores Inc. and works in four basic areas: range strategy & product development, production, supply and retail. The parent company of the IKEA Group of Companies, INGKA Holding B.V., is owned by Stichting INGKA Foundation in the Netherlands. The IKEA Group franchises the IKEA concept from Inter IKEA Systems B.V. in the Netherlands, which is the franchisor of all IKEA stores worldwide. IKEA itself is the world’s largest furniture retailer, offering well-designed and functional furnishing products at low prices so that as many people as possible will be able to afford them. The Swedish approach to design is also the basis of the IKEA range, which to this day is developed in Sweden. The home furnishings are modern but not trendy, functional yet attractive, human-centred and child-friendly and represent the fresh, healthy Swedish lifestyle through their carefully chosen colours and materials. Since its foundation in 1943, the IKEA Group has grown into a global retail brand with 127,000 co-workers in 41 countries generating annual sales of more than 23.1 billion Euros and serving 626 million visitors in 2010. Its annual catalogue is considered to be IKEA’s main marketing tool with around 197 million copies printed and distributed worldwide in 29 languages every year.

The group recorded revenues of €23,539 million during the financial year ended August 2010 (FY2010), an increase of 7.7% over FY2009. The gross profit of the group was €11,085 million in FY2010, an increase of 11.2% over FY2009. Its net income was €2,688 million in FY2010, compared to a net income of €2,525 million in FY2009. Europe remains IKEA’s primary market, generating 79% of sales in 2010. Fifteen percent of sales were generated in North America and 6% in Asia & Australia.

In 2011, IKEA was first listed in the Brand Finance® Global 500, obtaining a brand value of $14,676 million, as well as an A- brand rating.

Positive Aspects

IKEA wants to take a leading role towards a low carbon society

The company’s long-term direction states that all IKEA buildings shall be supplied with 100% renewable energy. Currently IKEA owns 52 wind turbines which generate roughly 10% of the electricity consumed by the IKEA Group’s operations. It is further equipping 150 stores and distribution centres with solar panels. All new IKEA buildings are energy-efficient and many are designed to use biofuels, geothermal energy or solar or wind power.

IKEA pursues a strong diversity management

About 40% of IKEA’s top 200 managers are female. The company’s retail operations in 41 different countries are led by country managers of 14 different nationalities. A recent co-worker satisfaction survey showed very strong results. In many markets IKEA is the “Employer of Choice” and globally IKEA is listed as one of the 50 top most attractive employers in 2010.

The IKEA Sustainability Direction 2015 outlines the corporation’s priorities for taking social and environmental responsibility at every step

During FY10 IKEA introduced the IKEA Sustainability Product Score Card, which will help the development of more sustainable home furnishing products. The score card reflects sustainable aspects throughout the lifecycle of a product; for example, type and amount of raw material used, manufacturing, distribution, product quality, product use and possibilities for recycling at the end of its lifetime.

During FY2010, the IKEA Foundation extended its support for UNICEF’s water and sanitation programme in India, doubling the amount of all previous donations. In total, the IKEA Foundation projects together with UNICEF, Save the Children, and the United Nations Development Programme. Through the IKEA foundation, the retailer funds programmes in the carpet and cotton regions in India and Pakistan that aim at making every child’s right to quality education and protection from exploitation a reality. By the end of 2015, some 10 million children across 20,000 villages in India and Pakistan will have benefited from the programmes.

Negative Aspects

In 2010, IKEA was repeatedly listed in the Sweatshop Hall of Shame published by the International Labour Rights Forum (ILRF)

According to the ILRF, IKEA commissioned an audit into labour conditions at the Menderes Tekstil Factory located in Denizili, Turkey, producing bed linen for IKEA and concluded there were no major problems, although it was reported earlier that unsafe working conditions led to the death of four workers. However, trade unions and anti-sweatshop groups like the Clean Clothes Campaign were denied access to the results of the audit, raising serious concerns about the biased conclusions that often arise from a company’s self-commissioned audit.

The opening of its Swedwood subsidiary in Danville, Virginia was nicknamed IKEA’s first American sweatshop factory due to its poor working conditions.

In 2008, the opening of the IKEA Group’s Swedwood subsidiary in Danville, Virginia caused major uproar, workers complaining about low wages, discrimination, as well as mandatory overtime. After the plant’s 335 workers tried to form a union, the factory hired Jackson Lewis LLP, a law firm that helps businesses block unions to fight the organising effort. Yet, in July 2011, employees voted 221-69 to join the International Association of Machinists and Aerospace Workers and Swedwood’s spokeswoman Ingrid Steen explained the subsidiary will accept their conditions and will work with their union in a mutually cooperative and respectful manner.

 

Last changed September 1, 2011

League tables

IKEA appears in the following brand league tables:

Rank 52 in the Global 500 2012.
Rank 6 in the Best Retail Brands 2012.
Rank 52 in the Global 500 2011.
Rank 52 in the Global 500 2011.
Rank 6 in the Best Retail Brands 2011.
Rank 60 in the Global 500 2008.
Rank 76 in the Global 250 2007.