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A chair, a book, a fork, or even a tie-dye pillowcase.
Whatever you want, they probably have it.
Although, some assembly is required.
Ikea, the blue and yellow furniture behemoth from Sweden has quickly become a mainstay
in many households.
Through their alternative approach to interior design, which champions cheap prices and a
do-it-yourself attitude, Ikea made roughly 42.7 billion dollars (38.8 billion euros)
in revenue during the 2018 fiscal year.
When you walk through one of Ikea’s maze-like showrooms, however, it’s hard to fathom
how they’re able to make that much money.
But Ikea’s low price points and slick designs are part of the reason why so many customers
continue to flock to their big-box stores.
So, to put it simply, I want to understand why IKEA is so cheap, and in addition to that,
I want to figure out whether their low prices means a weak commitment to mitigating their
environmental impact.
The story of IKEA’s low prices can be tied back to the mindset of its recently deceased
owner: Ingvar Kamprad.
Kamprad was an extremely cost-conscious man.
According to an article in the New Yorker, he still drove an old Volvo and recycled tea-bags
despite his massive amount of wealth.
He championed the idea of “lista” or “making do,” both in his own life but also in the
core values of the Ikea empire.
Essentially, IKEA seeks to create low-cost, minimalist and utilitarian solutions for everyday
life.
And it does that in several ways.
Similar to stores like Costco, IKEA leverages buying a large amount of material to drive
prices down.
All of those materials are “flat-packed” so that the maximum amount of product can
be shipped and stored in one place.
On top of that, they shift the assembly component of furniture onto the consumer, which means
they avoid a large amount of cost on the manufacturing end.
They push the time and effort needed to construct furniture onto people eager to buy their stuff.
So the key to IKEA’s cheap products is a knowledge of where and how to cut corners,
whether that’s in the manufacturing stage, shipping process, or up to the point of sale.
But Kamprad also has a very dark history.
He was involved in the Swedish fascist movement in the 1940s.
While Kamprad would later go on to write that it was the greatest mistake of his life, the
good and bad of his life also seems to parallel the dualistic nature of Ikea.
In the search for more profits and better margins, for example, Ikea has been criticized
heavily for avoiding potentially billions of euros in taxes by funneling money through
a web of subsidiaries and sub-companies.
In this regard, Ikea uses strategies from other corporations to circumvent accountability
to the law.
But does Ikea have the same disregard for their environmental initiatives?
In some cases, Ikea’s low prices are thanks to the cost-saving effects of the business's
new environmental initiatives, but alongside these highly publicized sustainability efforts
lie some questionable practices that leave much to be desired.
Let’s start with the good.
Ikea has made tremendous headway on the renewable energy front.
According to their 2018 sustainability report, Ikea has installed over 900,000 solar panels
across its warehouses and showrooms and owns and operates 441 wind turbines all in the
pursuit of becoming energy independent by 2020.
This is certainly admirable considering there are 424 Ikea stores worldwide that require
a massive amount of fuel and energy to run.
Alongside this rapid transition to renewable energy, Ikea committed to eliminating emissions
for all home deliveries by 2025, which means a fully electric home transportation fleet
within the next six years.
To top it all off, Ikea wants to reach a circular waste model by 2030.
With the elimination of single-use plastics in the store combined with the use of recycled
materials in their products, like their KUNGSBACKA line which uses recycled wood and plastic
bottles to create kitchen cabinets, Ikea has set out to redefine their relationship with
waste.
So in terms of climate change goals and ambitions, Ikea is doing better than most of the other
big-named brands in the field.
But, there’s always a flip side to the coin.
We shouldn’t just applaud Ikea for doing something everyone else should already be
doing.
It’s our job as consumers and as people to consider the consequences of a brand that
decides on a shockingly low price for their furniture and then challenges the design team
and suppliers to meet that price at whatever the cost.
If fact, according to Ikea, the carbon footprint of the company grew from 23.3 million tonnes
of CO2 in 2016 to 24.6 million tonnes of CO2 in 2018, which is roughly 1.2 million tonnes
more CO2 in just 2 years.
Even though they installed hundreds of thousands of solar panels on their showroom roofs, they’re
still a growing company.
Their suppliers, storage and shipment are making more furniture than ever and are not
all plugged into that clean grid.
And in terms of materials, Ikea consumes 1% of the world's logged wood for their furniture.
For just one company that is truly a massive amount.
According to the company, they seek to plant more trees than they consume, stating that
in the 2018 fiscal year they logged 700,000 trees and planted 3.6 million trees.
But Ikea’s track record when it comes to which trees its forestry subsidiary Swedwood
cuts down hasn’t been perfect.
In 2014, the Forest Stewardship Council banned Ikea for a month because Swedwood was cutting
down 600-year-old trees in Karelia, Russia.
In short, Ikea is doing good, but there are also negative ramifications to the growth
mindset of this massive fast-furniture company.
So, as we look towards Ikea’s cheap cost, we can understand a couple of things.
Its “cheapness” is the product of streamlined marketing and sales, strong control of their
supply chain, some unique approaches like flat-packing and DIY assembling, as well as
a little help from cheap renewable energy.
That being said, there is also a tension between the cheap first, everything else second mentality
that seems to ooze from all things Ikea and their environmental practices.
They’ve made strides in crafting more durable furniture, but Ikea is a business.
Mass consumption of their furniture is their reason to exist.
The more you buy, the better they do, but at the same time, the better they do, the
higher the environmental cost.
Ikea is ultimately interested in sustainability because that’s what customers want and it’s
good for business.
So the next time you’re chowing down on those classic Ikea Swedish meatballs, look
around; appreciate the fact that Ikea has made itself into a strong leader in sustainability
for big companies, but also understand that buying Ikea will never “save the planet”
or help mitigate climate change.
Buying that Tarva bed frame is certainly less bad than other options, but searching for
a different bed frame in a local antique or second-hand furniture store is the better
option for the environment.
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Hey everyone, Charlie here.
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