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IKEA is more than just a furniture store; it’s a cultural phenomenon that has spawned jokes, memes and comedy sketches and become as beloved to furniture shoppers in the U.S. as in the founder’s native country of Sweden.
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While everyone loves to make fun of the way the Swedish home furnishing company makes you put all of its iconic furniture together yourself, the fact is it’s cheaper than a lot of its competitors.
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Keeping costs low has been part of IKEA’s model since Ingvar Kamprad founded the company in the 1950s (the IKEA name is derived from Ingvar Kamprad’s initials plus Elmtaryd, the family farm, and Agunnaryd, the town where he grew up).
The entrepreneur always wanted to do more than just turn a profit, according to IKEA’s website, and making products that were affordable for all has been built into the company since the beginning. So how does IKEA keep its prices low?
One of the big costs that furniture companies must contend with is the cost of production — the labor and machinery involved do not come cheaply. IKEA keeps its prices to consumers low by producing many of the components in bulk, according to House Digest. Making the process even more efficient: Many parts are used in multiple furniture designs (e.g., you might find the same style of legs on a dining room table and a desk), which enables higher production quantities for cheaper cost.
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Making products in bulk means IKEA also purchases materials in bulk, which is the best way to earn a discount in the manufacturing process. Just like you, the consumer, pay less for bulk items at places like Costco or Sam’s Club, IKEA gets a cost break for producing in higher quantities, according to House Digest.
The very thing that IKEA is known for — DIY assemblage of your furniture — is not just a way to save space in the warehouse but part of a strategic system to save money used by Kamprad when he founded the company, according to IkeaMuseum.com. Kamprad had …….