Humility. Thrift. Simplicity

Context

As the world’s largest furniture retailer, IKEA is a leader in democratising design. Known for turning practicality into profit and making home goods affordable for the masses, IKEA stood tall—until the perfect storm hit. 

Supply chains collapsed. Geopolitical shocks cut off key resources. And a daring manoeuvre to slash prices saw profits nearly halved. But in true wartime spirit, IKEA proved its strategy is built for the long haul.

Real-Life Story

The tale of IKEA began on a modest farm in Sweden. In 1943, a 17-year-old Ingvar Kamprad founded the company. From the start, IKEA operated under constraints: scarce resources, tight margins, and high customer expectations. 

But Kamprad’s resourceful mindset—born of a rural upbringing where frugality wasn’t a choice but a way of life—gave IKEA its enduring doctrine: cost-effective innovation for the many, not the few.

By 2024, however, IKEA found itself in the crosshairs of several converging crises. Raw material costs soared while geopolitical tensions—especially the loss of wood from Russia and Belarus—choked off critical supplies. The Suez Canal blockage, labour shortages, and a pandemic-stretched supply chain further crippled operations. 

Meanwhile, in a bold effort to keep products affordable, IKEA slashed prices on over 3,000 items, sacrificing short-term profit to preserve its promise of accessible and affordable goods. The result: Ingka Group’s profits plunged from US$1.5bn to just $841m.

Company culture—seen as its greatest weapon—also came under fire. As IKEA expanded across continents, keeping Kamprad’s founding values intact while adapting to a diverse, modern workforce became a challenge.

Turning the Tide

Faced with this barrage, IKEA built up its muscle. On the supply front, the company diversified how it sourced materials, shifting procurement to European suppliers and bypassing ports with train logistics and chartered vessels. Local distribution hubs sprang up to defuse cross-border delays, particularly in post-Brexit Britain.

Operationally, IKEA doubled down on the very tactics that once fuelled its rise. Flat-pack design remained the secret weapon to keeping transport costs low. Self-service warehouses streamlined the customer journey. By leaning into its heritage of simplicity, IKEA protected its flanks.

Another critical component of IKEA’s lean strategy is the shift to renewable energy. In fact, the retailer has reached 100% renewable electricity usage in its stores and shopping centres across 23 countries, and is now progressing towards the same target for all company-run factories, packaging facilities, and distribution centres worldwide.

Price Reduction as a Winning Strategy

To counter financial fallout, IKEA deployed a strategy of volume warfare: cutting prices to boost customer footfall. The gamble worked. Physical visits rose by 4.5%; online traffic surged over 20%. While average transaction value dipped, total market share grew in several key battlegrounds such as the U.S.

In FY24, IKEA reported a 13.6% rise in its U.S. market share over the past five years. Total sales reached $5.5bn, with e-commerce contributing $1.9bn. IKEA credits this growth to sustained investments in the U.S. and significant improvements in its online shopping experience. 

Overall, IKEA reinvests 85% of its profit back into improving the business and its products. It also earmarked $2.4bn last year in a bid to keep prices low and counter inflationary pressures on its customers worldwide. 

Over in China, another key market, IKEA has committed 6.3 billion yuan (approx. $862m) over three years to strengthen its foothold. The retailer is set to open new stores and enhance its logistics network across the country.

‘Leadership By All’

IKEA’s initiative of “leadership by all” decentralised authority and aimed to empower troops at every level. To ensure creativity and cohesion remained intact, the company implemented:

• Monthly innovation meetings

• Flat communication lines

• Cross-functional collaboration 

Employee inclusion, upskilling, and regular field engagement from commanders also kept morale high. Today, it ranks eighth among 850 of the world’s best employers, according to Forbes.

Despite a rocky start to the decade, IKEA continues to stage a full-blown comeback in 2025. With 56 new store formats, aggressive omnichannel investments, and a loyal customer base, IKEA is once again setting the rules of engagement in the global furnishings market.

PostScript: Kamprad’s spirit still anchors the command post. His principles of humility, thrift, and simplicity in democratising design continue to shape strategy—from sustainable sourcing to customer-centric innovation. IKEA’s decision to reinvest 85% of its profits fuels its long-game approach: store expansion, renewable energy, and future-proofed supply chains.

Key Lessons

1) Fight on Cost Without Losing Command on Culture

IKEA’s decision to cut prices amid rising costs was a calculated retreat to preserve consumer trust. But it didn’t abandon its values of humility, thrift, and simplicity. Culture, when kept intact during cost battles, becomes the soul of the turnaround strategy.

2) Turn Logistics into a Tactical Asset

When traditional routes choked, IKEA rerouted its arsenal—chartering ships, building local hubs, and using trains. In wartime, logistics wins campaigns. WarTime CEOs secure the frontlines lest they lose control of the entire battlefront.

3) Empower Your Troops  

From the warehouse to the boardroom, IKEA’s “leadership by all” mantra decentralised authority, inspired ownership and facilitated greater collaboration across teams. Empowerment isn’t a morale booster—it’s a strategy multiplier in volatile terrain.

4) Frugality is a Weapon, Not a Weakness 

Kamprad’s cost-conscious legacy was not about penny-pinching. In the case of IKEA, frugality enabled it to fund innovation, shield margins, and extend runway, all while protecting customers against inflation. WarTime CEOs wield cost efficiency like a sword.

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Until next week, may the force be with you.

Kevin

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