IKEA reshuffles the furniture with new generation

Wednesday, June 5th, 2013 | Finance News

By Alistair Scrutton and Anna Ringstrom

STOCKHOLM (Reuters) - Asked if he would ever quit IKEA, 87-year-old founder Ingvar Kamprad told an interviewer last year he "had no time to die". But his latest step back from the world's biggest furniture group has pushed a younger generation to the fore.

Kamprad, who founded the business 70 years ago and is one of Europe's wealthiest men, will leave the board of a major company within the business, Inter IKEA Group, which owns the brand and directs strategy. He had already stepped down as chief executive as long ago as 1986. His youngest son Mathias becomes chairman.

Beneath the title changes, a big business with over 300 stores and 690 million visitors is shifting to Mathias and older brothers Jonas and Peter, all in their mid-to-late forties.

"These children have grown up talking IKEA at the breakfast table, at the lunch table and at the dinner table. You can't get a more thorough education," said Bertil Torekull, author of 'Leading by Design: The IKEA Story'.

"They come in with their generation's ideas."

Some say Kamprad is being gently eased out.

"My impression is that at IKEA ... they let him say what he wants, but they don't pay much attention," said Bosse Vikingson, a journalist who has followed IKEA for more than a decade.

Earlier this year, IKEA Group's chief executive said he planned to double the rate of expansion to around 20-25 new stores a year. Kamprad later told a Swedish daily he had not been informed.

IKEA has grown despite austerity in Europe, and now the three sons must now take up the challenge of spreading in markets like China and India and making further inroads online.

They have the advantage of instant brand recognition; the company claims its catalogue - 212 million copies last year in 29 languages - is the second most read publication after the Bible.

The sons each focus on one of the three groups that make up the empire: Jonas on IKEA Group, Mathias on Inter IKEA Group and Peter on Ikano Group. The groups all have separate ownership structures and the sons are on their respective boards.

GARDEN SHED BEGINNINGS

But their reclusive father's shadow is still everywhere. He formally acts as "a senior advisor" to IKEA Group, the owner of most stores, and has key positions in foundations that control the empire.

After flirting with Nazism during World War II, for which he has apologized, he built the business from a shop in his garden shed in the 1940s, selling watches and Christmas cards. His "flat-pack" furniture concept, begun in 1956, helped save a fortune in transport, storage and sales.

Saving money has become something of a hallmark for billionaire Kamprad; he reportedly flies economy class and still frets about the number of meatballs served in the store restaurants.

But he knows how to make it, too. Having more than doubled sales in the past decade to 27.6 billion euros ($36 billion) last year, IKEA Group, which owns most of the stores, plans to double them again by 2020.

IKEA published interviews with the sons over a year ago in its inhouse magazine, with photos of them in t-shirts and jeans under a simple banner headline "The Future".

"It's more of a refresh than a radical departure," said retail analyst Neil Saunders at Conlumino consultancy group. "IKEA is now in a position to be perhaps a little bit more receptive to some of the newer areas of consumer trends, such as things like social media, online, multi-channel."

"All my sons have the potential, but on different levels. Jonas with his extensive experience of the conditions of production, Peter with his talent for structure and organisation, and Mathias with his flair for sales and the big picture," Ingvar told Torekull in 2011.

Jonas has also designed some items.

"BETTER EVERY DAY"

There have been reports of rifts between the brothers, something their father has downplayed.

"We do not always agree. But we agree on the important things," he said in an interview last year in Swiss business magazine Bilanz.

Peter chairs Ikano, an independent mainly financial services group that also operates four IKEA stores, and he has experience working for one of the world's biggest fashion retailers, H&M, as well as IKEA in Poland, Sweden and Thailand.

Jonas is a board member of INGKA Holding, the parent of IKEA Group and its owner, the Stitching INGKA Foundation.

Mathias, among other positions, worked as his father's assistant for two years, as well as five years with Habitat, bought by IKEA in 1992, and is also on the board of Interogo Foundation, which controls Inter IKEA Group.

"It is business as usual with the aim to become a bit better every day," he said in a statement this week on becoming chairman of Inter IKEA Group.

"It's not as if someone will come in and start changing everything," said Conlumino's Saunders, "because there is no need to. It's actually a good, solid business model."

($1 = 0.7642 euros)

(Additional reporting by Johan Ahlander, Veronica Ek and Simon Johnson; Editing by Will Waterman)

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