Briton leads Ikea into bright future

Ten years ago last month, a low-priced flat-pack furniture shop opened in a far-flung outer suburb of Tokyo. Staff had to restrict access to the new outlet after half a million eager customers poured through the doors in the first month, giddy on the aroma of meatballs and pine shelving units.

Today, the Japanese arm of the Swedish home furnishings behemoth has eight shops and employs 2,700 people. A new mega-store is to open near Nagoya City within two years.

The Ikea business model is evolving. At its heart will remain the maze-like, 40,000-square-meter warehouse, into which happy shoppers set foot with intent to buy office chairs and children’s bedding, only to emerge, dazed, with a trolley-load of Tupperware, multi-pack tea lights and a spider plant.

Online shopping, in Japanese and English, is to debut here “as soon as possible”, according to Ikea’s British chief executive, Peter List. “As convenience and time become more important, we need to offer something to those who don’t have time”, he told BCCJ ACUMEN. Halfway between the two are new, smaller “touchpoint” shops where customers can order and collect items. The first of its kind opened in October 2015 in Kumamoto Prefecture.

Ikea is capitalising on a new Japanese interest in home furnishings, once unusual in a country where people do not tend to invest in their homes. The message is that “improving your home will improve your life”, said List, 46, who studied the Ikea ethos as part of a psychology degree.

In Chiba Prefecture, in 2006, local media were sceptical about whether Japanese consumers would accept cheaply made furniture from a foreign brand. Yet, as anyone who has visited an Ikea branch on a recent Saturday will know, Japanese shoppers have embraced Scandinavian interior style as wholeheartedly as they consume US products by the trolley-load at outlets such as Costco.

List attributes Ikea’s success to four attributes. First is research: “We listened to the market and built networks for a long time before we purchased land”, he said. “We studied how people live in Japan, and we still visit homes across the country every year”.

Second is commitment: “You can’t make a quick buck; you need to invest money and time. You need a ‘permanent’ mind set”.

Third is relationship-building: This, List believes, is the only way to overcome bureaucracy. “The World Health Organization has a list of banned substances but Japan has banned additional ones”, he said. “If you test products in another country, even to extremely high standards, sometimes different requirements may still apply”. This is where connections come in handy.

Finally, there is novelty: Japanese consumers expect this. “Unless you develop your products, customers will get tired [of them] very quickly. We use limited collections of items that you won’t get again”.

To this end, List has embraced the Japanese concept of kaizen (continual improvement), made famous by workers on Toyota Motor Corporation’s car production lines. “We are always looking to improve, and we use Toyota as a model”, he said. One of his key advisors is a former manager of the carmaker.

All Ikea Japan’s part-time workers receive pay equal to that of their full-time colleagues for equivalent work, and women make up 47% of managers. Both points are highly unusual in Japan. List now finds himself called on to explain Swedish egalitarian working practices to Japanese government ministers. “They are very interested in learning about how we do things in Sweden”, he said. “I find it very welcoming”.

Custom Media publishes BCCJ ACUMEN for the British Chamber of Commerce in Japan.

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