Jeremy Caplan

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Ikea CEO Dahlvigsnext big growthmarkets are China,Russia and the U.S.

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ties. And we had to understand how Japa-nese people live. We looked at 100 homes.We sit down with people. We ask, What doyou do? Where do your kids sleep? How doyou work or play with them?

What have you learned?DAHLVIG When we opened the store, we in-cluded a nursery for our workers, and of thewomen who came to work for us there, 70%said that was the reason they looked for a jobwith us. In Japan most women are house-wives. So there is no government structurefor day care. Of course, a lot of women wantto work, and some have to work, whethertheyre divorced or single mothers. Ournursery closes at 9, the same time the storecloses. That makes a huge difference tomothers. When they have this opportunityto work and have day care, theyre tremen-dously motivated and dedicated.

Whats unique about Japanese customers?DAHLVIG In Japan a lot of people use publictransport to get to our stores, so home de-livery is a huge aspect of the business,about 50%, as compared to other places,where its often 5% to 10%. We planned forthat, but it still took us a little by surprise.

Youre known for flextime and job sharing.How does that apply to in-store workers?

How is Ikea changing?DAHLVIG Were expanding much faster thanwe have historically. Compared to Wal-Mart,its nothing, but were building about 20 storesa year now. Were also aggressively reducingour prices, by about 17% over the past fiveyears. And were moving into new markets.

How have you avoided the opposition to big-box stores that Wal-Mart has faced?LOPEZ Were work-ing with communi-ties much earlierthan we did in thepast. We are verycareful about thesites we pick. Andwe communicatehow we providegreat revenue andgood employment,so that workers canmove up within thecompany.

Is Ikea growing up? TheSwedish furniture giantraces to expand, with a newemphasis on quality

From Tempe, Arizona, to Beijing, Ikea is building new storesnearly as fast as its customers can put together the friendly and inex-pensive modernist furniture the Swedish chain is famous for. ceo AndersDahlvig and North American president Pernille Lopez spoke with TimesJEREMY CAPLAN about the companys rapid expansion, its move into Japanand its strategy for making the Internet a bigger part of its business.

Quick-ChangeArtists

How do you respond to those who say yourfurniture is hard to put together and its quali-ty is inconsistent?DAHLVIG Quality is something we need toconstantly improve. And were always work-ing with our suppliers to make our productseasier to put together. We have a chair, for in-stance, that just snaps together. Weve alreadymade progress. Our return statistics are im-proving, and our product-quality reports are

also getting better. Butit takes time for per-ceptions to change.

What challenges didyou face in openingyour first store inJapan in April?DAHLVIG We spentfive years planning.We had to find a site,and then there wereregulations to adaptto, and customs du-

Ikeas Global Growth

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LOPEZ For workers, flexibility sometimesmeans that their schedule starts 20 min-utes later, so they can go to day care anddrop off their kid without worrying aboutbeing two minutes late. Ive found thatvery small things can make a huge differ-ence to people. If youre a cashier, you cantwork at home, youve got to be in the store.

But we can be flexible about how we sched-ule your time.

Dont customers hate assembling furniture?DAHLVIGWhen we came to market and askedcustomers to do the job, that was a uniqueproposition, and of course it met resistance,because it means you have to do more work

yourself. But we havethe sense that peoplehave more time thanmoney. So peopleare prepared towork so they cansave some money.

LOPEZ When youbuy in other furni-ture stores, you haveto wait three weeks,then stay home fordelivery, so the fourhours you mightspend to put togeth-er Ikea furniture,you spend waiting athome. So there arepros and cons. Myson loves putting itall together.

Whats your strategyfor marketing, asIkeas mix of prod-ucts evolves? LOPEZ We change30% of our productsevery year. Manypeople have the per-ception that Ikea isfor college students,a first apartment, the

kids room or the basement. But people inthe U.S. need to rediscover Ikea because wewere small when we came in, we were con-sidered quirky and the furniture too small,but now weve expanded and learned andhave more to offer. One segment we believein is small business. We specifically focus onwomen, who make up 70% to 80% of ourconsumers. And a lot of businesses all overthe world are being opened by women.Theyre using Ikea not necessarily just fordesks and chairs but for storage solutions,shelving and decorations.

Whats your strategy in China?DAHLVIG We open in Chengdu next year,then in Shenzen, Nanjing and a second storein Beijing. Were aiming at the middle class.We can source products there, and our laborcosts are lower, so we can sell everything forless. The products themselves are the sameeverywhere. Whats different is how we groupthem together because people live differ-ently. The size of homes is a big differentia-tor between places.

How will Ikea change in the next five years?LOPEZ Well reach our goal of having 50stores in North America by 2010. We wantto open five stores a year in North America.In Sweden we have 25% market share; inthe U.S. overall, we have 2%, but that num-ber will grow.

DAHLVIG In the past the Internet hasntbeen an emphasis, but it will become asource of information to complement ourstores on a totally different level. We havemore than 200 million visitors to our web-site worldwide and more than 400 millionvisitors to our stores. In three years wellhave more visitors to the Net than to ourstores. This autumn youll be able to tourrooms 360 degrees, walk in, click and pullout a drawer unit, and access all kinds ofnew product information. Thats just a start-ing point. The whole interaction will be dif-ferent in five years. pi

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! Lopez plans 11new Ikeas in NorthAmerica by 2010. Shesays communitiesneed time to get usedto big-box stores

countries have atotal of 236 Ikearetail stores, withabout 8,500products onaverage in each 160

million copies ofIkeas free catalogwere printed lastyear in 25languages, fromIcelandic to Turkish

million meatballsare sold every yearat Ikea stores. Theenvironmentallyfriendly retailer ismoving to organics 150

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