IKEA cooks up easy-to-assemble meals
The Swedish furniture retailer moves beyond meatballs and lingonberries.
(Fortune Magazine) -- IKEA, the Swedish company that built an international brand selling put-it-together-yourself furniture, now wants to do the same thing with food. This fall it will roll out a smorgasbord of edible products at stores in the U.S. and Asia, hoping that customers will want to assemble their own meals as well as the tables they eat them on.
"We want to give our customers a taste of Sweden," says Jan Kjellman, CEO of IKEA Food Services, which is already offering IKEA-branded meatballs, herring, lingonberry jam, moose-shaped pasta, and other typically Swedish products in most of its stores in Europe. Privately held IKEA expects food sales to reach $850 million this year, about 4.5% of the company's $18 billion in revenue last year.
IKEA founder Ingvar Kamprad, one of the world's richest men, recognized the importance of food early on. He opened a restaurant in his first store, in Älmhult in southern Sweden, in 1959 as a way of keeping customers on the premises. "If you're satisfied, you buy more," says Kjellman, explaining that customers who visit the restaurants spend an extra $40 on average on furniture. The company has also been selling packaged food made by other Swedish companies at most of its 237 stores around the world for years.
The idea of launching a line of IKEA-branded foods is a smart one, says Mattias Karlkjell, an analyst at Sweden's Sundal Collier. "They will make money, even though gross profit on grocery is lower than on furniture," he says, noting that IKEA is already one of the biggest exporters of Swedish food.
Kjellman says that prices will follow the IKEA spirit of cheap goods for everyone. A jar of herring will sell for just $1. "This way our customers can bring home the tastes they already tried out in our restaurants," he says. And the self-assembly option remains. "You just put together meatballs, mashed potatoes, and lingonberries into a nice meal."