How IKEA Chopped, Hollowed Out and Flattened Its Furniture to Cut Costs
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How IKEA Chopped, Hollowed Out and Flattened Its Furniture to Cut Costs

With inflation squeezing consumers and material and shipping prices up, the company took products back to the drawing board

By TREFOR MOSS
Wed, Apr 26, 2023 8:22amGrey Clock 5 min

ÄLMHULT, Sweden—Amid IKEA’s colourful staged living rooms, piles of umlaut-laden housewares and endless rows of flat-pack boxes is furniture that can have shoppers wondering: How does that chair cost only $35?

IKEA grew into a furniture behemoth with a relentless focus on keeping costs low, but that goal has become more challenging. The price of metal, glass, wood and plastic have spiralled up, as have shipping costs. Inflation has squeezed consumers’ wallets. Managers at IKEA knew that something had to change to keep prices down and profits up, so in the past couple of years they have taken some of their products back to the drawing board.

Designers experimented with ways to reduce IKEA’s reliance on wood—even in its trademark wooden furniture—to cut material and shipping costs. Lighter, less expensive plastics, they discovered, could be used instead in cabinet doors and drawers.

They learned that they could substitute less expensive recycled aluminium for zinc, which had doubled in price over two years to $4,371 per metric ton after the start of the Ukraine war. Recycled aluminium is now going into bathroom hooks and other products.

When they turned to packaging, they cut freight costs by purging flat packs of “fresh air and wasted space,” said Fredrika Inger, IKEA’s global range manager. On the new Nämmarö garden chair, the curved wooden slats featured on a previous model were straightened, which allowed the components to be packed more tightly together.

“Our budget is the customer’s wallet, and their wallets are smaller than ever,” said Susanne Waidzunas, global supply manager at Inter IKEA Holding BV, the company that owns the IKEA brand, develops its products and manages its supply chain.

Based in Älmhult in southern Sweden, where the late Ingvar Kamprad founded the company eight decades ago, IKEA is today the world’s biggest seller of furniture, with 460 mostly franchise-operated stores spread across 62 countries that carry some 9,500 products. Its in-store canteens serve 1 billion Swedish meatballs with cream sauce and lingonberry jam each year.

Mr. Kamprad, who died in 2018, believed in “democratic design”—essentially that everyday products should be attractive and functional, but also affordable. It was, in part, a hard-nosed strategy designed to maximize sales.

The challenges started with the disruptions of the Covid-19 pandemic, compounded by Russia’s invasion of Ukraine. Then high inflation presented many companies with a dilemma: raise prices to offset growing costs and risk alienating customers, or keep prices down and sacrifice profit margins. IKEA did some of both last year, and its annual profit halved, to 710 million euros, equivalent to $778 million, despite record sales.

As part of its push to boost profits, the company said last week it would spend 2 billion euros to open new U.S. locations over the next three years—its largest-ever investment in new American stores.

One of the company’s chief weapons in its fight to cut costs is the Billy bookcase, a bestseller considered the “heart of IKEA,” said Jesper Samuelsson, the product’s manager. Over 140 million units have been sold since it first appeared in the 1979 edition of the IKEA catalog. The company says someone, somewhere buys a Billy every five seconds—which comes out to around 6.3 million sales a year.

According to IKEA’s official history, the Billy’s original design was scribbled on a napkin after its creator, Gillis Lundgren, was inspired by criticism from IKEA’s then-advertising manager that the company’s bookcases lacked simplicity.

Now, Mr. Samuelsson said, IKEA colleagues have a game they play: “If you’re a product in IKEA, which one are you? I’m Billy—it’s a very simple, straightforward product.”

The Billy comes in two styles: white and wood finish. Its last major overhaul came in 1999, when the company changed its method for producing the white version. IKEA designers knocked a fifth off the unit’s price by replacing its white lacquer coating with a melamine foil.

It has been significantly cheaper than the wood-finish version ever since. In the U.S., the model that measures roughly 6½ feet tall and 2½ feet wide retails at $89.99 in white and $109.99 in wood finish. IKEA executives wanted to make the latter version less expensive, too, said Mr. Samuelsson.

Targeting a cost savings of 25% to 30%, Mr. Samuelsson and his colleagues focused on a solution that IKEA had been developing for years: the replacement of wood veneer with paper foil.

IKEA’s wooden furniture isn’t typically made of solid wood. Instead, it has traditionally used veneer, a thin slice of wood less than a millimetre thick that is glued onto a main structure of particleboard. Particleboard is formed from compacted wood chips and sawdust, and is significantly less expensive and lighter than solid wood.

Mr. Samuelsson knew that getting rid of the costly veneer would be key to savings, he said. The paper foil is less expensive, less wasteful and much quicker to apply than veneer, which speeds up the rate of production, Mr. Samuelsson said. Wrapped around the particleboard structure and printed with wood patterns, it looks like a wooden surface, he said.

IKEA first began to develop paper foil for use on its furniture around 2004, and has since steadily made the material less expensive and more reliable, gradually deploying it on other furniture lines, including the Pax wardrobe, one of the company’s bestselling bedroom closets.

By the time Mr. Samuelsson and his team of a dozen designers set about reworking the Billy in 2020, IKEA leaders had enough confidence in the paper foil to use it on their prize bookcase, he said. The Billy redesign brought some functional changes—including the replacement of metal nails with user-friendly plastic fasteners—but the switch from veneer to foil generated the cost savings that managers had been hoping for, he said.

The global rollout of the reworked version of the bookcase—produced in Sweden, Germany, Slovakia and China—has faced obstacles. Factories in Europe were already running at capacity, so the company would need to move slowly and carefully to introduce the new version without disrupting output. IKEA also realised its demand for paper foil would balloon, which required lengthy preparations to help suppliers build up their output.

Production of the new version started last year in China, where the local manufacturer had spare capacity and could implement the new production system sooner. The Billy is the country’s No. 1 IKEA product. There the wood-style bookcase is priced at 499 yuan, equivalent to about $72, down from 699 yuan—a 29% reduction. The white version sells for 399 yuan. The new Billy hits stores in the U.S. and Europe in early 2024.

These kinds of design changes are unlikely to alienate IKEA consumers, who typically don’t focus on how their furniture is made, said Tom Higgs, a furniture designer and lecturer at London’s Brunel University. “IKEA’s customers are looking for affordable, replaceable and convenient furniture,” he said.

For one of IKEA’s most popular office swivel chairs, the Flintan, smaller armrests and less steel and plastic in the back cut manufacturing costs. The new Flintan, which hit stores in 2021, is roughly the same size as its predecessor, but it’s much more efficient to ship after designers tweaked its components to make them fit more snugly into a flat pack. IKEA can now squeeze 6,900 Flintans into one shipping container, up from 2,750.

Even so, the company said that costs have increased so much that it decided to hold the chair’s price at $119 in the U.S. Without the design tweaks, the price would have risen significantly, it said.

IKEA designers likewise reworked the Säbövik bed, available in Europe but not the U.S., by changing the construction of its wooden frame. It was previously made of so-called sandwich board, comprising thin layers of wood glued together. Designers experimented with new material mixes before settling on a less expensive and lighter combination of solid wood, plywood and a compressed structure of wood strands and glue called oriented strand board.

The Säbövik used to come flat-packed in three cardboard boxes, but now fits into just two more compact boxes, enabling the company to cram twice as many flat-packed beds into a shipping container.

Tasked with developing a new extendible dining table that wouldn’t be prohibitively expensive, IKEA designers tried a novel approach.

Earlier IKEA tables typically used solid wood legs for strength and stability. In developing the new Rönninge table, which launched last year, designers created a leg made from hollow wood veneer with solid-wood inserts at the top and bottom to add strength. This approach significantly reduces material and freight costs since each leg now contains 90% less wood than if it had been made of solid wood, the company said. The Rönninge retails at $499 in the U.S.



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Booming demand for wellness tourism shows no slowing, with travel related to health and well-being projected to have reached $1 trillion last year and to hit $1.3 trillion by 2025, according to the Global Wellness Institute, a nonprofit based in Miami.

Curated wellness travel programs are especially sought-after, specifically holistic treatments focused on longevity. Affluent travellers not only are making time to hit the gym while gallivanting across the globe, they’re also seeking destinations that specifically cater to their wellness goals, including treatments aimed at living longer.

“I believe Covid did put a spotlight on self-care and well-being,” says Penny Kriel, corporate director of spa and wellness at Salamander Collection, a group of luxury properties in places like Washington, D.C., and Charleston, South Carolina. But Kriel says today’s spas are more holistic, encouraging folks to understand the wellness concept and incorporate it into their lifestyle more frequently.

“With the evolution of treatment products and technology, spas have been able to enhance their offerings and appeal to more travellers,” Kriel says.

While some growth is connected to the variety of treatments available, results and the digital world are also contributing to the wellness boom.

“The efficacy and benefits of these treatments continue to drive bookings and interest, especially with the support of social media, influencers, and celebrity endorsements,” Kriel says.

While genetics, environmental factors, and lifestyle choices such as regular exercise, a diet free of processed foods, sufficient sleep, and human connection play essential roles in living well and longer, experts believe in holistic therapies to help manage stress, boost immunity, and ultimately influence length and quality of life.

Anti Ageing and Beyond

“For years, people have been coming to spas, booking treatments, and gaining advice on how to turn the clock back with anti ageing and corrective skin treatments,” Kriel says. However, today’s treatments are far more innovative.

On Marinella Beach in Porto Rotondo, on the Italian island of Sardinia, guests at the five-star Abi d’Oru Hotel & Spa can experience the resort’s one-of-a-kind “longevity treatment,” a unique antiaging facial using one of the island’s native grapes: Cannonau. The world’s first declared “Blue Zone”—one of five designated areas where people live longer than average, some into their 100s—Sardinia produces this robust red wine varietal, the most widely planted on the island.

Known as Garnacha in Spain and Grenache in France, Cannonau supposedly contains two to three times more antioxidants than other red-wine grapes. By incorporating Cannonau, Abi Spa says its unique 50-minute longevity session increases collagen production for firmer, younger-looking skin.

Maintaining a youthful appearance is just one facet of longevity treatments, which range from stress-reduction sessions like massage to nutritional support and sleep programs, Kriel says. Some retreats also offer medical services such as IV infusions and joint injections.

Keeping with the trend, Kriel is expanding Salamander Collection’s existing spa services, such as detox wraps and lymphatic drainage, to include dedicated “Wellness Rooms,” new vegan and vegetarian menu items, and well-being workshops. “Sleep, nutrition, and mindfulness will be a big focus for integration in 2024,” she says.

Data-Driven Wellness

Skyler Stillings, an exercise physiologist at Sensei Lanai, a Four Seasons Resort—an adults-only wellness centre in Lanai, Hawaii—says guests were drawn to the social aspect when the spa opened in November 2021.

“We saw a huge need for human connection,” she recalls. But over the past few years, what’s paramount has shifted. “Longevity is trending much more right now.”

Human connection is a central draw for guests at Sensei Lanai, an adults-only and wellness-focused Four Seasons Resort in Hawaii.
Sensei Lanai, A Four Seasons Resort

Billionaire co-founder of tech company Oracle Larry Ellison and physician and scientist Dr. David Angus co-founded Sensei. After the death of a mutual close friend, the duo teamed up to create longevity-based wellness retreats to nurture preventative care and a healthy lifestyle. In addition to the Lanai location, the brand established Sensei Porcupine Creek in Greater Palm Springs, California, in November 2022.

Sensei has a data-driven approach. The team performs a series of assessments to obtain a clearer picture of a guest’s health, making wellness recommendations based on the findings. While Sensei analyses that data to curate a personalised plan, Stillings says it’s up to the guests which path they choose.

Sensei’s core three-day retreat is a “Guided Wellness Experience.” For spa treatments, each guest checks into their own “Spa Hale,” a private 1,000-square-foot bungalow furnished with an infrared sauna, a steam shower, a soaking tub, and plunge pools. The latest therapies include Sarga Bodywalking—a barefoot myofascial release massage, and “Four Hands in Harmony,” a massage with two therapists working in tandem. Sensei Guides provide take-home plans so guests can continue their wellness journeys after the spa.

Sensei Lanai, an adults-only and wellness-focused Four Seasons Resort in Hawaii.
Sensei Lanai, A Four Seasons Resort

Sanctuaries for Longevity

Headquartered in Switzerland with hotels and on-site spas across the globe, Aman Resorts features an integrative approach, combining traditional remedies with modern medicine’s advanced technologies. Tucked behind the doors of the storied Crown Building in Midtown Manhattan, Banya Spa House at Aman New York—the brand’s flagship spa in the Western Hemisphere—is a 25,000-square-foot, three-floor urban oasis.

Yuki Kiyono, global head of health and wellness development at Aman, says the centre provides access to holistic and cutting-edge treatments benefiting physical, mental, emotional, spiritual, and social well-being. Aman’s customisable “Immersion Programs” consist of a three- or five-day immersion. “The programs encompass treatments and experiences that touch every significant aspect to create a path for longevity, from meditation and mindfulness to nutrition and movement,” Kiyono explains.

Banya Spa House at Aman New York.
Robert Rieger

The spa’s “Tei-An Wellness Solution” features 90- to 150-minute sessions using massage, cryotherapy, and Vitamin IV infusions. Acupuncture is also on offer.

“With its rich history of Chinese Medicine, modern research, and the introduction of sophisticated electro-acupuncture medicine, acupuncture has been proven to assist with problems and increase performance,” Kiyono says.

Resetting the Mind and Body

Beyond longevity, “healthspan”—the number of years a person can live in good health free of chronic disease—is the cornerstone of Mountain Trek Health Reset Retreat’s program in British Columbia, Canada.

Kirk Shave, president and program director, and his team employ a holistic approach, using lifestyles in long-living Blue Zones as a point of reference.

“We improve our daily lifestyle habits, so we live vitally as long as we’re meant to live,” Shave says of the retreat. He built the program from an anthropological stance, referencing humans as farmers, hunters, and gatherers based on their eating and sleeping patterns. Food includes vegetable-centric meals sans alcohol, sugar, bread, or dairy.

Guests wake at dawn each day and have access to sunrise yoga, several hours of “flow” or slow hiking, spa treatments, forest bathing, calming crystal singing-bowl and sound therapy sessions, and classes on stress reduction—one of Mountain Trek’s primary goals. The program motivates people to spend much of their time in nature because it’s been proven to reduce cortisol, the stress hormone that can lead to inflammation and disease when elevated for extended periods.

While most guests aren’t aware of how immersive Mountain Trek’s program is when they arrive, they leave the resort revitalized after the structured, one-week program. Set in the Kootenays overlooking its eponymous river, the resort and adventure promise what Shave calls a “visceral experience of transformation.”

“They’re interested in coming to be in nature,” Shave says of the guests. “They hit a wall in their life and slipped backwards, so they know they need a reset.”

Banya Spa House at Aman New York provides access to holistic and cutting-edge treatments benefiting physical, mental, emotional, spiritual, and social well-being.
Robert Rieger

This article first appeared in the Winter 2024 issue of Mansion Global Experience Luxury.

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