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Mon, Oct 09, 2006 - Page 10 News List

Swedish retailing giants share more than just nationality

AFP , STOCKHOLM

Similar strategies finely tuned over the past 60 years have made Ikea's flatpack furniture and H and M's affordable fashion major Swedish export successes the world over, as the two groups continue to expand year after year.

The two Swedish giants are strikingly alike, say Charlotte Lindgren and Jenni Tapper, spokeswomen for Ikea and H and M, respectively.

"Their founders -- Ikea's Ingvar Kamprad and H and M's Erling Persson -- knew each other personally and had lots of discussions and mutual exchange," Tapper says.

Ikea was established in 1943 and H and M in 1947 and the two innately Swedish companies have stuck to a simple business model: offer a large range of products at low prices to attract as many customers as possible.

"Shopping should be as much fun for the poor as it is for the rich," Persson often said.

To achieve this the two firms do not skimp on market surveys or marketing. They have their own designers and stars, such as Madonna, who this year was the latest in a long line of celebrities to lend her image to H and M.

"Ikea and H and M know where their customers are and what they want," says analyst Rasmus Engberg.

Engberg also notes that while both companies aim to be market leaders, neither company says they have reached the level of dominance they seek.

"They are constantly asking themselves who their customers are, what their styles are and what they are looking for," Engberg adds.

Another characteristic Ikea and H and M share is their global expansion. Both aim to be the biggest on every continent and have a presence in a maximum number of countries.

Ikea, which employs 104,000 people in 44 countries, has 212 stores in 24 countries. H and M has 50,000 employees in 24 countries and 1,264 stores.

"Ikea is present in Russia, China and Japan and has great belief in these countries as future markets. India is of course an interesting market, however it is still very uncertain Ikea will open stores [there] due to regulations on foreign ownership," says Lindgren.

In the next fiscal year alone Ikea plans to open 20 new stores and take on 10,000 workers, while H and M hopes to open 150 stores.

Another similarity between the two is their management style. The founding families remain very much involved in decision making and employees are encouraged to take responsibility in specific areas. The two companies are also characterized by openness and Swedish informality.

Born in a relatively poor region of Sweden, 80-year-old Ingvar Kamprad resigned as director of Ikea in 1986. He does however maintain control of the company through various foundations.

Ikea, which saw sales rise last year from 14.8 billion euros (US$18.6 billion) to 17.3 billion euros, forecasts a doubling in sales in the next five to six years.

For the first nine months of the year, H and M reported sales of 19.6 billion kronor (US$2.6 billion), a rise of 10.1 percent on the year.

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