Mikael Ohlsson strides into the cafeteria of an IKEA store, coffee cup in hand, clad in unassuming khakis and V-neck sweater, a poster boy for the dependable and economical merchandise stocked at his chain.
A point of pride for IKEA’s chief executive officer, who is an industrial engineer by training: He can assemble one of its Ektorp sofas in five minutes – with the help of another person. His IKEA credentials shine through, even in his choice of eatery.
The fare at our 8:30 a.m. breakfast – the $1 special of scrambled eggs, two sausages and hash browns – reflects his no-frills approach to life. As Mr. Ohlsson peers at his plate when it arrives, he seems a bit disappointed. “We should have a healthy alternative as well, I think.” He quickly points out that the restaurant also serves alternatives: fruit cups ($2) and Greek yogurt ($1.69.)
“We should always offer the healthy organic alternatives,” he says. “And that’s growing a lot on our menus.”
Mr. Ohlsson, 55, who started with IKEA AB 34 years ago as a carpet salesman at the store in Linkoping, Sweden, will step down in September, to be replaced by Peter Agnefjall, almost 15 years his junior and currently IKEA’s country manager in Sweden. During Mr. Ohlsson’s tenure, he kept a strong Canadian connection, having headed the division here for four years in the early 1990s.
He noticed almost immediately similarities between Canadians and Swedes that helped him feel comfortable here: both, he found, are modest and retiring, never boastful.
True to style, he started the concept of “home visits” where store representatives go to customers’ homes to try to understand what they need, a practice that continues at the retailer today.
He says he got the idea when he was moving to Canada and had to look at homes and apartments for himself. “I got a head start,” he recalls.
His lessons: Mattresses and sheet sizes didn’t fit North American beds; North American appliances were too big for IKEA kitchens; glasses were so small that shoppers bought vases instead.
So began IKEA’s customization for local markets, with roughly 20 to 30 per cent of items now adapted to different markets. But low cost and efficiency are always paramount, he adds.
Steen Kanter, a former IKEA executive who headed its U.S division when Mr. Ohlsson helmed the Canadian unit, says the current CEO perfectly encapsulates IKEA’s likeable, accessible image.
“The ideal IKEA leader is not the great flamboyant personalities but leaders that fit into the IKEA down-to-earth culture of humbleness,” says Mr. Kanter, who was at IKEA for more than two decades and now runs consultancy Kanter International in Raleigh, N.C. “He fit into that style.
“It was very good to have a person in the seat in Sweden who had been involved in the North American market. It was a complicated market for IKEA and very important.”
Mr. Ohlsson isn’t leaving before making several more pitches for sustainability. He wants to work on the file when he retires, perhaps advising IKEA, or a non-governmental organization. The topic was one of his top choices for discussion at our breakfast, which took place two days after the garment factory collapse in Bangladesh that left 1,127 dead.
He has made sustainability and safe working conditions at factories – IKEA works with about 1,100 plants, seven of them in Bangladesh – one of his priorities during his almost four years at the helm of the cheap-and-cheerful Swedish retail powerhouse.
“I don’t want you to interrupt when I tell you the story – it’s too important,” Mr. Ohlsson implores, as he recalls the development of IKEA’s supplier code of conduct in the 1990s. “It started with the insight that child labour could exist – children that should be in school were actually working. And now you know – and we all know – that it’s one of the big problems in the world that still exists.”
As earnest and well-meaning as the retailer’s image that he represents, he is struck by the “terrible” deadly collapse in April of a building that housed textile factories in Bangladesh. He also grapples with the aftermath of the disaster, which touched off another round of soul-searching among retailers about the dangers of cheap chic. Canadian grocer Loblaw Cos. Ltd. was among those caught in the crossfire, when it was discovered that its Joe Fresh line was manufactured there.
Mr. Ohlsson has been in the eye of the storm surrounding the high cost of discount culture, which was the focus of a book four years ago with the same subtitle. His focus on philanthropy has helped to counter critics who say IKEA contributes to forest depletion and pollution by forcing shoppers to drive long distances to get to its stores, load up their cars and drive home with their flat packs.
Although Mr. Ohlsson assembles his own furniture, he’s been quick to encourage adding do-it-for-me services to its do-it-yourself retail model. In Canada, the chain recently introduced a service to pick out products from its warehouse-like store. And it’s increasingly substituting some alternative materials for wood in its furniture.
“Do I feel IKEA is a shining example of being good?” Mr. Kanter, the consultant, asks. “I wouldn’t say so. But I think IKEA has been a leader.”
As Mr. Ohlsson picks at his sausages – he ultimately leaves the eggs and potatoes uneaten, explaining that he’d had a bagel and cream cheese earlier at his hotel – I remind him of another controversy this year: the discovery in Europe of horse meat in ground meat, including that used in IKEA’s meatballs.
“It was totally unexpected,” he says. “We were, you could say, caught in one of the biggest European food scandals. And the supplier in this case, we have worked with for 30, 40 years … That’s terrible for us because every time there is something we have been part of, it’s highlighted.”
Even so, he learned from the stumble, he says. IKEA now does DNA testing on its ground meat, which it didn’t do previously.
He has also learned from 13 years working under IKEA’s IWAY factories code of conduct, which bans child labour and sets standards of minimum wages and working conditions. Last year, IKEA phased out 70 of its suppliers because they didn’t meet its standards, especially in forcing employees to work too many hours without benefits.
His Canadian connection is meaningful. When he arrived here in 1991, 15 years after IKEA launched in Canada, he faced challenges and opportunities. Suburban homes were “huge,” bigger than he had ever seen, while new condominiums were tiny. IKEA needed both bigger and smaller furniture to fit these dimensions.
He also felt staff weren’t skilled enough in such matters as marketing and running a store. Among his hires was Kerri Molinaro, who had worked at high-end fashion retailers such as Holt Renfrew.
Although Ms. Molinaro had little experience in home furnishings, he liked her style sense, and she went on to become the first woman to head the Swedish home division and now, the Canadian division.
Today, Canada is one of IKEA’s strongest markets with about $1.4-billion of sales, up 7 per cent from a year earlier at stores open a year or more, he says. A tough economy helps discount retailers such as IKEA grab business from rivals. He’s set out ambitious global growth plans for the retailer, targeting a doubling of overall revenue by 2020 from the current €27.63-billion ($37-billion).
Other businesses may be shy about investing during wobbly economic times, but not IKEA. The chain continues to add 10 stores a year and is planning to add up to 25 stores a year, starting in 2016, he says. Other executives may be worried about consumers’ current thrift; not Mr. Ohlsson.
“In economic downturns, people become more value conscious and that’s our strength,” he says. “We continue to grow and we gain market share, maybe even at a higher rate, in economic slowdowns.”
Age: 55; born in Helsingborg, Sweden
Personal: Married with three children, aged 10 to 17, two boys and a girl.
Education: Master of science in industrial engineering.
1979-1981: Started in the carpet department in IKEA Linkoping store.
1981-1984: Store manager, IKEA in Sundsvall, Sweden.
1984-1986: Training and development manager, IKEA Sweden.
1986-1988: Marketing manager, IKEA Sweden.
1988-1991: Country manager, IKEA Belgium.
1991-1995: Country manager, IKEA Canada.
1995-2000: Managing director of IKEA of Sweden.
2000-2009: Regional manager of various IKEA regions.
2009 to present: President and chief executive officer of IKEA Group.
He wants to sit on boards of four to six companies and work as an adviser on sustainability and children’s rights issues for some NGOs, and possibly advise IKEA.
He wants to do photography, play guitar and hang out with his family.
IN HIS OWN WORDS
“The difference between us and others is that we don’t just buy – we are out in the factories. We have about 1,000 people in our purchasing organization; they are at the factories every week. … You can never guarantee that one thing will happen somewhere, but we are vigorous in that we never trust paper. We are on the floor, in the field.”