August 31, 2005

IKEA vs. Wal-mart

Spurred by Karol Boudreaux's comment, I decided to assemble a post about the lack of IKEA-hatred. Before we get started, let's look at the magnitude of the hatred. Right now, "I hate IKEA" turns up 766 Google hits, while "I hate Wal-Mart" turns up 7000, and "I hate Walmart" brings up 4000. That's 11,000 to 766, or 14 to 1 more hatred for Wal-Mart than IKEA (from English writers; I haven't tried Spanish, German, Swedish, or any other language). So IKEA-hatred is dwarfed by Wal-Mart hatred. Why?

Since Wal-Mart hatred doesn't have a simple economic explanation, the lack of IKEA-hatred shouldn't have one either. And since cultural explanations are notoriously fickle, everyone can come to some sensible position on their own. So here's mine:

First of all, in many places worldwide where a new IKEA has been proposed, there IS opposition by locals opposed to big-boxes in general, IKEA's not so good customer service, increased traffic around the site, etc -- just like opposition to Wal-Mart. (See, for instance, Red Hook). But IKEA opposition rarely brings out the organized interests.

It seems to me the primary reason is that IKEA's footprint in the US is small -- only 24 stores! Really (see map)! But they're in California, Chicago, Seattle, Houston, Dallas, and the Northeast bringing a European simplicity, exclusivity, and style to the "coastal elites" and other cosmopolitan types -- a combination of low-cost and internationalism not available in the rural, so-called red-states. In contrast, Wal-Mart is perceived by those self-same people as bringing "hick" values -- and garbage goods -- to big-cities.

(IKEA has only 216 stores and 84,000 employees worldwide. Wal-Mart has that many stores and employees in each of several US states [FL, TX]), and overall Wal-Mart has 25 times the number of stores, and 20 times the number of employees of IKEA.

Also, coroprate culture is important: IKEA has a culture of social democracy, and its executives will kow-tow to unions (Australia, Japan, France, the UK, Austria, ...) when it needs to; Wal-Mart has a culture founded in liberal democracy and fights to retain its independence, giving into the bare minimum of outside influence on worker-employer relations. WM extends and pushes its own value system wherever it goes internationally, while IKEA almost-happily melds with the local methods of the State. For some people, the distinction is subtle: Wal-Mart has everday low prices and always low prices; IKEA has a "low price but not at any price" vision.

That is not to say IKEA is an anti-Wal-Mart. Like Wal-Mart, IKEA is notorious for doing everything it can legally to lower its tax burden. It's also interesting that IKEA purchases 19% of its goods from China and 12% from Poland. Buy IKEA, so Chinese and Poles (and in exchange, Americans) work!

Posted by Kevin on August, 31 2005 at 12:01 PM