Name: The Economics of IKEA: Why Does Labor Lead to Love? | The Economics Of | WSJ
Uploaded: 2022-09-07T03:43:34.000Z
Duration: 5 min 51 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

- You know they don't tell you, "Don't lay on the bed."

- [Narrator] If you've ever visited an Ikea,

their store's endlessly winding floor plan.

This layout can be confusing, but that is by design.

Ikea may be the biggest furniture retailer on the planet

The Swedish furniture giant asks its customers

and it stores and distributes those products

as well as their famous Swedish meatballs

contributed to the company's runaway success?

a look at the innovative business practices

you immediately sort of are put into this maze like

- [Narrator] Ikea's store layout is a fixed path design

that guides you through the store in one direction.

- [Sarah] It's not a grab a carton of milk

and get out kind of store, it's the opposite of that.

think about rooms you know, dream about what you really want

- [Narrator] The floor plan of most Ikea stores

resembles a maze that curves about every 50 feet

to keep customers curious about what comes next.

Since an average Ikea store is around 300,000 square feet

- An Ikea is to some frustratingly winding

but really it's laid out as an experience

that sell products preassembled, many of Ikea's pieces

As many couples and their therapists will know

building your own Ikea cabinet can be challenging.

consumers are more attached to have more positive feelings

towards objects or things that we've put effort into.

that they're more valuable because of that.

- [Narrator] The term Ikea effect was first coined in 2011

by researchers who noticed a similar phenomena

When instant cake mixes were first introduced in the 1950s

- And then they said, "Let's add a fresh egg."

like we're just participating enough to not feel guilty

- [Man] When you make a cake from a mix which do you want?

A fresh egg cake or a cake made with dried eggs?

A higher, lighter, tastier cake, why fresh eggs of course.

- The idea that we should love building products

- [Narrator] If you've ever shopped at one of Ikea's

you're likely aware of the unconventional product names

but what you may not realize is that in creating these items

Ikea sometimes comes up with the price tag first.

- So we have a classic example that they could talk

But they had this idea that a $1 LED light bulb,

would be hard to achieve, but if they could achieve it,

lots of people would buy LED light bulbs.

- [Narrator] That obsession with low prices

is a large part of why Ikea is the world's

Today, Ikea has 445 stores operating in 52 countries.

- You know obviously if you go into a student dorm room,

And that's really what they're going for.

- [Narrator] Today, Ikea is the very definition

of mass market appeal, but when the company first began

as a Swedish mail order business in 1943,

well-designed furniture tended to be expensive.

or seen as a serious long-term investment.

Ingvar Kamprad, who founded the company as a teenager,

pushed forward the idea that furniture could be flat packed

to massively reduce the cost of shipping and transportation.

- So flat packing is really the largest arguably

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The Economics of IKEA: Why Does Labor Lead to Love? | The Economics Of | WSJ

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