Sunday, February 26, 2017

IKEA as a Case Study on Globalization

Five Thirty Eight has an interesting post on the economics of IKEA's furniture.  From the article:
"The Poäng’s midcentury-modern forebear was the Finnish designer Alvar Aalto’s 1939 creation called simply armchair 406, which had its own bent-birch frame, swooping arms and thin tan upholstery. The Poäng’s design was first sold decades later, in 1978, after a collaboration between Lars Engman and Noboru Nakamura. Nakamura, in a company brochure celebrating his chair’s 40th anniversary, said that even though trends and fashion influence what he designs, “all products should have a timeless value.”
But it’s less the fashion trends than the resulting furniture economics that make this particular history interesting. Versions of the Aalto sell online for over $4,000. The Poäng debuted at a fraction of the price of the Aalto, and now, after a steep price decline, the Poäng sells at a fraction of its original price. Furniture has generally gotten cheaper relative to other goods over the years — likely due to effects of globalization — but this chair’s trend stands out. In the early 1990s, the chair couldn’t be had for less than $300, adjusted for inflation. Today, it’s $79. (The average piece of $300 dollar furniture in 1990 would cost about $151 today, per the consumer price index for furniture and bedding.)"

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