Ikea index indicates Finns pay highest prices
By Brian Carroll -- Furniture Today, February 15, 2004
STOCKHOLM, Sweden — Thanks to a Swedish economist, Ikea has joined McDonald's as a barometer of the world's economies and currencies.
Gabriel Thulin, a Swedish statistician and consultant, has developed an economic index that uses a basket of 26 Ikea products priced in 15 different countries to measure pricing differences.
Consumers in the United States pay the least for Ikea products, according to Thulin's research, while those in Finland pay the most. Among surveyed countries using the euro currency, people in the Netherlands pay the least for the basket of products.
"I did the study for my own interest," Thulin said. Since its release late last year, the Ikea index has been picked up by publications throughout the world and has added to Ikea's influence as a cultural force.
The Ikea index is modeled on the Big Mac index, a well-known comparison by The Economist magazine of the price of a McDonald's Big Mac hamburger in a number of countries.
Both indices are based on the theory of purchasing-power parity, or the notion that a dollar should buy the same amount in all countries. In the long run, the exchange rate between two countries should move towards the rate that equalizes the prices of an identical basket of goods and services in each country. In The Economist's case, the item is a burger. For Thulin, it is a basket of 26 Ikea products.
"The research started with my doing a more advanced Big Mac index in the late 1980s," Thulin said. "It grew from there."
The 15-country total for the Ikea index includes eight countries in the euro zone, three non-euro European Union countries, two European countries not in the union, and the United States and Canada.
Why Ikea? Thulin, a senior partner in Stockholm's Hallvarsson & Halvarsson, a financial communications consulting firm, said that when a journalist friend wrote a book on Ikea in the 1980s, Thulin recommended the friend develop some kind of an Ikea index. The friend didn't bite.
"I tried to do an Ikea index myself after collecting catalogs for about five years," Thulin said. "It was not easy to get catalogs from foreign countries, so I had to use relatives, friends and other contacts around the world."
The Web has helped Thulin immeasurably in amassing pricing information for the Swedish retailer, which has 186 stores in 31 countries. In a few cases, item sizes differ by market, which forced Thulin to adjust prices by weight.
Thulin said he selected furniture and accessory items with the criteria that they be available in all of the countries studied and come from various Ikea product categories. Among the items are the Klippan sofa, the Ivar chair and the Moppe storage chest.
According to the data, the Moppe storage chest, for example, costs 59% more in Austria than in the United States and 39% more in Austria than in Germany, which borders Austria and shares its currency.
According to The New York Times, the Austria-Germany differential indicates the euro has not yet accomplished one of its basic missions: to create a single, transparent market where identical goods cost the same everywhere. Sweden recently adopted the euro.
Thulin said there's another reason for the disparities: Ikea capitalizes on its brand name by charging more where the brand is strongest.
While the United States is the cheapest Ikea country overall, some products in the survey are cheaper in Europe. The Sultan Skymning mattress, for example, costs 42% less in Italy than in the United States, according to Thulin's research, which is explained in part by differences in taxes, wages and advertising costs.
Thulin said he will repeat the index in September. The 2003 index used Oct. 14 currency rates, a calculation that included a fairly weak U.S. dollar — a fact that in part explains the relatively low U.S. prices for the items in the Ikea basket.
He is offering the complete data, analysis and underlying calculations for $250.
| Ikea index: U.S. prices are lowest | ||
|---|---|---|
| Index is based on the price of a basket of 26 items at Ikea stores. | ||
| Rank | Country | Price index |
| Source: Gabriel Thulin, Hallvarsson & Halvarsson | ||
| 1. | United States | 100 |
| 2. | Netherlands | 110.2 |
| 3. | Canada | 110.3 |
| 4. | United Kingdom | 113.2 |
| 5. | Sweden | 113.2 |
| 6. | Germany | 113.8 |
| 7. | Switzerland | 114.5 |
| 8. | Austria | 116.6 |
| 9. | Spain | 118.0 |
| 10. | France | 118.0 |
| 11. | Belgium | 118.6 |
| 12. | Italy | 121.6 |
| 13. | Norway | 123.0 |
| 14. | Denmark | 126.2 |
| 15. | Finland | 133.2 |
-
U.S. delays report on China's currency
Apr 5, 2010 -
Just the Stats: Master bedroom
Mar 15, 2010 -
Just the Stats: Master bedroom
Dec 1, 2009 -
Ikea sales, profits rise in fiscal year
Feb 6, 2012 -
Ikea's profits jumped 10.3% in latest fiscal year
Jan 20, 2012
Featured Company
-
Wright Labels
Bill and Tom Wright founded Wright of Thomasville in 1961 on the idea that printing was a creative medium and the belief that "a promise made is a promise kept." The Wright brothers focused their attention on providing exceptional printing for the... more
VIEW ALL GALLERIES
