DISCRETIONARY INCOME SEEN RISING

In the years to come, consumers in the Western world will have more money available for discretionary spending. In Western Europe even more than in the United States income not already earmarked for such fixed needs as rents, basic food, taxes, in surance and the like will increase substantially.

In connection with a seminar held recently in Helsinki by the United Nations Economic Commission for Europe it has been estimated that in Europe such "free" income's share of total income will advance from 14.7 percent in 1983 to more than 20 percent in the year 2000. No matching gain is anticipated for U.S. consumers, but on the other hand the corresponding share in the United States is even now, and is expected to remain through 2000, at just under 30 percent.Almost inevitably such a development in Western Europe will entail changes in, and quite likely a certain upgrading of, the consumers' life styles. Already, it appears, some firms "have seen the light" and are adjusting their plans accordingly.

The Ikea Company looks like one of them. Over the last 20 plus years this Swedish firm (based in Aelmhult) has spread its sales of mainly furniture and furnishings to the extent that it now claims to have 38 million customers in 17 countries, and an annual turnover not far short of $1 billion.

To many Europeans, Ikea itself represents a certain life style. Ikea furniture, to put it a shade crudely, has attracted mainly young people with not too much money to spend who were setting up their first household. They were not greatly interested in buying things that would last them a lifetime.

Privately, Ikea executives now concede that despite their claims of offering good quality at low prices, there has been a quality problem. It is one they have now come to grips with. The "life expectancy" of Ikea furniture probably has averaged three to four years. But in the past few years the realization has gained ground - and been acted upon - that this is no longer sufficient.

Customers, it is admitted, no longer care for "throw away" merchandise. What they want are:

Goods that will last them between 8 and 12 years.

Goods that can be easily and usefully supplemented after a while when they have additional spending money.

It is with this in mind that the hundreds of designers employed by Ikea have shifted course of late. Gradually, too, the 8,000 persons that Ikea employs have been indoctrinated with this switch to higher quality products.

There are problems, of course. Ikea is anxious to keep its image of a store where products still constitute first rate bargains. On top of that, the organization would like to retain the identity that it has held for many years, and still holds, in the public's mind. On entering a room people are to go on saying as they do now: "Ah, you bought this table, that easy chair, those curtains at Ikea."

This in itself has always meant a distinct challenge. There has generally been a limit to how far Ikea can and will adjust to differing consumer tastes and habits in the many countries it serves. The somewhat restrictive attitude in this connection stems not only from purely commercial reasons, such as economies of scale. It also reflects the desire that merchandise should convey the Ikea "impression" wherever it is bought and seen.

Ikea is just one manufacturer that sees the handwriting on the walls and is adjusting to increased discretionary spending by the population. Others will too. Those who do not will miss out and lose market share if not their businesses.

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