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IKEA expands into insurance business

Swedish furniture giant IKEA Group is making a push into the insurance market, rolling out trial sales of a range of policies at select stores within the next couple of weeks, according to a person familiar with the plans.

Closely held IKEA, the world’s biggest furniture retailer, started selling child and pregnancy insurance, branded Omifall, on Oct. 1 at a few select IKEA stores in Sweden, the company confirmed. Within weeks, the Swedish stores will extend the offering to home-insurance products as well, the person said.

The trial sales in select stores constitute a soft launch of IKEA’s insurance offerings, the person said. The initial plan is to target the 2.5 million members of the company’s loyalty club in Sweden, potentially expanding the insurance product range abroad at a later stage. Globally, IKEA’s club counts 59 million members.

IKEA declined to comment on the rollout of further insurance products.

Both the child- and home-insurance products are handled by an entity within the IKEA empire called Ikano Group, which is owned by the three sons of 88-year-old IKEA founder Ingvar Kamprad. While Ikano has offered insurance before, the products have been kept at arm’s length from IKEA’s main flat-pack furniture business.

“This is the first time daddy properly lets the sons’ company into IKEA,” the person familiar with IKEA’s insurance push said, noting the generational shift under way as the Kamprad sons increasingly assume a more active role in the IKEA sphere.

Mr. Kamprad’s sons, Peter, Mathias and Jonas, have generally kept a low profile as Mr. Kamprad has maintained a strong grip on the furniture empire. In 2013, however, the company said that Mr. Kamprad—among the world’s richest men—would step down from the board of Inter IKEA Holding, and that his eldest son, Mathias, would step up as chairman.

IKEA’s mazelike ownership structure can make it difficult for outsiders to tell where one IKEA business unit ends and another begins. Mr. Kamprad has given few media interviews, and his three middle-age sons have never given media interviews, apart from an appearance in IKEA’s staff magazine.

IKEA has used its large customer base to branch out into categories beyond its traditional furniture business before. In 2012, the company launched a trial in Sweden to sell television sets and loudspeakers, which were later rolled out internationally.

The company has also grown into one of the world’s largest sellers of kitchen appliances, such as ovens and dishwashers manufactured by the likes of Electrolux ELUX-B.SK -2.81% AB and Whirlpool Corp. WHR -1.20%

Source : Jens Hansegard and Sven Grundberg - The Wall Street Journal

09 October 2014

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