How IKEA Has Transformed Russian Homes

IKEA (ИКЕА in Russian Cyrillic) was the Russian story that almost never happened. Still, the Swedish retail giant has transformed Russian kitchens, bathrooms and bedrooms in ways that the profit-wary communists of a few decades ago could have never imagined. In some ways, one might say that IKEA has finished what Richard Nixon started in the famous “Kitchen debate” with Nikita Khrushchev over 50 years ago.

The year was 1959. That July, USA Vice President Richard Nixon had traveled to Moscow to accompany the opening of the American National Exhibition, a USA-Russian exchange program held at Sokolniki Park. The Americans constructed an entire house filled with American appliances and home products, most of which were only a distant dream at the time for the typical Russian family. When Nixon treated Khrushchev to a tour, the two engaged in a spirited debate over the merits of capitalism versus communism.

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Nearly every item in this kitchen, from cabinets, to fixtures, and to furniture and appliances is an IKEA product.

On 17 August 1998, IKEA’s Lennart Dahlgren arrived in Russia. Dahlgren, newly appointed as the future head of IKEA’s Russian division, was sent by IKEA founder Ingvar Kamprad to open the Russian market. The process to begin business in Russia took the company longer than expected, cost more than anticipated, and due to corrupt officials and bureaucracy, the retail giant came very close to abandoning their Russian stores altogether.

The city of Moscow offered locations for the first store, but it was soon clear that the cost of opening inside the city limits was far higher than ordinary real estate and construction expenses. Then-mayor Yuri Luzhkov had suggested several sites, but when the company expressed interest in another property along one of Moscow’s major avenues, Kutuzovsky Prospekt, company officials claim that the city mailed flyers that resembled IKEA letterhead to local residents. The flyers, an apparent forgery, stirred up opposition to the site.

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From sleeper sofa, to lighting fixtures, to the desk and curtains, these are IKEA products.

IKEA eventually chose to open their first store in the Химки (Khimki) region, just outside city limits. That store faced unique obstacles and the opening was delayed after police raided the store just days before the scheduled grand opening. Officials claimed that a highway off ramp that had been constructed to handle the projected store traffic was in the wrong spot. The fact that officials had previously approved the ramp design, and inspectors had approved the construction process, seemed to have been forgotten.

Located in a busy shopping area along Leningrad Highway, the main road to Sheremetyevo (SVO) airport, it took a few months later, and several million dollars for a new government approved contractor to rework the highway ramp. However, once officials had been satisfied the project moved forward.

In June 2000, some forty-one years after the “”kitchen debate” between Nixon and Khrushchev, IKEA was ready to advertise the grand opening of their first Moscow store. But, there was another hitch: government officials at first banned the ads, saying that recent studies had discovered that consumers exhibit unstable moods when in underground floors, and that adverts promoting a store with an underground retail level might constitute a danger to public health. Foreign investors have long believed that local officials protect Russian businesses against competition by using excessive regulations and operating restrictions.

Despite the challenges, the first IKEA opened to a crowd of excited shoppers. The line to enter the store was several hours long, traffic in the area was jammed, and by the close of business that day, thousands of shoppers had picked the store clean. While hard to fathom, official estimates put the opening day traffic at near 40,000 shoppers.

Even then, there were kinks to resolve. The first day almost bombed when shoppers thought that prices were written in US dollars. At that time, the dollar was the most trusted currency following Russia’s recent default and currency devaluation. There was a big difference between $600 and 600 rubles, and so store employees quickly added the word “rubles” alongside prices to put shoppers at ease. For the rest of 2000, the average floor traffic exceeded 100,000 shoppers per week.

Bureaucratic hurdles have sprung up often, and for the most part IKEA has held the line on refusing to pay bribes to local officials. The company did agree to a $30 million donation to a charity benefiting the elderly to gain permits for construction of a large distribution centre outside Moscow in 2003. There was also a scandal during the acquisition for property in St. Peterburg when a former IKEA CEO allegedly approved an under-the-table arrangement between a large Russian subcontractor and local officials. The CEO was fired. Although unverified, Dahlgren says that he had sought a meeting with President Putin and IKEA founder Kamprad, but dropped the request after being told that the price tag for such a meeting was north of $5 million.

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Many a rustic countryside dacha has been transformed by IKEA furnishings.

IKEA promotes their Russian stores with the slogan Наша мечта исполнить вашу (Our dream is to make yours real!) Simplicity, quality, and economy in pricing are at the heart of IKEA’s retail operations, and in a country where retail is at two extremes (products can be very high-end for the wealthy, with cheap goods for everyone else), the average Russian consumer has embraced IKEA with a passion.

IKEA has invested heavily since the beginning in promoting their brand. Along with their associated property management company, MEGA stores, IKEA conducted a promotion in December 2014 to remind Russian consumers that giving is as important as receiving. Random shoppers were offered a gift, and then they were given the opportunity to give a gift to another person. To see the conversations in English, enable the subtitles on your screen, and watch:

Given the small size of many Soviet-era apartments, many living rooms serve as bedrooms by night with the sofa becoming an overnight sleeper. That concept is evolving as traditional beds are gaining acceptance with new apartment designs and remodeling projects. Last year, IKEA outfitted a Moscow movie theatre with beds, replacing the normal theatre seating for a night. In September 2014, the company invited couples to spend the night at an IKEA store to experience sleep on a traditional bed.

The advertising and promotion investments in Russia seem to be paying off, and today Russia is IKEA’s fourth most profitable market. There are 14 IKEA stores in Russia: three in the Moscow region, two in St. Petersburg, and more outlets in Kazan, Yekaterinburg, Samara, Ufa, Nizhny Novgorod, Novosibirsk, Rostov-on-Don, Krasnodar and Omsk.

Perhaps IKEA has not only transformed Russian homes, but hopefully has affected Russian officials with insight on honesty and integrity in business transactions. Despite all the challenges, IKEA loves Russia, and Russians love IKEA. But, don’t just take our word for it–this housewife is very happy with the results of her latest shopping adventure:


Russia Celebrates Crimea Anniversary

A crowd of several thousand Russians on Red Square greeted the anniversary of the annexation of Crimea with music, fireworks, and speeches—including one by President Vladimir Putin. With slogans like “Together as One,” the speakers at Red Square called the annexation an act of reunification.

Over the preceding months the Russian media voices have trumpeted the annexation as a sign of a resurgent Russia, and proof the invincibility of Putin’s rule. Despite past protestations that he had no involvement in the military take-over of Crimea, over the past month Putin has taken great pains to bask in the Kremlin’s actions leading to the invasion, coup of the then-Crimean government, and actions in forcing the referendum for joining Russia.

During the celebration, Putin joined a throng of Russian singers and musicians to sing the national anthem.

Putin now says that his actions saved Crimea, although there was no evidence that Crimea was in any danger during the ouster of the corrupt Yanukovich government in Kyiv (Kiev). The Kremlin narrative, while false, is accepted by most Russians who had no real information of the events taking place in Ukraine.

Charges that some of the celebrating crowd had been paid to attend seemed of little consequence to those in attendance, and some stayed only a few minutes before leaving. Some celebrants had indeed been required by employers to attend. Last week Russian social media was abuzz with comments by those who were required to attend from long distances away as a condition of their employment. Russian newspaper Ведомостей (Vedomosti) published information regarding notices that offered citizens age 14 and above a payout of 300 to 350 rubles for attending.

A recent poll of 1,600 people showed that 69% believe that Russia benefits from the annexation. Over 85% say that it must never be given back to Ukraine.

Events to celebrate the annexation also took place in Crimea.

Adding to the recently minted two 10-ruble coins featuring landmarks from Crimea, the Central Bank of Russia plans to issue a special banknote, 100-ruble denomination, to commemorate the anniversary.

Russia has designated the peninsula and the city of Sevastopol as separate entities. Sevastopol is now one of three so-called Russian “Federal Cities.” The other two are Moscow and Saint Petersburg.

Putin Resurrected

Had we listened to far-right conspiracy voices, the end of the world was taking place in Russia. The only thing is, that it was not.

St Petersburg: President of Kyrgyzstan Almazbek Atambayev (L) meets with Vladimir Putin (R). 16 March 2015.
St Petersburg: President of Kyrgyzstan Almazbek Atambayev (L) meets with Vladimir Putin (R). 16 March 2015.

Over the past two weeks we were hounded daily for tidbits from many such outlets for photos, videos, and any juicy bit of gossip about the supposed palace coup that had taken place over the past almost two weeks. We were told that mysterious trucks were rolling into Moscow into the dead of night, and that an unusual number of military helicopters were circling over Moscow.

When we reminded one California-based Internet sensation that thousands of trucks roll into places like Los Angeles and New York in the wee hours, the respondent screamed that we were out of touch. Perhaps that purported Internet conspiracy “expert” should have taken a closer look in the mirror.

There were trucks to be sure. Moscow is Europe’s second largest city, and like most mega cities, there are some restrictions on large truck traffic in daytime hours. There was also a large circus leaving town, and goodness, circus equipment is hauled by (gasp!) trucks.

The conspiracy forces quickly produced Twitter photos of large trucks parked near Red Square. Setting aside the all-too-logical question of why a palace coup would need the presence of large over-the-road trucks, we calmly reminded those inquirers that Red Square is being prepared for the first year anniversary celebration of the annexation of Crimea. Such preparations need equipment that is typically hauled on–you guessed it–large trucks.

Along with the helicopter tales, there was hysteria over the alleged presence of massive riot police formations all over Moscow. There they were, on YouTube! But, while they were on YouTube, where were they in Moscow? We watched some of the YouTube videos, and noticed that those riot police were outfitted in winter gear. While true that Moscow is not in the Caribbean, “Spring has sprung” as the expression goes, and temperatures of late have ranged from the high 40s to low 50s (Fahrenheit for American readers).

To be sure, the Kremlin brought some of this upon themselves. Where else, but in a dictatorship, would the absence of a leader generate such angst among citizens, and delirium by outsiders? In the USA, there would be street celebrations if Barrack Obama went missing. The American security services would scour every known golf course in the developed world. Heck, they might even search the fairways of third world backwaters like Hawaii in their quest. But, were most Western leaders truly missing for good, such would be cause to break open a six-pack and throw a rack of ribs on the grill.

Voices of those who know more than us ordinary mortals, warned that the USA was responsible. They had read the tea leaves of doom, and analyzed Russian media sources for clues to back up their wild claims. Mind you, most of these experts have never even traveled to Russia, let alone speak or read Russian. Ignorance, in the world of conspiracy kooks, is the resume of an expert. Nevertheless, World War III was upon us.

The Kremlin press office did not help their own case when distributing dated photos and video images of meetings that took place in earlier years. Reporters who had been on the beat in Russia quickly spotted those for what they were.

For some reason, the Kremlin propaganda creators must believe that the Russian mindset cannot handle truth. Those in power seem so prone to “spin,” that even something so simple as back pain, or flu, or the birth of a bastard love child, apparently needs to be spun to the public. That is just as unhealthy as the insane blather of the conspiracy theorists.

Newsflash to the Kremlin spinmeisters: you did not help yourselves, and while that is the deeply rooted nature of your boss, sometimes you must resist his urges. He is not infallible, even when it comes to PR.

Newsflash to the conspiracy theorists: Putin has been resurrected. Wherever he was, and whatever he was doing, he is not dead. Nor does it seem that he has been shackled by those in the Kremlin shadows. He appeared, as expected, for his scheduled meeting with the President of Kyrgyzstan in Saint Petersburg.

As for his own explanation, Mr. Putin had only this to say: “It would be boring without gossip.”

Disappearing Putin

An alert reader reached out to us yesterday to find out if there was any news on Mr. Putin’s supposed disappearance. It is too early to tell what could be the issue, if any, but most likely he is off riding some tiger or fish, bare-chested, or perhaps he delivered 8 March flowers in person to a certain young gymnast, and her two young children, down in Sochi.

So was Mr. Putin just busy, as suggested by his press spokesman Dmitry Peskov? Or, as some in the international and domestic press are asking, is this the case of a disappearing Putin?

Typically he takes in several meetings daily, and logs telephone calls to various regional and world leaders, but his schedule was exceptionally thin this week. Other than two meetings with regional governors, and a call yesterday with Armenian president Serzh Sargsyan, one might indeed suspect him to either be ill, or on a personal retreat.

It was interesting that the only photos the presidential press office approved for media use this week, struck several of us in the foreign press as being old. Also, the location for the type of meeting seemed askew. The Kremlin is rarely used for daily meetings and work; although the  “official” presidential residence is the Kremlin Senate building.

The Senate building was built in 1776, with ornate interiors and expensive dark wood work. The exterior is best known by the dome at the top, and tradition says that Russia’s leader is present inside the Kremlin when the Russian flag is flying over the Senate building dome. That is not really accurate these days, especially with security concerns that follow any world leader.

While there is government staff who work daily in the Kremlin, such as in “building 14” which houses some of the administrative staff, the Kremlin is generally reserved for state functions, such as diplomatic receptions, or the General Assembly of the Union State of Russia and Belarus which took place in the Grand Palace last week.

General Assembly of the Union State of Russia and Belarus. Moscow 2015.
General Assembly of the Union State of Russia and Belarus. Moscow Grand Kremlin Palace, 03 March 2015.

It really is not at all difficult to distinguish between the two locations. Most working days, and most in-state meetings, are conducted in the presidential residence at Novo-Ogaryovo, just outside Moscow.

President Putin greets Moscow mayor Sergei Sobyanin. Novo-Ogaryovo, 02 Mar 2015.
President Putin greets Moscow mayor Sergei Sobyanin. Novo-Ogaryovo, 02 Mar 2015.

Depending on the relationship, Putin often conducts state diplomacy meetings at his residence, rather than exclusively at the Kremlin. An example of this was the near-stealth meeting on 26 February with the president of the French Senate, Gerard Larcher.

President Putin and Putin French Senate Pres Gerard Larcher, Novo-Ogaryovo, 26 Feb 2015.
President Putin and Senate Pres Gerard Larcher, Novo-Ogaryovo, 26 Feb 2015.

When in Moscow, Putin generally works the entire day in the Senate building offices. An example would be last week’s Security Council meeting. Afterward, the rest of his day was spent working inside the Kremlin. There is a helicopter pad that allows the president to commute to the Kremlin without disturbing Moscow’s heavy traffic.

Putin Yamalo-Nenets Autonomous Area Gov Dmitry Kobylkin
President Putin with Governor Dmitry Kobylkin of the Yamalo-Nenets Autonomous Area. Kremlin, 10 March 2015.

The presidential press office listed this week’s meetings as having taken place in the Kremlin, and one can verify this by the decor and woodwork for his meetings with Dmitry Kobylkin on 10 March, and then with Aleksandr Khudilainen on 11 March. Not only do these seem to be older stock photos, but Alex Lunc writing in the Guardian (London) reports that Kremlin sources told Russia’s RBK newspaper that Kobylkin, the governor of the Yamal-Nenets region, did not meet with Putin on Tuesday.

Putin Republic of Karelia Alexander Khudilainen
President Putin with the head of the Republic of Karelia, Aleksander Khudilainen. Kremlin, 11 March, 2015.

So, how does one check things like press office photos? Well, familiarity with those locations helps, and as one might expect, since not only are the presidential offices not alike, but the two press briefing rooms are also very different:

Kremlin press briefing room, presidents Putin and Lukashenko. March 2015.
Kremlin press briefing room, presidents Putin and Lukashenko. 03 March 2015.
Press room Novo-Ogaryovo Cypress talks 2015
Novo-Ogaryovo Press briefing room, Cypriot talks.  25 February 2015.

This is not the only time that President Putin has seemed to drop off the radar. Each year around the New Year and Christmas holiday he tends to enjoy a reduced schedule. He enjoys attending Christmas liturgy at smaller churches in towns outside the major cities.

As to this episode of the seeming disappearance of Putin, perhaps we should also consider the whereabouts of a certain aforementioned young gymnast. News reports from German and Italian media sources suggest that she has just delivered a baby at the St. Anne hospital in Switzerland. Could it be, out of compassion and concern for one of Russia’s athletes, that Putin has taken a personal interest in the management of her maternity care?

Putin and Kabaeva, 2001.
Putin and Kabaeva, 2001.

In September of last year, as Putin was restructuring the ownership and management of various media companies across Russia, the young gymnast (and former Duma member) with no media experience was named as chair of the board of the new “National Media Group,” Russia’s largest private media holding company.

NMG holdings include Channel Five and Ren-TV and is co-owner of News Media, which manages the channel Life News, the newspaper Izvestia, the Russian News Service, a group of radio networks, and other media. NMG also owns a 25% stake in Russia’s top television news and entertainment network, Channel One.

Alina Kabaeva, left, Sydney, Australia; October 2000.
Alina Kabaeva (left), Sydney, Australia; October 2000.
Alina Kabaeva is a two-time Olympic medalist, and one of the torch bearers for the 2014 Sochi Winter Olympics. Was Putin at her side for the birth of a baby, or was he just super busy in Russia? No sooner had the baby story surfaced, Russian TV featured a video clip of him greeting Vyacheslav Lebedev, chairman of Russia’s Supreme Court, at the presidential residence in Novo-Ogaryovo.

Wherever he was, apparently he is back. But it does leave one nagging question: why would it be necessary for Miss Kabaeva to seek out maternity care in Switzerland?

Russia Belarus Union State Supreme State Council Meeting

On Tuesday, 03 March, the leaders of Russia and Belarus met in Moscow to convent the Supreme Council of the state of Union between Russia and Belarus. Although the union continues to be a work in progress, the two nations are working to integrate their economies and currencies more closely.

Putin Lukashenko Union State mtg 3 March 2015 f
St. Andrew’s Hall in the Kremlin Grand Palace: Supreme Committee of the Union State of Russia and Belarus, 03 March 2015.

The two nations at one time had planned to share a single currency, the Russian Ruble, but Belarus president Aleksandr Lukashenko shelved the idea after concerns about ceding too much authority to Russia’s Vladimir Putin.

Asked by reporters as to how the Union State fit within the framework of the Eurasian Economic Union, Putin said the Union State was “no substitute for the common market and common economic space set up among Kazakhstan, Belarus, and Russia.” That economic bloc was to have included Ukraine prior to the “Maiden” events in Kyiv last year.

Putin Lukashenko Union State mtg 6 March 2015 docs signed b
Additional agreements on development of trade and economic relations were signed.

The Supreme State Council is the highest authority in the Union State, and is made up of the Presidents, Prime Ministers and the heads of both chambers of the respective parliaments. The presidency rotates and Lukashenko is the current Union State chief executive.

Russia and Belarus entered into a Union state agreement on 08 December 1999, but have failed to implement many of the original aspirations, such as a common legal system of courts, and a common currency. In 2008 the National Bank of Belarus announced that the Belarusian ruble would be tied to the US Dollar instead of the Russian ruble.

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08 March: International Women’s Day!

поздравление 08 марта (Congratulations on 8 March): Today is a very special day in the Eastern world–it is International Women’s Day.

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Think of it as the East’s version of Valentines day, but on “08 March” as it is often called, we celebrate all the women in our lives. Wives, girlfriends, daughters, mothers, mother in laws, grandmothers, aunts, etc, will receive flowers, chocolates and cakes from the men in their lives today. Think of it as Valentines day on steroids.