Businesses can do some good in society... and still make a profit

Anders Dahlvig said in an interview with the Yorkshire Post that there “isn’t a contradiction between making profits and doing good for society”.

In his new book, The Ikea Edge, he says that it is not enough for companies to pay their taxes and create jobs.

With Mr Dahlvig at the helm from 1999-2009, Ikea averaged 11 per cent yearly sales growth and annual operating profits of more than 10 per cent. The company hired more than 70,000 new employees and opened new stores in the emerging markets of Eastern Europe, Asia, and the Middle East.

Ikea has looked at the area of Sheffield as a possible location for a new store, a spokesman for the company said, but he could not confirm anything at present.

Mr Dahlvig said it is important to find a way “your core business is contributing to society”. He said Ikea is an example of this through its vision to offer “quality products at very low prices”, adding: “So offering good home furnishing to people with limited financial means.”

He said: “On top of that you have how you can contribute to a lot of other stakeholders in the business – the way you work with suppliers in the emerging markets, to see that the working conditions are okay, that the environmental standards are okay, in all aspects of your business that you contribute to sustainable society, and how you contribute with things like diversity in your work- force.”

Mr Dahlvig said: “The social good is important as it helps the reputation of the business and it helps you motivate your co-workers.

“They feel they are working for a business they can be proud of and that actually contributes to things other than just making the owners rich.

“The increased motivation and loyalty you get through that will give you higher profits.”

Mr Dahlvig, who is now a non-executive director for companies including H&M and Kingfisher, said that the difficult economic climate does present opportunities for business. He said: “I think it’s not that easy to boost your sales when there’s such a slowdown in the economy as there is right now.

“However, there are a lot of opportunities for business in a downturn. Usually you have better opportunities when it comes to the buying costs, you can improve that.

“You have better opportunities with negotiating rent down, you have less pressure on salary costs. It’s easier to get retail permission for new locations.

If you want to acquire new companies it’s usually cheaper and there’s more things on the market.

“Usually what happens in the bad times is that some of your competitors may go out of business. And this will create new consumption for you as a business.”

He advised businesses not to compromise on customer service, adding: “Don’t reduce your opening hours, don’t increase the lines in the checkout, don’t be too greedy with the margins and try and reduce your sales prices if necessary to keep your volumes up.”

On the outlook for the retail sector, Mr Dahlvig said: “My feeling is this will go on for a number of years now.

“I don’t see a very rosy picture for quite some time. If the retailers are global I think they would do well to focus maybe some priorities on expanding their business in developing markets where I think the growth opportunities long term are higher than they are in Europe.

“If you want to be seen as a growth company I don’t think Europe will offer enormous growth for a long time, you have to look for that in other markets, in the developing markets.”

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