IKEA is the world's largest furniture brand. With annual sales hitting ~$50B+, it's the King of "buy stuff you never planned to buy".
Unsurprisingly, IKEA designs its stores with various psychological tricks to get you to spend more money.
Here's are 12 of them 🧵
1/ IKEA's first psychological hack is the business model: sell furniture that requires the effort of self-assembly.
A 2011 Harvard study found people assign higher value to self-assembled goods (willing to pay 63% more vs. pre-assembled).
Shocker: it's named "The IKEA effect"
2/ Store locations
IKEA stores also require "effort" (and time) to get there, with many of the chain's 440+ locations outside of big cities and in suburban areas.
Once a shopper arrives after a long trek, they'll be motivated to buy something so as to not "waste the trip".
3/ Store flow
The "effort" continues in the store: first, you walk through IKEA's "showroom" (including 50+ inspirational settings.)
After travelling 1km+, you pick up furniture in the "market hall". Subconsciously, buying goods is a reward for all the distance you've covered.
4/ Maze-like design
IKEA as a maze is a popular meme...but also true. Even though there are exits and shortcuts, the store is designed for a shopper to see everything on offer in the showroom.
And, again, the "effort" of solving the maze increases the perception of value.
5/ Guiding arrows
The maze-like design is complemented by floor arrows that guide shoppers.
This is another hack: you are handing over your decision-making (where to go) over to IKEA.
This is psychologically disarming and primes you for a later purchase.
6/ Desensitizing environment
Like casinos, IKEA's showrooms and market halls don't have windows. Shoppers lose sense of time and space, staying focussed on the task of shopping.
7/ License to impulse buy
IKEA places small items everywhere:
◻️ Next to big-ticket items (eg. plates on a kitchen table) these look like a deal
◻️ Since it's a maze, you often pick up items "just in case you don't come back"
◻️ One purchase decision opens up the buying spigot
8/ Writing down a list
IKEA makes pencil/paper available to write down the item # you want to pick up. While it's a memory aid, the act of writing plays on a classic persuasion hack: consistency.
Once you've written down an item, you'll want to "follow through" on a purchase.
9/ In-store dining
IKEA's founder Ingvar Kamprad said "You can't do business with someone on an empty stomach."
IKEA's have cafes where shoppers recharge, talk over potential purchases and -- crucially -- stay in the store longer.
Insanely, IKEA sells 1B+ meatballs a year.
10/ Great value
IKEA has a "democratic design approach". It reverse engineers a product based on price first.
The Scandinavian aesthetic (simple, clean designs) lends itself to furniture that can be "flat-packed" for easy pick-up.
Also, self-assembly reduces cost (and price).
11/ Mirrors everywhere
It's no secret why: we're narcissists and can't keep eyes off of reflections of...ourselves.
IKEA brings out this positive emotion by placing mirrors literally everywhere.
12/ The power of smell
Finally, IKEA's famous cinnamon buns are often placed near checkout.
Smell is extremely powerful for memory recall. IKEA is linking what should be the most painful part of the experience (buying) with the soothing scent of home baking.
13/ If you enjoyed that, I write threads breaking down tech and business 1-2x a week.
Def follow @TrungTPhan to catch them in your feed.
Here's a related one that might tickle your fancy:
16/ Also, never forget this classic *fake* viral story: "Man arrested for putting fake arrow decals on the floor of IKEA and creating a labyrinth with no exit"
21/ PS. I’m getting enough requests to do one of these threads for Costco, so will do that (but a real one, not the shitpost one @anothercohen did above lol)
The amount of work Hayao Miyazaki and Studio Ghibli team put into a film is mind-boggling.
Each typically has 60k-70k frames, all hand-drawn and painted with water color.
This 4-second clip (“The Wind Rises”) took one animator 15 months to do. Insane.
The docu “10 Years with Hayao Miyazaki” shows him talking to the animator (Eiji Yamamori) after its done.
It’s so good:
Miyazaki: “Good job.”
Yamamori: “It’s so short, though”
Miyazaki: “But it was worth it.”
The animator gets a second of joy (he’s pumped) but on to the next.
Miyazaki doesn’t use digital FX or computer graphics. He believes “that the tool of an animator is the pencil.”
On a related note, here’s something I wrote about another Japanese legend dedicated to the craft (Ichiro Suzuki) and the art of mastery: readtrung.com/p/jerry-seinfe…
New York City paid Mckinsey $4m to conduct a feasibility study on whether trash bins are better than leaving garbage on the street.
The deck is 95-slides long and titled “The Future of Trash”.
Some highlights:
▫️The official term is “containerization”, which is the “storage of waste in sealed, rodent-proof receptacles rather than in plastic bags placed directly on the curb.”
▫️Two main types of containerization: 1) individual bins for low density locales; 2) shared containers for high-density.
▫️NYC needs to clean up 24,000,000lbs of garbage a day
▫️Containerization has only become the norm worldwide in major cities in the past 15 years.
▫️New York City first considered containerization in the 1970s but never conducted a feasibility study until now (Mckinsey’s sales team has been dropping the ball)
▫️Key considerations for container viability:
• POPULATION DENSITY: NYC has 30k residents per square mile (more dense than comparable big cities)
• BUILT ENVIRONMENT: Few places to “hide” containers due to history of infrastructure development.
• WEATHER: Snow creates challenges for “mechanized collection” in the winter.
• CURB SPACE: Mostly taken up by bus stops, bike lanes, outdoor dining and fire hydrants.
• COLLECTION FREQUENCY: NYC needs to double frequency of pick-up for estimated speed of trash that bins would accumulate.
• FLEET: A new garbage truck will needs to be designed to collect rolling bins at scale.
▫️ The proposed solution (literally garbage bins and shared containers) covers 89% of NYC streets and 77% of residential tonnage.
▫️The three case studies — because you gotta have solid case studies — are Amsterdam, Paris and Barcelona.
▫️There is a slide called “Why containerization matters” and three reasons are “rats”, “pedestrian obstruction” and “dirty streets” (the 21-year intern that did this slide billed at prob $10k an hour is my hero).
The study is actually pretty interesting.
I have no idea if $4m is a rip-off to learn that “yeah, we should put garbage in bins so rats don’t eat it” but I would have happily done it for 10-20% of that budget (and come to a similar conclusion).
It is actually an interesting deck. Just the thought of a 20-year old newly grad getting billed at an obscene rate to say”rats get to garbage” is kinda funny
Four more solid slides:
— By the numbers (daily garbage = 140 Statue of Liberty a day!!)
— City comparison
— Container comparison (looks like they did select the “scalable” trash bin)
— Curb side analysis
Think Mckinsey telling NY to “put garbage in bins so rats don’t eat it and people can walk” will work out better than when it told AT&T in 1981 that cellphones would be “niche.”
The Economist latest cover story on solar energy is packed with interesting stats.
▫️Solar energy will be the primary source of human energy use by 2040
▫️$500B spent on buying and installing solar panels in 2024 (nearly same “sum being put into upstream oil and gas”)
▫️Solar on track to produce “more electricity than all the world’s nuclear power plants in 2026, than its wind turbines in 2027, than its dams in 2028, its gas-fired power plants in 2030 and its coal-fired ones in 2032”
▫️Since the 1960s…the levelised cost of solar energy—the break-even price a project needs to get paid in order to recoup its financing for a fixed rate of return—has dropped by a factor of more than 1,000
▫️From the mid-1970s to the early 2020s cumulative shipments of photovoltaics increased by a factor of a million, which is 20 doublings.
▫️Over the same span, the “prices dropped by a factor of 500. That is a 27% decrease in costs for each doubling of installed capacity, which means a halving of costs every time installed capacity increases by 360%.”
▫️The cost of a kilowatt-hour of battery storage has fallen by 99% over the past 30 years.
The chart below — which they made vertical (kind of weird) — shows global useful energy consumption over the past century.
I’ll add two more posts after this one with excerpts on obstacles and opportunities.
— A lot of A/C for Sub-Saharan African (need 2TW of new solar just for Africa to reach India level of electricity use)
— Filter air continuously (reduce spread of airborne diseases)
— Carbon removal
— Water desalination
— AI/Data energy needs
Details from Red Lobster’s bankruptcy filing are wild and so much mismanagement:
▫️$1B in debt, $30m in cash
▫️Previous PE owner sold land and leased it back to Red Lobster at “above market rates”
▫️$20 Endless Shrimp cost it $11m but the interesting part is that one of the chain’s owners is Thai seafood firm Thai Union (which also owns Chicken By The Sea) and it may have used Endless shrimp to dump its own shrimp supply through the 578 restaurants in North America
▫️Thai Union became the only Red Lobster shrimp vendor, overcharging for shrimp and skipping quality reviews (Thai Union has written off its $500m+ investment)
▫️Red Lobster has had 5 CEO in the last 5 years (!!!)
▫️Sales down 30% since 2019
Red Lobster needed Yukitaka Yamaguchi — aka Japan’s Tuna King (sleeps 3 hours a day and knows where any fish is from on a single bite) — to run quality control.
Also, never forget Beyoncé name dropped Red Lobster with some R-rated verses in 2016 (“Formation”) and Red Lobster social responded and there was actually a brief sales surge.