Drab and boring. I’m sure I’m not being entirely fair in my evaluation, but those are, to be brutally honest, my first impressions of the Danish city of Herning at the center of the Jutland peninsula.
Once the center of the nation’s textile industry, what is now the region’s administrative hub is industrial and gray, today reputed for the many trade fairs taking place in what is the largest exhibition center in Scandinavia. And – explaining the reason for our visit – it houses the headquarters of an exciting interior design and lifestyle concept for urban living.
Herning is home to BoConcept—upscale IKEA for the style conscious but with an added versatility that seems to have caught on in many of the world’s metropolitan areas. The comparison with IKEA may seem far-fetched at first, but enter one of the Danish franchise’s stores and you’ll understand where it’s coming from. If you’re equipped with a larger wallet than the regular IKEA visit requires, you’ll walk out with a personalized version of Scandinavian modern, slick, sleek design solutions for your home. It’s all about simplicity—you select the style and colors, and combine and mix them based on a coordinated set of solutions. It’s really about making your life easy by offering practical, flexible solutions that reflect your own personal choices and lifestyle. Although leveraging a line of products produced in volume to make them more accessible pricewise, your solutions and preferences will be yours alone, creating your own personal space.
What started as Denka, a furniture factory founded by two carpenters sixty years ago has grown into a global franchise company with more than 250 stores worldwide. The transformation of Denka into BoConcept over the last ten years has more in common with the transformation of the corner coffee shop to Starbucks than with IKEA, however.
The story started in 1952, when those two Danish craftsmen, Jens Ærthøj Jensen and Tage Mølholm, decided to open a furniture factory in Herning. Their goal was not only to make great quality furniture that looked good, but also to make it functional and provide good value for money. They got it right, and in 1984, their company, called Denka, became publicly listed on the Copenhagen Stock Exchange. In the early ’90s, Denka was a furniture producer for mass markets, supplying more than 1,200 wholesalers worldwide as well as producing pieces for IKEA and Danish Idémöbler. Viggo Mølholm, son of one of the founders, took over as CEO in 1995 after successfully turning around nearby furniture company Club 8, which had been acquired while bankrupt at the end of the eighties. Mølholm wanted to reach further in the supply chain, streamline the shopping experience for the “front end,” the consumer, and by getting closer to the actual consumer display the products in a better way. In 1993, Club 8 opened its first own store in Paris under the name BoConcept. The store eventually became profitable, but Mølholm reminisces about the first few days: “We sold a vase on day one for 80 francs and after that came a couple of completely quiet days before it actually started to take off.”
These days, BoConcept collaborates with some of the world's most successful and prominent designers, here's a film we made on the Ottawa Collection: tinyurl.com/l9nrx2a|[Karim Rashid for BoConcept]
Hot design at a decent price
With a clear mission and vision and a good portion of confidence, courage and perseverance, Mølholm and his team started working to reposition their brand. Or, rather, they sought to reshape the corporate structure and operations to create a brand based on where they wanted to be as a company. The ambition was to create control of the marketing concept and supply chain by offering a superior turnkey store solution to franchisees. Parameters were identified, including a market position of less expensive than the highest priced furniture, yet more expensive than middle market – put simply, to offer “hot” design at a decent price. High image, way above IKEA or Jysk (a Danish chain of low-priced home solutions) but in terms of price just below the top perceived brands, thus filling a void between, for instance, Habitat and Bolia and the higher priced, single-designer-run companies or U.S.-based specialized retailer Design Within Reach. Beyond that, consumers would be offered a friendly and unique shopping experience, with interior design service more or less free, and a customized, coordinated design solution befitting a modern urban home.
In 1999, the company restructured its Danish production facilities and started offering franchises through Club 8. Widely different markets signed on fast, with China, Greece and Portugal among them. Denka Holding was continuously listed under the name at the stock exchange, but Club 8 was at that point effectively the future.
In 2002, the company made the long-term strategic decision to become one company, one brand, under the overall name of BoConcept. It was going to take an additional four years to finalize the evolution from furniture manufacturer to supplier of a store concept through a multifaceted bundle of services, where the product, the piece of furniture became but one – albeit important and central - ingredient.
“It’s been a beautiful journey and a journey with a wonderful team,” says Mølholm as we meet at the corporate headquarters, an oasis in the otherwise rather industrial setting in the outskirts of Herning. ”If I ever woke up with the smallest doubt in our being on the right track, I had a hard working loyal group of people around me to remind me where we were going, to offer support and cheer us on.”
A clear concept for success
The strategy had been fully implemented in 2006 when the listed company became BoConcept Holding A/S. Today it boasts 250 stores in 58 markets, close to 600 full-time employees, with an additional 2,500 in retail, and retail revenues of nearly half a billion USD.
“Some will say we are thinly spread, but if you have a 100% clear concept you can do it and succeed,” Mølholm asserts. “Design, decoration, IT and set up, the catalogues are all the same in Taipei or Mexico as they are in Denmark. The franchise model also means the person who meets the customer knows the local market and they are or represent the people that invest and take the risks.”
BoConcept University was established in 2004 to offer training and education to sales consultants from all over the world.
“We constantly invest in educational programs,” Mølholm says. “We have ten education centers [around] the world and offer several e-learning programs. Once a year we invite everyone to an inspiration camp in Herning when the offices, warehouse and former manufacturing areas are transformed into exhibit and discovery centers for what is to come in the coming season.”
Since 2006, the company no longer has wholesale customers and sells only through the franchise-based BoConcept stores.
“We stay the course, do not deliver outside of our franchise organization. I had a group here from Thailand visiting as late as yesterday,” Mølholm says, “they were thrilled by our versatility and variety of combinations and wanted to order a container but we said no. We stay the course and believe in the concept we’ve implemented over the last ten years.
“Also, the downturn of the economy made us more aggressive but we generally don’t search for new partners, they find us,” he explains. “Asia or Latin America are growth markets and grow organically and naturally. Someone will have seen our concept, visited one of our stores somewhere or, as is the case with our New York franchisee, bought an item, became intrigued as a customer and later picked it out as an investment and a livelihood. There are exceptions. We have wanted to enter Australia for some time and have just signed up our first franchisee there. Australia will fit in nicely with the areas we supply from our Asian distribution center in Shanghai. I meet every single franchisee as do several of our team [members]. In the beginning it was different; if the money was there, we signed them up. Today everyone is tested and met by several people in the organization. It’s all about staying true to our core concept.”
‘Reborn’ annually with sustained quality
Marketing and branding have become much more important than production. The company producing furniture in its factory in nearby Ølgod, but after once having produced 75% of own furniture ten years ago, that number has been reduced to 25%. The rest is to a large extent sourced from Asia. Mølholm sees a huge potential in Latin America along with the Asian countries. A regional office in Hong Kong, run by Mølholm’s eldest son Kim, coordinates existing and opens new markets. True to the company’s supply chain strategy, a new Asian distribution center opened in Shanghai in 2010.
“Quality in every product and delivery is of course central to us,” Mølholm says. “To ensure this in, for instance, China, no less than 30 people are in control functions; every single product is checked before it ships. Another person is less costly than getting a full container to Denmark or another market with the wrong product.”
Every year, 80%-90% of the furniture is updated or replaced with new models—often reflecting lifestyle trends or expected changes in consumers’ needs. The new catalogue is released in September; store design and decor change everywhere. Although accessories and certain textiles change constantly throughout the year, the concept of BoConcept is “reborn” on an annual basis.
This past September, the company’s 60th year in business, marked another major change as Viggo Mølholm, son of the founder, stepped down as CEO after 17 years to work on the company supervisory board. He handed over the reins to Torben Paulin, long-time Bo Concept retail and sales director. No small part of the company’s success in recent years can be attributed to the passion and competence of the families of the founders. They seem, in a manner similar to the families behind Scandinavian success stories IKEA and H&M, able to grow an organization into a large, global concern, yet remain small in the eyes of employees and partners. With three grandsons of the founders enthusiastically working different aspects of the company, there’s little doubt that the corporate structure coming from a family-driven organization will remain for many years to come.
Viggo Mølholm says the company will grow from 250 to 400 stores through organic growth in a matter of a few years. His dream for a future legacy?
“In ten years time I’d like there to be talk of two great Scandinavian furniture retail success stories, each supplying its very own customer base: IKEA and BoConcept.”
Written for Nordic Reach Magazine by Ulf Barslund Martensson
Photography courtesy of BoConcept
What started as Denka, a furniture factory founded by two carpenters sixty years ago has grown into a global franchise company with more than 250 stores worldwide.
“Some will say we are thinly spread, but if you have a 100% clear concept you can do it and succeed”
”If I ever woke up with the smallest doubt in our being on the right track, I had a hard working loyal group of people around me to remind me where we were going”
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