Ikea’s transformation plans include brick-and-mortar

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Ikea’s transformation plans include brick-and-mortar

By Dan Berthiaume - 10/21/2019
Ikea

Ikea is preparing for an omnichannel future that will blend digital and physical customer interactions.

In a recent interview with LinkedIn, Jesper Brodin, CEO of Swedish home furnishings giant Ikea, discussed his company’s strategy for brick-and-mortar and digital retailing, as well as topics such as workforce automation and environmental sustainability. Following are highlights of Brodin’s commentary in these areas.

Brick-and-mortar retail
“Here’s the thing, data is worth a lot. But a physical visit is amazing. It has incredible value. We don’t subscribe to the idea that tomorrow there will not be physical meetings. But on the contrary, you have to make them better, and you need to invest in the human interaction, not for transactional aspects, but, for example, home furnishing competence. People love to come to places like this because most of us, before we sign up for a new kitchen, we want to look somebody in the eyes and say ‘Is this going to be good?’”

Digital retail
“We’re doing two things digitally. We are, behind the scenes, basically reconstructing our architecture, which goes…all the way back, to the ‘70s. That spaghetti is being untangled to sort of a lasagna for the future. At the same time, we started to invest in customer applications, and in ways of opening up our fulfillment backbone digitally. All of that is actually the biggest investment we do right now.”

Workforce automation
“Even if it sounds tough, whatever can be done better automated, will probably be (automated) tomorrow. At the same time, people are really requesting the interaction with other humans when it comes to dialogue, competence in life at home, etc. Even when we develop state-of-the-art planning tools, people want to talk to somebody. So you want to play with it, you might get inspired, but most people still want to interact with somebody. We will most likely upskill more people toward becoming experts within home furnishings.”

Environmental sustainability
“People are not going to pay a premium for sustainability. In our case, it is about using raw material…investing in renewable energy. It’s not about charity (or) premium. It is about the new business model that can allow you to be cost smart in the future. (W)e have invested 2.5 billion Euro in renewable energy. So, we’re one year ahead of schedule. We actually have more renewable energy than we consume in our operations of stores, and logistics, and shopping centers.

“Now, we’re moving to electric vehicles for home deliveries. That’s going to be ready by 2025. It’s done in Shanghai. New York is on its way within a year. And we’ll also bring our solutions to our customers through better waste, energy and heating-cooling systems, including selling solar panels. Which we actually started in seven markets and rolling out to a lot of places. And many more things.”

Ikea currently serves 1 billion people a year in its stores, has over 200,000 employees, and reports $45 billion a year in revenues.