OSLO: A retailer that has become emblematic of elegant Swedish design, IKEA’s traditional out-of-town business model is under threat. The aggressor? Cities and their car-less inhabitants.
CEO Jesper Bodin has spoken to the Financial Times about the company’s three-year strategy to bring in full digital solutions in all countries, which will include “affordable” home delivery. Meanwhile, the company will begin to move some operations to city centres, an idea floated last year.
Bodin was made chief executive of the retailer in September, following the sale of its product design, manufacturing and supply chain business to Inter IKEA, a sister company in 2016. He began at the company as an assistant to the founder Ingvar Kamprad, and then as head of the supply chain and product range business. Now, he is adapting the business to a new landscape.
“We are looking into a transformation of our business. We are at a point where it is less business than usual than we have experienced in the past. The speed of change going forward will be incredible,” he said.
Spurred not only by a migration to cities, but also by the growth of convenient online retailers, Bodin believes that the low-cost, out-of-town store selling flat-packed furniture is increasingly outdated. But the company is having to adapt more quickly than its usual five-year planning cycles: “we are not going to have 10 years to gradually change and plan,” he said.
The next three years, he added, “will be exceptional when it comes to change, entrepreneurship, test and try and exploring new ways forward”.
Beginning with globally significant megacities, including London, New York and Tokyo, it will experiment with smaller formats. The brand has already established test stores in Madrid and Stockholm, according to the FT.
In fast developing economies with growing middle classes, such as Southeast Asia, inner-city stores are an efficient way to reach this audience. As Asian cities grow, they will be fundamental to any long-term strategy. Inside Retail Asia reported that the brand’s roll-out of mini stores in the region will begin in Thailand over the next three years. IKEA already has one compact store in Phuket.
Meanwhile, slightly vaguer statements from the IKEA boss push into alternative ownership models for furniture, including renting, though Bodin was reluctant to add any more. “It is our ambition to explore that,” he said.
Sourced from the Financial Times, Inside Retail Asia, WARC