Though originally founded as an mail-order sales business in 1943, it wasn’t until the 1950’s that Ikea as we know it today started to take shape. Believing that everyone should be able to afford stylish, modern furniture, Ikea founder Ingvar Kamprad began experimenting with in-house manufacturing and self-assembled furniture - two strategies that enabled Ikea to significantly reduce the cost of manufacturing. 

As Kamprad would later put it, “Our idea is to serve everybody, including people with little money.”

However, the world has changed considerably since then. Not only do over 80% of customer interactions begin online, but people have come to expect fast, consumerized service from every aspect of their lives but especially retail. Plus, as more and more people shop online, brick & mortar retailers are now being challenged to deliver the same level of service in the digital realm as they would in the real world. 

With this in mind, here is a look at how Ikea has embraced a new, digital-first approach to reinventing itself for its next stage of market dominance. 

Integrating the Physical & Digital Shopping Experience

Similar to other retailers we’ve covered such as Target and Walmart, Ikea realized that, in order to compete in the digital era, it would have to develop an omni-channel experience. This means creating new customer touchpoints as well as optimizing the old ones.

For example, over the past 2 years, Ikea has completely revamped and augmented its mobile app. Launched in the U.S. in early 2021, this new all-in-one app was designed to serve as a virtual companion to the in-store experience. In addition to purchasing items at home to be delivered or picked up, customers can use the app to “shop & go” - meaning they can scan and pay for items as they shop, bypassing the checkout line. 

As explained to the Harvard Business Review by Ikea Retail’s CDO, Barbara Martin Coppola, “E-commerce is open 24 hours a day, while traditional stores are not, which means we’ve needed to learn how to operate at two speeds, while operating from one space. Goods can be delivered from the stores, or from different distribution centers — and algorithms are helping figure out where the goods are being sourced from. We’re rapidly expanding data and analytics and changing how they’re embedded in decision making.” 

Ikea in the time of COVID 19

Few industries were more disrupted by the global pandemic than retail. As online shopping surged amidst lockdowns, Ikea accelerated its digital transformation to not only accommodate consumer demand, but ease the transition of office workers into a remote environment and help ensure the safety of their onsite employees.

In partnership with Google Cloud, Ikea set up contactless Click & Collect services that allowed people to purchase items via their app and pick them up curbside. Ikea also enhanced its 3D modeling and VR/AR capabilities to help people visualize what products will look like in their home. 

Keys to Ikea’s Digital Transformation Success

When asked to identify the core pillars that underpin the retailer's digital focus, Barbara Martin Coppola shared, “The first thing is that it's all about people. The starting point sometimes is technology or having the right systems - it is not. It's actually about mindsets, people, having the right energy, the right motivation and the right skills to be able to create a whole new company or a whole new way of thinking.

The second thing is that digital is embedded into everything that we do. So not to reduce the area of technology to a few things, but to really see it as a horizontal thing. Digital is also a mindset that comes with speed, data centricity and accountability - but also the freedom to create new experiences.

When tackling a transformation, one can think ‘oh my god we are catching up.’ Or one can think ‘oh my god, we are creating, we can leapfrog and create competitive advantage in the future.’ And of course, you need a lot of stamina and a lot of resilience.”