The keyword guiding IKEA’s history is innovation.
Ever since its start in 1943, the name IKEA has been synonymous with minimal, cheap furniture that can be bought and assembled in one’s own home. Its first innovation is also its most famous one – the flatpack furniture. By introducing this concept, and moving furniture assembly onto the user – contrary to what other furniture stores were doing – it allowed the company to reduce costs. This concept made IKEA the world’s biggest furniture store, with no real worldwide competition. This enviable position, allowed it to focus on other innovations and products that could improve the IKEA brand and allow the company to enter new markets.
There were, of course, a number of high profile mistakes, but how else would a company from Sweden make €12.4 billion profit, if not for continuously making mistakes and learning from them along the way? The IKEA furniture made in the 1950s might not be fitting for today or appropriate in 10 years, while the food sold by the company 20 years ago might not respect the increasing sustainable lifestyle of many of its customers. The creation of SPACE10, IKEA’s very own ‘X’, the former Google X, has helped the company to experiment with new concepts and projects to address these challenges and keep the company on the forefront to new challenges. IKEA is changing how customers live, eat, and work, and its future will have a bigger role in our everyday lives.
There are four main areas where I believe IKEA is spearheading new concepts, new technology, and better practices:
- the Smart Home
- Augmented Reality
I’ll delve deeper into each category and explain how IKEA is expected to be innovating in each, and then we’ll briefly look at how IKEA has the potential to rival Amazon, as it makes the jump from a furniture store to the everyday store.
A few years after the flatpack furniture was invented, IKEA started opening IKEA Bistros and food markets, in its out-of-town stores.
“It’s difficult to do business with someone on an empty stomach.”
These were the words of IKEA founder Ingvar Kamprad, who wanted to start serving food to the people spending whole days at IKEA stores out of the city. What better way to keep customers at your store than to offer them cheap AND good food?
The meatball remains an IKEA favourite, and the word itself has become as synonyms to IKEA as the flatpack furniture. With millions of IKEA meatballs sold each year, you would think the company would not want to upset the cart by changing recipes and adding new items to the menu. However IKEA did just that, and in mid-2020 it rolled out its ‘veggie balls’ and the ‘veggie hotdog’ for public consumption. Two of the most famous IKEA food staples now have their vegetarian version, with the veggie balls producing around 15 to 20 times less carbon footprint than the meatballs. IKEA also joined forces with other organisations to buy sustainably farmed coffee, and tea and created the ‘IKEA Food Better Chicken’ programme which seeks to source chicken under strict animal welfare criteria.
Like other companies in the food sector, IKEA recognises the increasing number of individuals becoming aware of the carbon footprint needed to sustain the current consumption pattern. SPACE10 has been trying to build on the meatball’s legacy by creating new concepts which leave a much smaller carbon footprint, like meatballs made from artificial meat and those made from insects, which are not unconventional ideas in 2020, even if they have yet to enter the mainstream markets. The Lab also has a concept of a 3D printed meatball, which is more of an aesthetical project rather than a ready-to-serve meatball, however, this goes to show how SPACE10 is seeking to broaden the perspective of both IKEA itself, as well as its customers, to future possibilities in the food sector.
In the early 1990s, IKEA realised that the increase in residential property prices is making it harder and harder for certain sections of the population looking to buy a home without having to break the bank. BoKlok was born from an agreement between Swedish construction giants, Skanska, and IKEA, to build and design low-cost housing, complete with, of course, IKEA furnishing. Sweden, Norway, Denmark, and Finland have been the first beneficiaries of this project, while the United Kingdom will be the first country to host BoKlok housing outside of the Nordics.
BoKlok, which was also called ‘the flatpack taken to the next level’, prides itself in using as limited and as sustainable resources as possible. The design and materials used for the pre-fabricated blocks make the houses’ energy-efficient and environmentally sustainable. This modular housing technique, allows BoKlok to build up to 80% of the houses in a factory and then transport and assemble them to the construction site itself.
With BoKlok, IKEA has managed to infiltrate the housing market, and as housing prices continue to rise above median wages, the company will continue to find a market for low-cost housing. What made BoKlok successful, and continues to do so, is the cost-cutting every step of the way, with profits then being passed on to the consumer. A combination of cheap land, a single standard design, and large-volume manufacturing allows IKEA to create entire housing estates while eliminating brokers and their fees. Buying a flat with BoKlok is also as simple as buying a new bed frame from IKEA – you just have to register at the nearest IKEA store for available housing units.
While this is already disruptive in the current housing market, IKEA, or rather IKEA’s SPACE10 has already come up with a BoKlok on steroids – a new concept for future housing and working environment. ‘The Urban Village Project’ shares the same aims of BoKlok, that of creating a sustainable and affordable way of living, but it also aims higher – to completely transform the housing market, by “bypassing the interests of short-term investors”. What this means is that the Project looks for financing by collaborating with “pension funds, future-oriented companies and municipalities” in order to drive down costs, and combine the project with co-operative structures to keep housing within the community. All managed through a neat-looking app.
Related to this, is IKEA’s announcement that it will start to create robotic furniture for small spaces. Rolling out in places like Hong Kong and Japan, micro-apartments will be the first to feel the benefits of the Rognan furniture, which transforms easily depending on what you need to use at the time. The idea is that one will not use a certain section of the place while busy doing something else, like not using the bed if you’re on the sofa – and Rognan helps to maximise space accordingly.
In the near future, I would also see IKEA getting into the workspaces sector, providing low-cost offices for freelancers and even startups looking to cut costs. Coworking is expected to grow to an estimated $11.52 billion in 2023, with Europe, IKEA’s home territory, leading the way, which makes it easier for the company to integrate this sector into its current BoKlok partnership with Skanska.
3. the Smart Home
In more recent years, IKEA added smart home products in its catalogue. While the company was relatively late to the party, today the IKEA customer has a number of functional smart products to choose from and which can be easily connected through the IKEA Home smart app, as well as other third-party applications. In typical IKEA fashion, its mantra of ‘making not using space’, the company did not just copy other smart appliances – IKEA’s wireless chargers can be integrated into furniture, and a SONOS Bluetooth speaker is produced either as a bookshelf or as a lamp, and both work with Google Assistant, Alexa, and Siri voice assistants. This is certainly an area were IKEA will be looking to improve on. By creating its own smart technology as an integrated part of its furniture, the company would be able to get a better understanding of how its products are being used, for how long, and can even signal to the owner when that furniture needs repairing or replacing.
A series of projects called ‘Everyday Experiments’, by SPACE10, continue on this trend of making sure that the smart appliances being created are beneficial to the consumer. These experiments recognise the increasing multi-dimensional use of one’s house, from living quarters, to play areas, to work stations. The latter is an increasingly important part of one’s home, especially since the COVID-19 pandemic. Smart improvements to the house have to respect the serenity one looks for in a home, making life easier and more comfortable, while avoiding adding further technological distractions. There are also, of course, privacy issues when it comes to smart furniture or appliances, so IKEA would also be wary of further technological intrusiveness on its customers.
Some of these experiments are more likely to be used in everyday situations than others, such as the one using hand gestures to control a light fitting, making it easier for someone to switch on/off or dim the lights without having to move.
While IKEA might need to collaborate with other technological companies, such as SONOS, and depend on Google, Amazon, and Apple for voice assistants in order to grow its smart ecosystem in the short term, its better understanding of the home and what tenants want from it, allow IKEA to be in a position to create superior, practical smart appliances, than other companies in the field. Björn Block, Business Leader at IKEA Home Smart, himself said that:
“We’re (IKEA) definitely into the tech space, we’re into the digital space, and we really want to be here and really play this because I think that we can also make a difference.”
Which leads us to the fourth and final area:
4. Augmented Reality
This area is very much linked to the Smart Home, but it deserves a separate section due to AR’s possible broad applications within one’s home, as well as IKEA’s and SPACE10’s extensive experiments in the field.
The company has taken advantage of Apple’s ARKit and iOS11 to launch its own IKEA Place, an iPhone-only app (for now) which lets users interact better with their homes and IKEA products, before even visiting an IKEA store or its online marketplace. ‘IKEA Place’ offers the ability for smartphone users to look through their screens and interact with their real-life space, by placing IKEA products in the living room or bedroom. By being true to scale, it allows you to make an easier decision on which sofa, bed frame, or chair can fit within your space.
By providing this value to IKEA customers, ‘IKEA Place’ proves itself to be an extension of the traditional store, rather than a separate app by the same company. IKEA’s chief digital officer neatly explained this as “the store experience with the online experience”.
IKEA Place is, however, just the beginning of the company’s relationship with AR. New concepts are being developed as part of the ‘Everyday Experiments’ projects, such as Shelve It, which lets users scan their walls and shows real-time options of how a certain type of shelf can be built in your room. Others, like Point and Repair and Light Filters, allow a better understanding of one’s surroundings, the former by having your own private interior designer and the latter by helping you figure out how lighting changes the dynamic of a room, at different times, and different seasons. All of this directly available through an app.
IKEA vs Amazon?
What all of this means is that the future of IKEA will not just be related to furniture. Just as Amazon is not a company selling books exclusively anymore, IKEA will be playing a much larger role in our lives in the near future. The two may even be each other’s biggest competitor in areas such as smart home appliances and augmented reality or the food sector. IKEA is also aiming to reach 3 billion customers by 2025, by investing in city-centre locations rather than out of town stores, and offer some of the more requested products and services. This opens new possibilities for IKEA, including the ability to use these city-centre locations to push forward its food products, directly competing with convenience stores like Amazon Go.
Unlike Amazon, however, IKEA is putting the environment, sustainability, and human health, front and centre in every product and service it creates. As each section above shows, as well as the recent announcements that the company is removing non-rechargeable alkaline batteries from its stores by October 2021, and is using its supply chains to produce personal protective equipment, IKEA is putting itself in line with the changing habits of its customers and potential new ones. All of these factors make it even more plausible that a brand like IKEA has the potential to grow to become one of the greatest cultural forces in the world.