Ikea Business Plan

Ikea Business Plan-62
Stores already take back mattresses, recycling the parts into products like roofing materials and animal bedding.Products that are returned also go back on display in a section of each store.In Australia, a program gives customers vouchers when they bring back furniture to be resold to a new customer. The tests look at factors of desirability–whether customers want to buy products this way–along with commercial viability and the feasibility of the new approaches within Ikea’s business model.“We’re really looking at the current operating model, what works and what doesn’t work, what are the capability gaps we have, and how can we make it into something that is not a niche thing, but actually becomes a new way of doing business–really understanding how do we move this from a few people to something that is actually for the many,” she says.

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“We see that across the 30 markets that we operate, so it’s not just a Swedish thing or a British thing,” she says.

The company has already started testing interest in a subscription-like model for furniture in a few locations.

In Switzerland, it’s finding that small businesses are interested in the idea, and Ikea is now moving forward with more tests.

In the Netherlands, it’s testing a package that rents university students a set of basic furniture, and studying everything from pricing to how to extend the life of the products when the students no longer need it and Ikea takes it back.

The traditional way of manufacturing–extracting resources, making products, and selling them to consumers who ultimately put them in landfills–no longer makes sense for the retailer, which recognizes that it faces a squeeze on raw materials as the global population grows and more people want to buy its products.

Because Ikea makes affordable products for the mass market, it needs huge volumes of raw materials.

Raw materials, by far, are the largest part of that footprint, so reusing or recycling materials can have a dramatic impact.

Customers, too, have become more conscious of the environmental footprint of consumption and are interested in new models in a way that they were not even a few years ago.

“We do not see that we as a company can move with this situation going forward if we don’t address the resource scarcity topic, meaning that we need to be super smart about the materials that we use,” says Cook.

By taking back its own products, Ikea can help extend a product’s life and then reclaim the materials, helping limit its reliance on raw materials for the new items it makes.

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