There is no doubt that retail will look and feel different once the ongoing COVID-19 pandemic comes to an end. But in the meantime, many retailers have done much more than just waiting out the storm. So more so that they are reinventing their online presence and launching new and innovative ways to serve their customers.
IKEA is a prime example. The Swedish retail giant was named the brand that has had the most success leveraging e-commerce capabilities to maintain a steady stream of revenue according to digital traffic, sales, and customer retention. Although IKEA typically only shares sales data once per year in the fall, reports suggest that IKEA’s online sales have reached double what they were a year ago, and in the U.S., e-commerce sales have reportedly risen by over 60 percent in April and May
Other countries are seeing even starker increases. In Denmark, IKEA’s e-commerce sales are nearly 10 times pre-pandemic levels.
Looking back to 2019, Ingka Group (IKEA’s parent comapny) reported a 46 percent YoY jump in e-commerce sales, with online accounting for 11 percent of total sales. Now, IKEA’s current online sales are closing in on 25 percent of total intake, a massive chunk of the company’s $45 billion-plus revenue.
In order to reach these numbers, IKEA has undergone massive changes and pioneered what they believe should be the new normal for all of retail. IKEA’s chief digital officer Barbara Martin Coppola discussed her company’s (and the industry’s) overall evolution at the recent Collision 2020 conference.
“There is a permanent shift towards e-commerce and its convenience,” says Coppola. “We are absolutely seeing a gain. There has been an incredible increase in online sales.”
Coppola points towards some of the obvious increases first—as more consumers began to work from home, there was a massive increase in demand for home office decor and furniture. In Australia, the demand for these IKEA products jumped 400 to 500 percent. But as the initial rush died down, other products such as storage solutions and children’s products increased, keeping up the torrid e-commerce pace.
“[The changes] we used to see happen in months, it would be done in days. It’s quick decision-making for everything online.”Barbara Martin Coppola, Chief Digital Officer, IKEA
“We have actually stopped a lot of non-proactive activities and focused on this opportunity. E-commerce has been developing incredibly fast, and that demands operational excellence from us and a focus on the experience we offer consumers,” says Coppola.
Four ways retail will shift at IKEA
Despite the surge towards online shopping, retail will eventually return to some sense of normalcy, but as the head of one of the largest e-commerce departments in the world, Coppola has an idea as to what that new standard will look and feel like.
1.) Customer privacy
First and foremost, IKEA wants to respect consumer privacy and make it known that they believe every other retailer should follow suit. Earlier this year, Coppola and her team announced a set of data control measures for IKEA shoppers that allows them to control what the retailer has access to. Consumers can toggle whether or not IKEA can see browsing history, previous purchases, preferences, saved credit card information, and even abandoned carts.
“We have started with an incredible ambition in regards to keeping data safe,” says Coppola. “We want to continue with the trust people have in our brand. They invite us into their home, and it’s important to honor that trust. Data is personal—it is part of a human being … If people don’t want us to keep credit card information, we need to delete that from our systems immediately. It’s algorithms that update themselves instantly with choices consumers make.”
“We are respecting privacy in-store, but we need to bring those values to e-commerce and online,” Coppola continues. “That massively changes the e-commerce experience you offer to people. And offering that with dialogue and consent that is understandable is important.”
2.) Improved e-commerce
Coppola’s second idea around the evolution of retail builds on interactivity and IKEA’s ability to inject a bit of personality into the e-commerce experience. She believes that the future of online retail at IKEA will feature the ability to inject personalized knowledge and the feeling of being in a store.
3.) New digital experiences
The third aspect of IKEA’s e-commerce retail future is one that highlights the brand’s ability to innovate at a high level.
“It’s new experiences,” says Coppola. “Online, you can do so much. Soon, we will give people the digital ability to design your home photographically in 3D in a very simple way. Take a picture, swap furniture in and out, and visualize how it fits. All of that is a part of new experiences online and it is important to continue doing that.”
IKEA’s new experiences do not end there. In fact, the brand is among the global leaders when it comes to rolling out new and unique ways to engage with products online. From using locally-standardized living room layouts to boost sales 17% in Russia to launching integrated smart home offerings based on simple shortcuts, IKEA is consistently pushing the envelope when it comes to combining technology and retail.
4.) “Phygital” – when physical meets digital
Coppola’s final fourth point about IKEA’s evolution as a retailer involves the mixing of e-commerce and physical sales—”phygital” as she describes it.
“There is so much innovation coming to stores to help you purchase and explore products,” she says.
A few examples include a recent IKEA experiment to turn travel time into currency. IKEA created a solution that permitted customers in Dubai to purchase items with the total distance they traveled to get to the store in order to incentivize those who may be discouraged based on store distance.
During the ongoing pandemic, these changes and more have happened at an incredible pace. Coppola points to an “increased overall digitization” speed that has allowed IKEA’s digital team to respond to the online influx by developing and launching solutions in an expedited manner.
“What we used to see happen in months, it would be done in days,” says Coppola. “It’s quick decision making for everything online.”
The next stage of fulfillment
With increased e-commerce numbers comes an increased strain on getting those products out the door. At the onset of the pandemic in April and May, IKEA shoppers were faced with long waits for products and pickup time slots that were nearly impossible to secure. In response to the dramatic rise, Coppola says IKEA shifted many stores to become fulfillment centers themselves.
“For those countries that allow that, IKEA stores are an hour away—max—from 90% of the customers we serve. You can see how that’s an incredible advantage. We have turned those stores into fulfillment centers for now and after COVID. That’s how we go fast.”
Prior to the pandemic, IKEA invested in all kinds of fulfillment optimizations, including bringing in Optoro to reduce waste from returns and utilizing chatbots, digital dashboards, and more to streamline shipping and receiving for the retailer’s famous meatballs.
Coppola’s overall thoughts on fulfillment nicely echo IKEA’s sentiment towards the future of retail. It’s about empowering the consumer by giving them options.
“What’s important is to create a choice and let consumers choose,” she says. “It’s a convenience ladder of different services for people to pick from.”