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Ikea: leading the pack in multiple ways

The IKEA Group’s 2016 annual report couldn’t be clearer about the direction in which the company is heading. The home furnishings retailer, which operates in 28 markets around the world and is this year preparing to launch in India and Serbia, may have its bedrock in stores (which currently account for 95% of sales), but it has no doubt that its future is as a multichannel retailer.

“We are on an important journey to becoming a multichannel retailer, for which we are bringing in specialists and appropriate competencies,” Lotta Lyra, group development and expansion manager, noted. “Most importantly, we are moving forward with an even greater focus on innovation and development to meet customer needs in new ways.”

Ikea currently offers ecommerce options in 14 of its markets, but intends to roll these out across the business to give all customers the option of shopping in store, online or via social media. It is also promising a joined-up experience where shopping started at home or on a mobile device can be continued in store and vice versa. To enable these changes it is introducing a major shake-up of its distribution and logistics, whereby products will be stored closer to customers to cut down on delivery times and costs, with new stores – some of which will be in new formats – serving as hubs for customers to pick up, exchange and return purchases.

Ikea has also put sustainability at the heart of its vision, committing to do its bit to tackle climate change by producing more renewable energy than it consumes. By the end of the 2016 financial year, it had committed to own and operate 327 wind turbines around the world and had invested in 730,000 solar panels on its buildings.

Changes currently being rolled out in its German operations give a taste of what is to come. Here, the company has reorganised its distribution to provide two warehouses (in Berlin and Hamburg) to deal with larger-sized products ordered in store or online, leaving a parcel unit in Dortmund to deal with smaller orders, which it can turn around more quickly, now it has been freed up of the larger items.

A pick-up point combined with showroom has been introduced in Ravensburg, and a small-format ‘Smart Store’ in Bremerhaven, while its new Kaarst store, due to open in the summer of 2017, will be the first of the company’s resource-efficient “More Sustainable Stores”. These will feature large amounts of natural light and environmentally friendly technologies.

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