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Inside IKEA’s Digital Transformation

• Thomas Stackpole

A Q&A with Barbara Martin Coppola, IKEA Retail’s chief digital officer.

How does going digital change a legacy retail brand? According to Barbara Martin Coppola, CDO at IKEA Retail, it’s a challenge of remaining fundamentally the same company while doing almost everything differently. In this Q&A, Martin Coppola talks about how working in tech for 20 years prepared her for this challenge, why giving customers control over their data is good business, and how to stay focused on the core mission when you’re changing everything else.

What does it mean for one of the world’s most recognizable retail brands to go digital? For almost 80 years, IKEA has been in the very analogue business of selling its distinct brand of home goods to people. Three years ago, IKEA Retail (Ingka Group) hired Barbara Martin Coppola — a veteran of Google, Samsung, and Texas Instruments — to guide the company through a digital transformation and help it enter the next era of its history. HBR spoke with Martin Coppola about the particular challenge of transformation at a legacy company, how to sustain your culture when you’re changing almost everything, and how her 20 years in the tech industry prepared her for this task.

• Thomas Stackpole is a senior editor at Harvard Business Review.

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Ikea’s Business Model: Global Furniture Analysis

By Aditya Shastri

Quick Read   Explore the IKEA business model in this comprehensive case study. Understand how IKEA’s innovative approach to affordable, stylish furniture drives its global success and market leadership.

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Imagine treasure hunts where the prize is your dream living room – that’s IKEA. Their stores inspire with room layouts showcasing furniture’s potential. The secret? Flat-pack designs that disassemble for easy transport, saving on storage and letting you be your own furniture-building hero.

Efficiency is key. IKEA sources materials globally in bulk to keep costs low. Plus, their multi-use designs appeal to a wider audience. Those checkout impulse buys (hello, cinnamon buns!) add up too!

Sustainability matters at IKEA. They use recycled materials and promote energy-efficient appliances. They also prioritise good working conditions. This approach is a core part of IKEA’s business model, focusing on affordability and sustainability.

Want to dive deeper in this IKEA’s business model case study, just like we did in the SWOT analysis of Wikipedia ? Let’s begin our journey of understanding IKEA from its inception.

Source: Google

Starting small in 1943 with a young Ingvar Kamprad at the helm, IKEA began by selling affordable household items like pens and wallets. Their mission? To make well-designed furniture accessible to everyone.

They hit a home run with flat-pack furniture in the 1960s, making it easier to transport and assemble these stylish pieces yourself. Today, IKEA is a global giant with over 450 stores, keeping Ingvar’s dream alive by offering good design and functionality at low prices.

They’re also champions of sustainability and keeping their environmental impact low. Even though they started in Sweden, IKEA has become a multinational brand, bringing their signature style and affordability to countries around the world. Their stores are known for their unique layout, complete with room displays that inspire customers to create their dream living spaces.

The success of IKEA’s business model lies in this combination of affordability, sustainability, and innovative design. So next time you’re looking for stylish furniture that’s easy on the wallet and the planet, consider a trip to IKEA.

IKEA Case Study: What’s New With IKEA?

Examining IKEA’s business model reveals numerous innovative strategies and developments aimed at maintaining their market leadership. Here’s what was buzzing around IKEA recently:

• New sustainable materials: IKEA is introducing new sustainable materials into its products, such as recycled plastic, bamboo, and cork.
• More affordable options: IKEA is committed to making its products more affordable for everyone, and is introducing new affordable product lines in 2023.
• More online and omnichannel shopping options: IKEA is expanding its online and omnichannel shopping options, making it easier for customers to shop for IKEA products however they want.
• New product collaborations: IKEA is partnering with new designers and brands to create new and innovative products.
• New focus on home improvement: IKEA is expanding its focus on home improvement, and is introducing new products and services to help customers make their homes more stylish and functional.
• New focus on sustainability: IKEA is committed to sustainability, and is working to reduce its environmental impact and operate more sustainably.
• New stores: IKEA is opening new stores in new markets around the world.
• New digital services: IKEA is developing new digital services to make it easier for customers to shop for and use IKEA products.
• New focus on customer experience: IKEA is focused on improving the customer experience, both in stores and online.
• New focus on inclusion and diversity: IKEA is committed to creating a more inclusive and diverse environment for its customers and employees.
• New focus on social responsibility: IKEA is committed to making a positive social impact, and is working to support its communities and employees.

Understanding IKEA’s business model is essential to appreciating how these initiatives align with their mission of affordability, sustainability, and innovation.

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Let’s now understand the target audience of IKEA better with the help of a buyer persona.

IKEA Case Study:Buyer Persona of IKEA

A buyer persona generally refers to the detailed information of an ideal customer of a company. When it comes to IKEA, people from India use it the most. This buyer persona will help you understand the attributes of a regular IKEA user.

Buyer’s Persona

Minneapolis, Minnesota

Profession:

Interior Designer

• Affordable Home Furnishings
• DIY and Creativity
• Sustainability
• Functional Design

Interest & Hobbies

• Interior Design

Pain Points

• Assembly Challenges
• Limited Customization
• Store Crowds
• Product Availability

Social Media Presence

From the table above we can conclude that an ideal IKEA User is motivated by affordable home furnishings, DIY creativity, sustainability, and functional design, with interests in interior design, gardening, reading, and cooking.

Buyer personas are a powerful tool used by countless companies to refine their marketing strategies. Explore our library of digital marketing case studies to see how various companies leverage buyer personas. You’ll discover the wide range of buyer personas employed across different industries, providing valuable insights you can apply to your own marketing efforts.

The marketing strategy of UNIQLO is a fabulous example of this. Their approach is sure to spark your interest – and perhaps even inspire your own marketing tactics.

Business Model of IKEA

Ikea case study: market share & market analysis.

IKEA holds a dominant position in the global home furnishings market, with an estimated market share of around 12% in 2023 (source: Statista). The business model of IKEA leverages its extensive supply chain, economies of scale, and efficient logistics to maintain competitive pricing. Market analysis reveals a growing demand for affordable and sustainable home furnishings, trends that IKEA continues to meet with its product offerings. The company’s ability to adapt to changing consumer preferences and invest in digital transformation ensures its continued market leadership.

IKEA Case Study: Product Offerings

IKEA’s product offerings include a wide range of home furnishings and accessories, from furniture and kitchenware to textiles and lighting. The brand is known for its flat-pack furniture, which reduces shipping costs and allows customers to easily transport and assemble products. This business model of IKEA focuses on offering services like home delivery, assembly, and interior design consultations. The introduction of smart home products and sustainable materials reflects IKEA’s commitment to innovation and environmental responsibility.

IKEA Business Model: Target Audience

Source: ikea.com

Young adults, families, and urban dwellers who prioritise affordability, style, and functionality in their home furnishings form the core customer base of IKEA’s business model. These customers are typically budget-conscious but still value good design and quality.

IKEA offers a wide variety of furniture catering to diverse tastes and lifestyles. This includes modern minimalist pieces, traditional styles, and rustic options. IKEA furniture allows for customisation and multi-use, making it appealing to a wider range of needs.

Demographic segmentation is a key pillar of the business model of IKEA. This allows them to tailor their marketing and product offerings to specific customer groups. One important segment IKEA targets is young, cost-conscious individuals like students or young professionals. These customers, typically with incomes between $15,000 and $50,000, are likely furnishing their first apartments or homes and prioritise affordability.

In essence, IKEA uses demographic segmentation to understand their diverse customer base and tailors its offerings accordingly. This allows them to attract a broad audience seeking stylish and functional furniture at accessible prices.

IKEA Business Model: Funding & Investors

IKEA is a privately held company, primarily owned by the Stichting INGKA Foundation, which was established by Ingvar Kamprad. The company has not required external funding rounds due to its strong financial performance and reinvestment strategy. IKEA’s revenue model is reinvested into the business for expansion, innovation, and sustainability initiatives. This self-sustaining financial model supports IKEA’s long-term growth and stability.

IKEA Business Model: Revenue Model

The IKEA revenue model is based on direct sales of home furnishings and accessories through its retail stores, online platform, and catalogues. In 2022, IKEA reported revenue of €44.6 billion (source: Inter IKEA Group). The company’s affordable pricing strategy, combined with its high-volume sales, ensures substantial revenue. Additional revenue streams include food sales in IKEA restaurants and service fees for home delivery and assembly. The diversified revenue model of IKEA ensures financial resilience and growth.

Business Model Of IKEA: Marketing Strategy

IKEA’s marketing strategy focuses on affordability, sustainability, and customer experience. The brand uses a mix of traditional advertising, digital marketing, and experiential marketing to reach its audience. IKEA’s iconic catalogues, engaging social media campaigns, and in-store experiences create strong brand loyalty. The company also leverages data analytics to personalise marketing efforts and improve customer engagement. Collaborations with designers and influencers enhance IKEA’s appeal and visibility.

Many companies, like IKEA, recognise the power of digital marketing to promote their brand and generate profits. It’s clear that digital marketing is shaping the future of marketing. Understanding its importance, YouTube, a major digital platform, emphasises the value of learning digital marketing skills.

If you believe that digital marketing should be approached strategically and deserves the utmost respect, pursuing a PG in Digital Marketing programme could be the perfect choice.

Business Model Of IKEA: Value Proposition

IKEA’s value proposition lies in offering well-designed, functional, and affordable home furnishings. The brand’s commitment to sustainability and innovation further enhances its appeal. IKEA’s flat-pack furniture and efficient supply chain reduce costs, which are passed on to customers. The IKEA shopping experience, from inspirational store layouts to comprehensive services, ensures high customer satisfaction. The value proposition of IKEA ensures a loyal customer base and strong market presence.

It refers to a competitive solution a company uses to make its products to gain a larger market space.

• DIY system Flatpack: This system is suitable for the present building size required anywhere.
• Using renewable energy sources: It helps to maintain an environmental/commercial balance.

Business Model OF IKEA:Operational Model

IKEA’s business plan includes an operational model which integrates a global supply chain, economies of scale, and efficient logistics. The company sources products from over 1,800 suppliers in more than 50 countries, ensuring quality and cost-effectiveness. IKEA’s flat-pack design reduces transportation and storage costs, enhancing operational efficiency. The company’s investment in digital transformation, including online sales and smart home solutions, ensures seamless operations and customer convenience.

IKEA Case Study: Strategic Alliances & Partnerships

IKEA forms strategic alliances with suppliers, designers, and technology partners to enhance its product offerings and operations. Partnerships with sustainable material suppliers support IKEA’s environmental goals. Collaborations with designers and brands, such as the Virgil Abloh collection, bring unique and limited-edition products to customers. Alliances with technology firms enable IKEA’s business to innovate in areas like smart home solutions and e-commerce.

IKEA Case Study:Technological Innovations

IKEA invests heavily in technology to enhance its products and customer experience. The company uses digital tools like the IKEA Place app for augmented reality furniture placement and the IKEA Home Planner for room design. Innovations in sustainable materials, such as recycled and renewable resources, reflect IKEA’s commitment to environmental responsibility. IKEA’s business plan is to focus on technological advancements ensuring continuous improvement and market differentiation.

However, technology is just one pea in a pod. Just like Uber leverages digital marketing to connect with riders and drivers, this powerful skill set can benefit anyone looking to stay ahead in today’s digital world. Enrolling in the best digital marketing course online can equip you with the knowledge and tools to create targeted campaigns, reach new audiences, and achieve your goals.

Unsure where to begin? Consider attending a free digital marketing certification masterclass . This can be a great way to explore the world of digital marketing and see if it aligns with your interests.

IKEA Business Model: Corporate Social Responsibility (CSR)

IKEA’s CSR initiatives focus on sustainability, community support, and social responsibility. IKEA’s business plan aims to become climate positive by 2030, reducing more greenhouse gas emissions than its value chain emits. IKEA promotes sustainable living through products like solar panels and energy-efficient lighting. Community initiatives include supporting refugees and providing disaster relief. The IKEA Foundation, funded by Stichting INGKA Foundation, supports global humanitarian projects and environmental initiatives.

Business Model of IKEA: Failed Campaigns of IKEA

IKEA more than often grabs attention with its unique marketing. But, there have been a few times when the campaign failed to connect with the audiences and gained backlash.

Here are a few examples of failed campaigns of IKEA:

• IKEA’s ‘Book of Love’ catalogue: In 2012, IKEA released a catalogue for Saudi Arabia that featured photos of women without headscarves. This caused a lot of controversy in the conservative country, and IKEA was forced to apologise and withdraw the catalogue.
• IKEA’s ‘This is How the Many Live’ campaign: In 2013, IKEA launched a campaign in the UK that featured photos of real people’s homes. The campaign was intended to be relatable, but many people found the photos to be depressing and unrealistic.
• IKEA’s ‘The Wonderful Everyday’ campaign: In 2016, IKEA launched a campaign that featured families from different backgrounds living together in harmony. The campaign was intended to be inclusive, but some people found it to be unrealistic and even offensive.
• IKEA’s ‘How to Live Small’ campaign: In 2019, IKEA launched a campaign that featured people living in small spaces. The campaign was intended to be aspirational, but some people found it to be insensitive to the challenges of living in poverty.
• IKEA’s ‘Life is Not an IKEA Catalog’ campaign: In 2020, IKEA launched a campaign that featured furniture being peed and vomited on. The campaign was intended to be humorous and relatable, but many people found it to be gross and distasteful.

IKEA Business Model: Brand’s Top Competitors Analysis

Just like other businesses, IKEA also has its fair share of competitors. While there are so many out there here are some of top competitors of IKEA

• Wayfair: Competes with IKEA in online home furnishings, offering a wide range of furniture and decor with a strong focus on e-commerce.
• Home Depot: Provides a broad selection of home improvement products and services, attracting DIY enthusiasts and professionals.
• Ashley Furniture: Known for its affordable and stylish furniture, competing with IKEA on price and design.
• West Elm: A subsidiary of Williams-Sonoma, offers modern and contemporary furniture, appealing to design-conscious consumers.
• Amazon: Competes in home furnishings through its vast marketplace, offering a wide range of products and convenient delivery options.

The IKEA business model exemplifies innovation, efficiency, and sustainability in the home furnishings industry. Its diverse product offerings, strategic partnerships, and technological advancements ensure sustained growth and market leadership. As IKEA continues to evolve, it remains a transformative force in global home furnishing.

As we wrap up our analysis of the impressive business model of IKEA it’s clear that staying up-to-date with the latest trends and techniques is key to success in the digital marketing world.

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FAQs About Business Model of IKEA

IKEA's business model focuses on providing affordable, well-designed home furnishings through a global supply chain and efficient logistics.

IKEA makes money through direct sales of home furnishings, accessories, food sales in its restaurants, and service fees for home delivery and assembly.

IKEA’s main products include furniture, kitchenware, textiles, lighting, and accessories for home furnishing.

IKEA’s top competitors include Wayfair, Home Depot, Ashley Furniture, West Elm, and Amazon.

IKEA uses technology for augmented reality furniture placement, room design planning, and innovations in sustainable materials.

IKEA's target audience includes young adults, families, and urban dwellers seeking affordable, stylish, and functional home furnishings.

IKEA holds approximately 12% of the global home furnishings market.

IKEA’s CSR initiatives focus on sustainability, climate positivity by 2030, supporting refugees, and global humanitarian projects.

IKEA’s value proposition is offering well-designed, functional, and affordable home furnishings with a commitment to sustainability and innovation.

IKEA markets its products through traditional advertising, digital marketing, iconic catalogues, social media campaigns, and in-store experiences.

Author's Note: My name is Aditya Shastri and I have written this case study with the help of my students from IIDE's online digital marketing courses in India . Practical assignments, case studies & simulations helped the students from this course present this analysis. Building on this practical approach, we are now introducing a new dimension for our online digital marketing course learners - the Campus Immersion Experience. If you found this case study helpful, please feel free to leave a comment below.

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Table of Contents

Ikea target audience, ikea marketing channels, ikea marketing strategy, ikea marketing strategy 2024: a case study.

Founded in 1943, Ikea operates 422 stores in 50+ markets. The favored furniture brand has an impressively wide customer base, with nearly 70% of its stores in Europe. Ikea added 19 stores last year, including its first in India. The Ikea marketing strategy includes some of the most iconic logos, campaigns and companies in recent history.  

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Ikea serves the unique functional needs of each target audience, with special attention to 16-34-year-old adults. It has solutions for:

• Single people not living at home
• Newly married couples
• Families with the youngest child under six
• Older married couples with dependent children
• No children families
• Labor force
• Professionals 

Thus, it uses the following types of product positioning :

• Mono-segment positioning. It appeals to the needs and wants of a single customer segment that is cost-conscious and prefers value for money.
• Adaptive positioning. It believes in periodically repositioning products and services to adapt to changes in customer preferences. Its Swedish furniture chain considers the dynamic nature of customer preferences. For instance, its latest products reflect increasing minimalism on the global scale. 

Ikea utilizes the power of the following marketing channels: 

• Mobile Application
• WebEngage: Email, SMS, and Whatsapp Marketing
• Social Media
• Telecalling
• Commercials

The Ikea marketing strategy contributes majorly to its success because it's original, imaginative, and distinctive while maintaining a transparent value proposition.

A Creative, Consistent Brand Theme

From the Swedish national colors on its buildings to rich meatballs in its store cafeterias, Ikea's marketing strategy reflects its cultural heritage proudly. It infuses all elements of their identity with a sense of self-assuredness that maintains their identity in the market of stiff competition. 

Emphasizing Affordability and Sustainability 

Understanding that a simple tiered strategy won't encourage repeat business, Ikea extends customization, flexibility, and mix-and-match furniture modules. It effectively combines the elements of affordability and sustainability in its marketing strategy to ensure success.

While the furniture options don't pledge a lifelong guarantee, the products are built to last. Even its reusable shopping bags reflect its commitment to sustainability.

Sponsorship and Influencers 

IKEA-sponsored comedic series Easy to Assemble. Its innovative content marketing was way different from a furniture product demo. Incorporating sponsored digital marketing campaigns and social media influencers have boosted the Ikea marketing strategy. 

Ikea’s Easy to Assemble Series

Exceptional In-store Experience

Ikea brilliantly displays products employing the best lighting systems to generate more sales. It strategically arranges best-matched items in mock rooms to encourage impulse purchases and inspire decor. The company also extends excellent customer service to provide a memorable experience and incite customers to come back for more.

Ikea’s Store Decor for Inspiration

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Website and Mobile Application Marketing

Ikea ensures an optimal mobile website's speed, button displays and gesture controls on its website and mobile app to retain and attract individuals to the site. It carefully invests in its UI/UX , enquiry-based chatbot, and regular updates on new offers, discounts, and promotions. 

One of the most successful marketing moves includes downloading its 3D modeling app to envision a dream home. It's one of its most successful marketing moves that allows IKEA to upsell its low-demand items by creating a desire in its customers to revamp the room.

Ikea’s Website With Engaging Content

Ikea's SEO (Search Engine Optimization)

Ikea's marketing strategy aims at enhancing the site's visibility for relevant searches to attract the attention of new and existing customers. It includes the right product-specific keywords and Google advertisements to further augment its organic ranking .  

Ikea Ranking for Bookcases on Google’s First Page

Ikea's SMM (Social Media Marketing)

Ikea's handles are very active on digital marketing platforms like Facebook, Instagram , Twitter, and Youtube . Their digital presence is impressive, with more than 30 Million likes on Facebook, 1 Million followers on Instagram, 5.3k followers on Twitter, and 41.2k subscribers on YouTube.

Ikea’s Instagram Profile

Its Instagram bio links to its website. The website also has links to its various social media posts. Its 'view shop' and 'call' options for product catalog and direct assistance, respectively, are a testament to a well-crafted Ikea marketing strategy.   

Ikea’s Youtube Advertisements 

IKEA also conducts free online workshops that lure lots of enthusiastic customers, resulting in gaining leads.

Ikea’s Online Workshop Ad

Content Marketing

Ikea relies on its content marketing strategy to create a distinguished presence amongst furniture brands. Its commercials, print ads, social media, and website stands out with attention-grabbing content. It combines innovation and humor to present the brand's core values and inspire people. 

Ikea’s Captivating Commercial 

Ikea Marketing Strategy bears testimony to a well-thought and structured marketing venture. Sign-up for our Digital Marketing Specialist and learn more about marketing case studies published by Harvard Business. You will be taught by experts from facebook and Purdue University. Sign-up for the course TODAY!

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Exploring digitalisation at IKEA

International Journal of Retail & Distribution Management

ISSN : 0959-0552

Article publication date: 15 March 2022

Issue publication date: 19 December 2022

The paper aims to clarify how an incumbent retail organisation explores digitalisation for its existing business.

Design/methodology/approach

The paper draws from an in-depth case study of home-furnishing retail giant, IKEA conducted with semi-structured interviews, participant observations and document analyses.

In the exploration phase of digitalisation, three major activities – interpreting, interrelating and integrating – illuminate how the exploration process can be organised in practice.

Originality/value

Although digitalisation ranks amongst the most significant ongoing transformations in retail businesses, research on how incumbent retail organisations have engaged in exploring digitalisation in practice has remained scarce. The paper contributes insights into digitalisation processes in retail businesses that may also apply to other trends affecting the retail industry.

• Digitalisation
• Exploration

Hagberg, J. and Jonsson, A. (2022), "Exploring digitalisation at IKEA", International Journal of Retail & Distribution Management , Vol. 50 No. 13, pp. 59-76. https://doi.org/10.1108/IJRDM-12-2020-0510

Emerald Publishing Limited

Copyright © 2022, Johan Hagberg and Anna Jonsson

Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode

1. Introduction

Digitalisation , defined as the “integration of digital technologies into everyday life by the digitization of everything that can be digitized” ( Hagberg et al. , 2016 , p. 696), ranks amongst the most significant ongoing transformations in business, one that has introduced new ways of doing business whilst challenging established ones ( Leeflang et al. , 2014 ). As such, digitalisation has been characterised as a disruptive change that tests industries, their accepted logics and even individual businesses (e.g. Verhoef et al. , 2015 ; Hänninen et al. , 2018 ).

In literature addressing retail, digitalisation has received increased attention from both consumers' and retailers' perspectives ( Frasquet et al. , 2021 ), including in terms of omni-channel strategies ( Verhoef et al. , 2015 ), business models ( Jocevski et al. , 2019 ), multi-sided platforms ( Hänninen et al. , 2019 ) and the reconfiguration of retail stores ( Hagberg et al. , 2017 ). Most recently, according to Hänninen et al. (2021) , such research has integrated far more discussion and theorising about digitalisation across the value chain. However, the organisational processes that catalyse the incorporation of digital technologies in retail businesses – in March's (1991) and Winter and Szulanski's (2001) terms, the exploration phase – have received less attention. Therefore, this paper focusses on that very phase – the early stage of digitalisation – to contribute insights into digitalisation in retail ( Hänninen et al. , 2021 ) whilst answering the call for research on “how firms adapt their business models in response to external threats and opportunities” ( Saebi et al. , 2017 , p. 567).

The paper aims to clarify how an incumbent retail organisation explores digitalisation for its existing business, even as potential disruptions, their meanings and their consequences remain uncertain. To that purpose, the paper builds upon an in-depth case study on IKEA, an established firm in today's dynamic retail sector, an environment in which digitalisation especially urges business actors to rethink their ways of doing business and attracting customers ( Hänninen et al. , 2018 ; Blom, 2019 ; Jocevski et al. , 2019 ). It draws upon first-hand experiences with, and insights into, how IKEA has explored digitalisation, even when the concept was relatively elusive and how it would affect IKEA's business. In describing IKEA's exploration phase and what digitalisation has meant for its business, the paper delineates three major activities of that exploratory process: (1) interpreting what digitalisation means, (2) interrelating digitalisation and the existing business and (3) integrating new ideas and solutions in light of digitalisation.

In what follows, we review literature on digitalisation in retail and research focussing on that process's exploration phase and development in businesses. Next, we describe the methodological considerations made for our case study on IKEA. After that, we present our findings in terms of three major activities that guide the exploration phase. We conclude the paper by discussing our findings in relation to the literature and addressing our research's limitations.

2. Literature review: exploring digitalisation in retail

Having significantly impacted retail in recent years, digitalisation has become an important topic in research on the industry ( Hänninen et al. , 2021 ), especially regarding specific applications of digital technology – for example, the use of smartphones in physical retail settings ( Fuentes et al. , 2017 ; Grewal et al. , 2018 ), augmented reality ( Scholz and Duffy, 2018 ; Caboni and Hagberg, 2019 ) and digital signage ( Dennis et al. , 2012 ; Jäger and Weber, 2020 ). Studies on specific technologies have been accompanied by broader frameworks for integrating various digital technologies into retail, not only by turns based upon their usage and retailers' objectives ( Wolpert and Roth, 2020 ), their social presence and consumers' convenience ( Grewal et al. , 2020 ) and their use in relation to shopping behaviour at various stages of the customer's journey ( Rosengren et al. , 2018 ; Blom, 2019 ; Roggeveen and Sethuraman, 2020 ), but also by general frameworks of what digitalisation implies for retail business overall ( Hagberg et al. , 2016 ). In such studies, digitalisation in retail has received sustained attention regarding several aspects of consumer behaviour ( Hure et al. , 2017 ; Pantano and Gandini, 2018 ), the retailer–consumer interface ( Hagberg et al. , 2016 ; Roggeveen and Sethuraman, 2020 ) and retailers' ways of doing business ( Verhoef et al. , 2015 ; Hänninen et al. , 2018 ). The processes in which incumbent retailers develop their businesses in light of digitalisation, however, have received far less attention.

Because digitalisation, understood as the integration of digital technologies, is arguably not a binary shift from one stage to another but an ongoing process without a clear beginning or end ( Hagberg et al. , 2016 ), its exploration in retail warrants a more processual perspective, particularly regarding its influence on how retail organisations alter their businesses (cf. Langley, 1999 ). Along with frameworks addressing how retail businesses can integrate digitalisation in various ways, the actual processes that may result in digital integration need to be explored and modelled. That need directs our attention to the exploratory processes through which retail businesses may approach digitalisation and, more specifically, to how digitalisation consequently influences established business models. Especially for the latter reason, we gave priority to incumbent retailers, whose business models and established ways of conducting business often confront such considerations.

Despite extensive research on what constitutes a business model, understandings differ about how to define, explore and leverage one. In fact, Teece (2018 , p. 41) has estimated that there are probably as many definitions of business model as there are models themselves. According to Ritter and Lettl (2018) , a business model, simply put, is a company's “way of doing business”. In this paper, considering how business models have been discussed in retail settings ( Sorescu et al. , 2011 , p. 4), we broadly understand a company's business model as representing “the firm's distinctive logic for value creation and appropriation”.

Although various external events may necessitate changes to ways of developing and operating businesses, digitalisation itself is not an event but an emergent, comprehensive and uncertain phenomenon. Indeed, digitalisation can span several external and internal aspects of businesses, as well as pose myriad implications for individual business models. To date, though scholars interested in digitalisation have examined different approaches to innovating business models, from making gradual, evolutionary adjustments to radically altering them ( Berends et al. , 2016 ; Inigo et al. , 2017 ; Snihur and Wiklund, 2019 ), how the exploration phase of digitalisation is understood and organised merits further investigation.

Following March's (1991 , p. 71) definition, exploration refers to searching for, innovating and experimenting with something novel. The concept as used by March (1991) is often considered in relation to exploitation, which refers to refinement, efficiency and implementation of “old” routines or certainties in an organisation. As noted by He and Wong (2004 , p. 481), researchers in strategic management, organisation theory and managerial economics have applied the two concepts in order to understand how innovations occur and how an organisation learn and develop dynamic capabilities to meet change. Previous studies either focus on the trade-off between exploration and exploitation or the balancing act between the two as discussed within literature focussing on ambidexterity and means for developing dynamic capabilities (e.g. Benner and Tushman, 2003 ; He and Wong, 2004 ; Vahlne and Jonsson, 2017 ). The two concepts have also been applied in processual research describing the evolution and development of an organisation. Winter and Szulanski (2001) use the two concepts when outlining their theory of replication as strategy and suggest a two-phase model where the organisation first enters the exploration phase “in which the business model is created or refined” (p. 731) and then move on to the exploitation phase. The argument that exploration and exploitation can be understood in terms of different phases of a process has been adopted also by researchers focussing on, for instance, retailers' internationalisation process ( Jonsson and Foss, 2011 ), the transition into retail omni-channel strategies ( Picot-Coupey et al. , 2016 ) and reverse knowledge flows within franchise organisations ( Friesl and Larty, 2018 ). Still, how the exploration phase is organised and how it can be understood remains to be further investigated. To the best of our knowledge, there is a dearth of research focussing specifically on the exploration phase and how it develops in practice. Whilst existing studies do explore the exploration phase, it is also discussed in relation to the exploitation phase with focus on the outcomes rather than the processual aspects of the phase as such. For this paper, we zoom in on and examine the exploration phase and how it can be understood in the context of retail digitalisation. In particular, when emergent trends such as digitalisation, a change process, challenge established business models, more comprehensively re-engaging the exploration phase can become essential.

3. Methodology

Investigating a complex phenomenon such as digitalisation, and given our aim, calls for a qualitative in-depth case study ( Eisenhardt, 1989 ). According to Dyer and Wilkins (1991 , pp. 615–617), case studies aim to “provide a rich description of the social scene”, “describe the context in which events occur” and thus offer opportunities for other researchers to see “phenomena in their own experience and research”. In that sense, rich, explorative case studies provide avenues for future research or, as more broadly conceived by Doz (2011 , p. 588), “offer the opportunity to help move the field forward and assist in providing its own theoretical grounding”.

Our in-depth case study focussed on IKEA, a global home-furnishing retail company, and its work with developing an understanding of digitalisation. IKEA is a particularly interesting case that has attracted practitioners seeking a benchmark in a hitherto successful business model (e.g. Jonsson and Elg, 2006 ; Edvardsson and Enquist, 2011 ; Burt et al. , 2016 ). IKEA has frequently been used as an empirical example in the business models literature (e.g. Hedman and Kalling, 2003 ; Sorescu et al. , 2011 ) and subject to in-depth case studies of the development of specific aspects related to the IKEA business model over time (see e.g. Salzer, 1994 ; Jonsson, 2007 ; Tarnovskaya et al. , 2008 ; Edvardsson and Enquist, 2011 ; Hellström and Nilsson, 2011 ; Burt et al. , 2016 , 2021 ). In addition, there are several studies of various aspects related to digitalisation, including store format development ( Hultman et al. , 2017 ) and comparison of IKEA's digital catalogue and website ( Garnier and Poncin, 2019 ). IKEA has also served as an in-depth case for studies of exploration in relation to exploitation and replication ( Jonsson and Foss, 2011 ; Vahlne and Jonsson, 2017 ). The present study adds to this literature through an in-depth case study of IKEA's digitalisation process in an early explorative phase.

In the ten months from September 2014 to June 2015, we observed IKEA's work on exploring digitalisation and the trend's potential impacts on various parts of the organisation's business model and participated in a project undertaken in support of such exploration. In that form of action research ( Patton, 1980 ), engaging in IKEA's internal exploratory work as researchers allowed us to understand digitalisation's implications by discussing them with representatives at IKEA, which, at the time, considered knowledge of those implications to be important because they, along with digitalisation itself, remained unknown. Using such methods enabled us to contrast findings from interviews with findings from observations and synthesise the results in light of theory ( Ghauri and Grönhaug, 2002 ). In particular, our case study revolved around two ongoing projects and the processes of working within them: IKEA's “E-Commerce Programme”, later named the “Multichannel Transformation Programme”, and a project designed as a pre-study addressing the future role of IKEA's physical stores and the challenges and opportunities that they face amid digitalisation.

We collected data with three overlapping methods: in-depth semi-structured interviews, participant observations and document analyses (for an overview, see Table 1 ). As for the first, we conducted 21 interviews with senior executives with different functions in different departments at IKEA as detailed in Table 1 . Using purposeful sampling, we interviewed IKEA managers and employees working with and/or preparing for the organisation's digitalisation about their experiences with and thoughts on the concept of digitalisation and its implications. The interviews combined retrospective questions about IKEA's business model with questions about current situations experienced by the interviewees and prospective enquiries about IKEA's future in relation to digitalisation. All interviews began with open-ended questions about digitalisation in general and digitalisation at IKEA in particular. As the interviews progressed, questions became more structured and delved into the future role of IKEA stores, the specific challenges that IKEA faces, whether they will affect the IKEA concept and if so, then how. All interviews were recorded and transcribed verbatim and translated into English in those cases the interviews were made in Swedish.

Meanwhile, participant observations involved three meetings – before, during and after data collection, respectively – with the project manager of the pre-study to discuss the overall project. Those meetings lasted 11 h and 36 min in all. We also engaged in both in-store observations and meetings, lasting 10 h in total, whilst visiting an IKEA store in the Altona borough of Hamburg, Germany that operates as a test store for new concepts (e.g. urban proximity, technical solutions and delivery solutions). The local managers who accompanied us during our in-store observations also met with us twice: once with five other store managers and once with five employees from different departments. We conducted both meetings as group interviews guided by the same questionnaire used in the individual interviews. During all observations, we took field notes for data about the employees' perspectives and what digitalisation meant in practice. That information was valuable when conducting interviews with IKEA managers responsible for strategic decision-making and for translating digitalisation into IKEA's business model. Last, we also collected documents and visual communication, both public and internal, for analysis. The internal documents contained information about the pre-study, the “E-Commerce Programme”, the “Multichannel Transformation Programme” and the movie “ Shop with Laura ” (see Table 1 ) and public documents included information about the IKEA history, vision and business idea statements. Documents were collected on the basis of their mentioning during the interviews or participant observation sessions. These constituted sources of detailed information preserved from the time in which they were written and less dependent on the informants' memories. Throughout data collection, we facilitated informants' validation of the data on several occasions (cf. Silverman, 2006 ), which afforded us the opportunity to discuss our observations and findings with the participants. Apart from our participant observations, we also hosted two internal workshops with the project manager of the pre-study to discuss our findings.

To analyse the data, we used systematic combining ( Dubois and Gadde, 2002 ) – i.e. alternated focus between our empirical material and theory – whilst developing our case study and the emerging framework. For integrity's sake, we triangulated the three major sources of data – participant observations, interviews and document analysis ( Silverman, 2006 ) – during all four steps of data analysis. First, we coded the transcripts with reference to keywords and phrases related to digitalisation and its consequences for the retail industry in general and IKEA in particular. In that step, we adopted an emic perspective that prioritised the perceptions and understandings of the informants ( McCracken, 1988 ). Second, following Langley's (1999) suggestion, we took a narrative approach to comprehending the process-related data, namely by drafting a general description of the process with illustrative quotations from material collected in the field ( Berends et al. , 2016 ). Third, whilst working abductively between the empirical material and our emerging analytical framework, we used theoretical coding ( Charmaz, 2014 ) to sort, integrate and organise the material to represent a three-phase process. In so doing, we gradually shifted to an etic perspective – i.e. from the informants' perspective to our own perspectives as observers of the empirical material. Fourth and finally, we reorganised the material and wrote a case narrative structured according to the three abovementioned activities as presented next.

4. Exploring digitalising: the IKEA way

In the past 70 years, IKEA has grown from a small, family owned company in Sweden into the world's largest retailer of home furnishings. Arguably, IKEA's rapid international expansion resulted from the three-phase development of a formula that has been replicated in all markets where IKEA has entered an expanded, where the first phase commenced by exploring IKEA's business idea and opening test stores in markets outside Sweden ( Jonsson and Foss, 2011 ).

IKEA's business idea builds upon two concepts – the idea concept and the concept in practice – that together define what, in theoretical terms, could be understood as IKEA's business model. Whereas the idea concept refers to IKEA's vision “to create a better everyday life for the many people”, its philosophy of co-creation (i.e. “We do our part, and you do yours”) and the central role of IKEA stores, the concept in practice refers to IKEA's practices of examining specific sets of variables whilst adjusting to local markets ( Jonsson and Foss, 2011 , p. 1,090). The two concepts are mutually dependent; if the concept in practice does not change, then the practices of the idea concept will eventually become irrelevant and not reach “the many people”.

In 2014, drawing from insights during its internationalisation, IKEA realised that digitalisation could be both a challenge and an opportunity amid its recently declining expansion. For decades, IKEA had experienced outstanding success in replicating its business model: an average yearly increase in sales of approximately 8–10%, the constant meeting of new sales targets and a steady rate of expansion, with 12–14 store openings per year. In 2013, however, IKEA's steady growth declined in some markets, as the rapid worldwide growth of e-commerce in retailing continued to challenge physical stores and change the competition. In response, the company decided to decelerate its international expansion in favour of exploring what digitalisation could mean for their established business model. At IKEA, it was, therefore, considered increasingly important to return to a state of exploration in which key variables describing the idea concept and the established concept in practice would be re-evaluated. Moreover, as increasingly more young employees at IKEA sought new, 21st-century ways of reaching “the many people” – i.e. current and potential customers – both IKEA's employees and customers began looking for digital solutions and new ways of working.

In the following sections, we recount how IKEA engaged in exploring digitalisation in the IKEA way and how it (re)imagined reaching “the many people” in the shifting retail landscape. The story begins when the intersection of digitalisation and IKEA's business model was becoming increasingly apparent but not yet regarded as a phenomenon that would require radical changes, and it ends six months later, when the exploration phase resulted in an understanding and approach that we term the re(in)innovation of IKEA's business idea. In particular, we discuss how IKEA interpreted, interrelated and integrated digitalisation with its established ways of doing business. Although we have structured our discussion in three subsections, each addressing one of those three activities, the activities should not be considered as occurring along a linear path but instead as three aspects of the exploration phase.

For an overview of the activities and related steps, please see Table 2 .

4.1 Interpreting digitalisation

In 2014, aware that IKEA retailers in the USA were witnessing a cannibalising effect on their physical stores because of e-commerce, IKEA took its first steps towards exploring digitalisation. IKEA realised that its E-Commerce Programme launched only a year prior, could not simply be rolled out as initially planned but needed to be informed by a discussion about what e-commerce and digitalisation would mean for sales in IKEA's physical stores. Although digitalisation was becoming a widely discussed concept in retail at the time, it had remained undefined, and it was unclear how, or even whether, it was distinct from e-commerce. Recognising that possibility, IKEA's global expansion manager initiated several internal projects to explore what digitalisation meant and how it might relate to IKEA's business idea.

E-commerce is how we do business electronically, so it's about selling: selling online. But digitalisation is much bigger than that […] It's about the whole company, because it involves, for example, online learning. I think that e-commerce is not just about selling; it's about fulfilment, the buying process. (Development Manager, E-Commerce Programme)

Digitalisation is broader than e-commerce. It's also more about how we approach customers: how we communicate and how we ensure that all of our customers have the same knowledge, whether they're buying things in the store or online. Digitalisation is something that happens in the store. It's how we provide all of the information to our customers: where the products come from, what they do and how you can use them. (Supply Manager, IKEA Supply AG, Logistics)

As that quotation suggests, despite references to what digitalisation might mean and what it truly is, its signification remained vague. Even so, it appears that digitalisation might have generally been understood as offering digital information to customers. Making sense of digitalisation thus involved distinguishing digitalisation from e-commerce to not only explain how the concepts differed but also make digitalisation manageable for and relevant to customers.

So, all of a sudden, the amount of information that we have about people and how they live, move, interact etc. is phenomenal. And it's in combination. It's not urbanisation only; it's urbanisation plus digitalisation that gives us the opportunities. It's an example of how combined trends can become very powerful. (Digital Business Manager, Inter IKEA Systems B.V.)

It is exponential because every new invention in the digital space is built on previous ones. So, it's a combined effect that creates exponential speed. So, ignoring it, as Kodak or Nokia did, will be very dangerous. On the contrary, it can be very powerful, like for Apple, Google, Facebook, etc.

For me, digitalisation is a moving target. Its content is changing all of the time. To some extent, we use a lot of digital technology already—it's just that it’s outdated, right—so we're changing how we digitalise instead of digitalising something that is not digital. (Global Retail Logistics Manager, Retail Logistics IKEA of Sweden)

Gradually, it became clear that digitalisation not only needed to be understood in the sense of selling goods online but would have broader implications for the company. As a case in point, when observing customers who had already developed new shopping behaviours – using mobile phones to search for products from both outside and inside stores, for example – IKEA realised that new mobile solutions had to be integrated with traditional retail logic. As a result, IKEA unveiled the “Future Role of the IKEA Store in a Multichannel Environment” project to emphasise the need to understand and combine related trends. The project was initiated to jumpstart a shift towards what IKEA called a “seamless customer journey”. Consisting of five sub-projects, the project prompted the redefinition of the E-Commerce Programme and later evolved into the Multichannel Transformation Programme.

Digitalisation means nothing, I would say. Because what we want is to secure a solution for when you, the customer, move between the store and the web. It might be a digital solution, but it can also be a physical solution, or something else. The only thing that's important is to solve some sort of need and to learn more about those needs. (Group Retail Manager, Global Retail Services IKEA Group)

The expansion manager also emphasised that instead of simply focussing on defining digitalisation, routines and skills need to be developed for facilitating “disruptive developments” and finding new solutions and ways of testing new ideas. Understanding how various activities were organised and integrated was also considered to be pivotal. The idea addressed in many interviews – namely, that digitalisation both enables and requires the integration of knowledge – was explained as enhancing the focus on customers and their experiences. That perspective marked a shift into the phase in which IKEA began actively exploring what digitalisation meant to its ways of doing business by revisiting the idea concept and the concept in practice.

Altogether, the first activity of the exploration phase, interpreting, refers to ways of understanding and making sense of digitalisation and the changes that it was considered to imply. The process can be described as encompassing three steps: differentiating (i.e. distinguishing and delimiting digitalisation from other concepts), combining (i.e. making connections between digitalisation and other trends and concepts) and concretising (i.e. defining digitalisation and making it actionable). Building upon lessons from that work, IKEA transitioned into the second activity of exploration where it began relating digitalisation more explicitly to IKEA way of doing business.

4.2 Interrelating digitalisation with established business ideas

Whilst interpreting digitalisation, informants increasingly reflected on what it would mean for IKEA's established business ideas. After all, the replication formula was being challenged by not only digitalisation but also urbanisation. Mounting criticism about globalisation and calls for de-growth were also seen as challenging the existing understanding of doing business – i.e. by selling furniture “to the many people” – and concerns for sustainability were identified as needing to be incorporated into understandings of digitalisation.

To ensure that all IKEA employees shared the same interpretation of digitalisation and how it relates to IKEA's established business model, it was considered to be necessary to visualise the future. To convince internal sceptics, it was considered to be especially important to also visualise how digitalisation could generate opportunities for sales and attract a broader customer base and thereby more fully reach “the many people”. It additionally required ideas about urbanisation, sustainability and ways of offering not only furniture but also services, both in terms of continuity and making it easier to shop. Some proposals even conceived collaborating with second-hand retailers or establishing an organisation that would create opportunities to sell recycled and/or used furniture.

We wanted to have a completely different kind of interaction with our customers: a completely different type of conversation, a completely different type of engagement. So, I made a video that I think is very entertaining. […] She [Laura, the protagonist] wants to decorate her children's room, and the videos show her journey until she's satisfied. (Web and Digital Manager, Web and Digital Retail Services)

To develop a “seamless” experience for customers, it was considered to be crucial to introduce multiple perspectives, which seemed to require visualising the journey of customers in order to ensure focus on their experiences. To that end, it was expressed that all perspectives in IKEA's value chain had to be considered, and a consensus was emerging that different perspectives needed to be integrated in order to realise digitalisation. It was also clear that integrating knowledge from various functions in order to avoid a silo mentality would require more effort.

Our model has been built on direct deliveries to our stores, where you [the customer] do your part, we do our part, and then we save money. We need to think about a completely different kind of integration in how we develop and how we lead the overall development. To make that happen, we're now investing billions in new infrastructure—large investments in IT—but that's not what will take us into the future . (Group Retail Manager, Global Retail Services IKEA Group)

It was necessary to look inwards and to involve different views and perspectives, both across different parts of the company and from the outside. The same informant underscored the importance of accessing different perspectives to also “integrate the outside perspective into our structure, so that we do not get too isolated and, in that way, also cultivate our own skills”. The involvement of different functions and external partners prompted discussions about what digitalisation meant in relation to the established retail logic of “You do your part, we do our part (and together we save money)”. As it became clear that digitalisation would inevitably affect IKEA's business model, the question of how that process would unfold increasingly became the topic of discussion.

In sum, the second activity of the exploration phase, interrelating, refers to assessing digitalisation in relation to established ways of doing business in three steps: visualising (i.e. what the future might look like), mapping (i.e. what functions, areas and parts of the business model will be involved) and evaluating (i.e. how digitalisation will affect the business model and current ways of doing business). Based upon insights from that work, IKEA advanced to putting lessons learnt into practice and began the third activity: integrating new knowledge with existing knowledge.

4.3 Integrating digitalisation into a business model

From the internal projects related to efforts of interpreting digitalisation and interrelating it to other trends, IKEA's managers concluded that its established business model needed an update and that the antidote, digitalisation, also offered an opportunity to fully realise the business idea of offering products and services to “the many people”. To that end, testing new ideas, learning from them and making any necessary adjustments were considered to be important tasks. Thus, to be able to integrate digitalisation with the business model, it was necessary to experiment with numerous ideas and solutions as was done at numerous IKEA locations. For example, at IKEA in Altona, new ideas and concepts were tested to see whether they could satisfy a more digital, urban segment of customers. The Altona store was not only constructed differently from the standard global store format, in terms of size and layout, but also to accommodate for trends in urbanisation. It had also been adapted to test new concepts in practice, including new logistics and distribution solutions, and the normal pathway through the IKEA store had been partly removed to attract customers passing by outside. In the United Kingdom, by comparison, as a result of exploring digitalisation and testing new digital solutions, IKEA had launched its first app.

Experiences from testing new ideas and solutions were transferred back to the IKEA Group and Inter IKEA Systems. Thus, an important step was reviewing and learning from those experiences followed by transferring them internally within the organisation. In relation to the Altona store, both IKEA's management team in Germany and the IKEA Group's management team followed the experiences closely. Beyond that, many employees from IKEA worldwide visited the UK and/or Altona stores simply out of curiosity.

That's the essence of IKEA. If you remove everything, then the core is what's left, and that's IKEA… [We] need to develop our concept, take it further and say, “This is how I see IKEA today”. We have to be on track and dare to test and create other formats… So, IKEA has to change; otherwise, it's the beginning of the end. (Group Retail Manager, Global Retail Services IKEA Group)

The concept manager also reflected on how those changes would affect the idea concept and the concept in practice, as well as the latter should not come at the former's expense: “I mean the concept, if we go back to it, and the vision… part of the recipe for success has been just doing things together, engaging people” (IKEA Concept Manager, Inter IKEA Systems B.V.). Thus, integrating digitalisation into IKEA's business also implied reconnecting with IKEA's roots and reflecting on the idea concept as “the core of the core”. After all, although IKEA was changing at the time and continues to change, it remains the same IKEA. In that sense, revising the business model appeared to be quite natural, for though it had always changed in one sense, in another sense it had also always remained intact. The conclusion was that to be able to sustain the idea concept, “the core of the core”, the concept in practice needed to change, which would imply searching for new formats and new solutions to further leverage IKEA's business. IKEA's managers realised that although the basic needs were the same, people had changed and were continuing to change, and the experiences of customers demanded far more focus. For those reasons, a new position, global customer experience manager, was created. The shift implied a return to the core of IKEA's concept and vision – “to provide products and services that are both cost-efficient and innovative” – and that digitalisation had forced IKEA to rethink its processes of achieving those ends. As another informant argued, the entire process of re-evaluating the way of doing business – i.e. the IKEA way – had alerted managers and employees not only to IKEA's strong vision and business model, but also its need to seize the opportunity to fully realise that vision and reach “the many people” both online and offline.

All of the work to prepare IKEA for the digital shift had prompted a return to the company's roots and the questioning of proven solutions, which is indeed one of IKEA's ten values, perhaps best be described as shifting from interpreting digitalisation and interrelating with IKEA's business model into integrating and turning it into practice. That integrative phase also precipitated how IKEA re(in)novated its business model. IKEA's approach of digitalisation could thus be understood as returning to the company's original idea; the understanding of the idea concept will never change, but the concept in practice has to be rethought and new ideas and practices tested and evaluated in order to continue to reach “the many people”. To that end, practising and testing new solutions were crucial strategies for IKEA, not to mention integral to the IKEA concept and its organisational culture.

In all, the third activity of the exploration phase, integrating, refers to the actual digitalisation of the business idea by steps of practising (i.e. developing and trying different solutions to test and learn from them), reviewing (i.e. sharing knowledge within the organisation to learn from practice) and revising (i.e. connecting and evaluating changes to the established business model in order to provide continuity).

5. Conclusion

This paper has sought to illuminate how an incumbent retail organisation approached digitalisation for its existing business at an early, exploratory phase when possible disruptions, their meanings and their consequences remained uncertain. To that aim, we have provided an account based upon our in-depth case study of IKEA and how the company explored digitalisation at an early stage. We have delineated the exploration phase as consisting of three chief activities – interpreting, interrelating and integrating – each of which we have detailed by identifying certain steps therein. Together, and with reference to IKEA's case, those aspects allow an understanding of the exploration phase.

Compared with previous studies on exploration and exploitation (e.g. March 1991 ; Winter and Szulanski, 2001 ) and specifically in the context of retailing ( Jonsson and Foss, 2011 ; Picot-Coupey et al. , 2016 ; Friesl and Larty, 2018 ), our paper contributes with insights on how the exploration phase is understood and organised in practice. The study further contributes to previous literature of IKEA's business model ( Hedman and Kalling, 2003 ; Sorescu et al. , 2011 ) and specific aspects of the IKEA business model (see e.g. Edvardsson and Enquist, 2011 ; Burt et al. , 2016 , 2021 ) by outlining the exploration phase in further detail. Although the activities of the exploration phase – interpreting, interrelating and integrating – stem from a specific case, we believe, following the potential of qualitative in-depth case studies ( Dyer and Wilkins, 1991 ; Doz, 2011 ), that they may provide value for analysing what digitalisation or any other current or future trend means to retail businesses apart from IKEA.

Because our study was performed at a relatively early phase of adapting the business model at IKEA, some of the outcomes of that process were beyond our study's time frame. However, conducting the study during the process afforded the advantage of revealing ambiguities, scepticism and reservations amongst employees and managers, all of which are important for understanding how retail businesses can be transformed in practice due to digitalisation. In hindsight, some of those uncertainties may be expected to fade or fall into oblivion once changes appear as a continuation of their antecedents and become institutionalised in the ordinary course of business, whether such a development occurs and, if so, then how it remains to be investigated. In any case, a key contribution of our study is the understanding of how an organisation such as IKEA, a global retail giant, organises its efforts to explore digitalisation in relation to its existing business. Still, as this study was conducted in a relatively early phase of the digital transformation, we believe that the findings may differ from later implementations when digitalisation has increasingly become a norm rather than an exception and retailers having increased abilities to learn from their and other's previous experiences. An important opportunity for further research would be to study more recent cases of exploration phases in relation to digitalisation as well as comparing incumbents and entrants as well as larger and smaller organisations.

Using a case study to develop an understanding of digitalisation in retail has advantages and disadvantages. On the one hand, it affords a more profound understanding of how retail businesses are transformed due to digitalisation in practice, as well as detailed insights into the practical work within the company (cf. Saebi et al. , 2017 ). On the other, however, it can be difficult to apply the results of case studies in forming a basis for scientific generalisation ( Yin, 2003 ). Although an analysis based upon a particular case can indeed provide an understanding of the practical process, that process is liable to differ between companies and between industries. In IKEA's case, as an organisation that many companies use as a benchmark due to its long-term success, no precedent construct existed for understanding how digitalisation in retail would look – for example, by relying on normative models – but instead surfaced as an emerging process. A better understanding of how a specific retailer has approached digitalisation complements current understandings of retail's digitalisation in general ( Hagberg et al. , 2016 ; Hänninen et al. , 2021 ). By extension, we believe that the suggested conceptual framework for understanding and organising the exploration phase could be a useful tool for retail managers to explore not only digitalisation, but also any other transformation and the consequences for their businesses.

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Acknowledgements

The authors contributed equally to this work. The paper is part of a research project with financial support from The Swedish Retail and Wholesale Development Council. The authors would like to thank Niklas Egels-Zandén for comments on an earlier draft of this paper, and also colleagues Catrin Lammgård and Malin Sundström who were also part of the research project. In addition, the authors would like to thank the people at IKEA who have contributed with their time and reflections, and in particular, the authors would like to appreciate Martin Hansson and Carole Bates for showing interest in this research and for inviting the authors to participate in the internal work of trying to interpret what retail digitalization means to IKEA.

Corresponding author

About the authors.

Johan Hagberg is professor of business administration specialising in marketing at the School of Business, Economics and Law, University of Gothenburg. His research revolves around the digitalization of retailing, consumption and markets.

Anna Jonsson is associate professor at Lund University, School of Economics and Management. Her research interests include learning and knowledge sharing in organizations and society. She has conducted research about various industries and organizations, including the retail industry.

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Unpacking the digital transformation at IKEA

by Didier Bonnet , Michael R. Wade Published 15 February 2022 in Innovation • 8 min read

In an IbyIMD interview, Barbara Martin Coppola, Chief Digital Officer of IKEA Retail (Ingka Group), explains how she is helping to take the company, famous for its out-of-town stores and physical products, in a bold new direction.  

For nearly 80 years, IKEA has provided the world with its distinct style of ready-to-assemble home furniture, appliances, and accessories. IKEA is now one of the most recognized brands in the world, and its fame was built on quality physical products and analog distribution and business model. So, how does such a successful incumbent company stay relevant faced with the fast-changing realities of the digital economy?   

Four years ago, to accelerate its digital transition, IKEA hired Barbara Martin Coppola, a seasoned digital executive with global experience from Google to Samsung, with a remit to accelerate the digital transformation of IKEA.  

IMD Professors Didier Bonnet and Michael Wade asked Barbara how she faced the challenges of digitally transforming such an iconic global brand.   

What were the priorities of IKEA when you joined the company?  

When I joined IKEA, I was the first Chief Digital Officer in almost 80 years, the company was going through a deep self-reflection about its future directions. There were headwinds in the retail industry, consumers were changing their habits, the way they live their lives and their consumption patterns. Yet, when you think about IKEA, you think about those big flagship stores outside main cities, which is the model that, over the years, had served us well to grow the company. Now, with digital technology providing the opportunity to operate companies more efficiently and find new sources of growth with digital business models, IKEA had to embrace this digital wave quite urgently.   

In discussion with our CEO, we progressively realized that a digital transformation would mean changing deeply the way IKEA operated. But with one strong guiding principle. Every digital change was to be true to the values and the mission of IKEA. So, the remit was not to design a digital transformation “on the side” of the core business but to truly follow the firm core principles.  

“Now, with digital technology providing the opportunity to operate companies more efficiently and find new sources of growth with digital business models, IKEA had to embrace this digital wave quite urgently. ”

So, it was not about a digital strategy, but a strategy enabled by digital transformation?  

Absolutely. IKEA was very clear on its driving objectives, and the idea was that we needed digital to underpin and accelerate the execution of these objectives. On the surface, the driving objectives were not technology-driven, but fundamentally linked to our changing customers and our competitive position. The vision and mission were built around three core elements:  

• How do we become more accessible ? Given our traditional out-of-town locations.  
• How do we continue to be affordable ? Serving our wide base of customers from India to China, to Germany.  
• How do we become planet-positive ? Contributing to the sustainability of the world we operate in.  

I like to refer to these as the “Three Icebergs”, because the bulk of the digital work was to take place below the surface. Let me give you a tangible example. How do we become more accessible? When you start peeling the onion, it means that our customers have to be a click away from the brand, they have to be able to access a multitude of touchpoints even when they live within large cities. The consequences of doing that are profound as it means our inventory flows need to be different, it means the speed and agility which we operate the business have to be different, it means merchandising needs to be different and even the skills of the people delivering to customers need to change. This is exactly where digital needs to come to the fore.  

The change you describe implies you managed to execute your digital transformation across the natural silos in the organization?   

First, it needs a realization that the silos, particularly in terms of functions, needed to change themselves. To execute effectively, we also needed to build cross-functional teams bringing different expertise to tackle digital solutions end-to-end. It required a lot of human interactions, a lot of communication and a lot of stakeholder management. Second, it was about how we empowered those cross functional teams and give them the freedom to execute fast. We gave them decision rights to execute the change and produce the results. One thing I think we got right during the pandemic, is that we did not implement a heavy governance mechanism upfront with committees and layers of decision-making and approvals. We empowered the teams first and then formalized the governance later. And it was a business governance around three functions: Digital, Commercial and Operations. We had to remain pretty nimble, particularly during COVID, as the stores were closed, so empowering the front line and leading from behind was key to speedy execution.  

Discover IMD Program: Developing Digital Transformation Strategies

Digital and sustainability are the two major transformations facing businesses today, how do you reconcile the two  .

I see huge complementarity between the two transformations. It would be wrong to treat them separately. Digital is absolutely central to achieving our “Planet Positive” objective. Let me give you an example of how the two reinforce each other. One of the key sustainability goals of IKEA is to have a circular business model. One of the main implications is that we can follow the goods, trace the provenance of materials, monitor their usage and be able to get goods back for recycling. This is entirely based on digital product information, supply chain visibility and the data flows that underpin all these digital processes. You also need to digitally equip consumers through apps so they can see that information and be able to return an item to IKEA.   

We started a program last year where customers can sell products back to us for recycling. On Black Friday alone last year, we had 100,000 items sold back to us. And this is just the beginning, we plan to triple that number this year. We need to understand each component of the item to be able to recycle them effectively either by reusing materials or by reselling used items in the stores at a cheaper price – benefiting our affordability goal. Everyone benefits we save on goods and raw materials, we save on carbon impact, and we prolong the life of the products we make. I believe a lot of people will be happy with this. And it’s only possible because of our ongoing digital transformation.   

Our research shows that externally appointed CDOs often find it hard to navigate the complexity of large organizations, you seem to be a counter example?   

It’s a great question, you’re right, I’m only the second executive coming from outside IKEA in 78 years. And I’m not Swedish, I’m digital and I’m a woman. I think, first reporting directly to the CEO was an essential signal of the intent. Second, the CEO deserves a lot of credit for supporting me and putting in place the right conditions for the digital transformation to happen. I would also say that other executive team members were also extremely supportive, and that is a great help. 

I believe that what made a difference is that the whole executive team was aligned on the need to change. But, more importantly it was also about fitting into the values and the beliefs of the IKEA organization. To be honest, I was closely observed at the beginning, and I had to pass the “can we trust her” phase, way before any questions on my digital expertise. Once the confidence was established then we moved into the transformation execution. During this phase, we needed to bring proof points and early successes, so people went “oh, my god, this is working”. And started to believe in the power of digital to augment IKEA.    

If there’s one thing I have learned is that the human dynamics are essential to digital transformation success. How do we embed a digital mindset as a core component of the company’s leadership, and how do we bring the entire organization on the journey with us?  

Back to your question, I think it’s a lot about respecting what is and envisioning what could be. There is a sentence at IKEA that I really like and that capture that mindset: “Love the past and create the future.”  

This article is part of a series of “ Digital Leaders” interviews that IMD is conducting, to learn from real experiences from practitioners leading the digital transformation of large, global organizations.

Didier Bonnet

Professor of Strategy and Digital Transformation

Didier Bonnet is Professor of Strategy and Digital Transformation at IMD and program co-director for Digital Transformation in Practice (DTIP) and Leading Customer Centric Strategies (LCCS). He also teaches strategy and digital transformation in several open programs such as Leading Digital Business Transformation (LDBT), Digital Execution (DE) and Digital Transformation for Boards (DTB). He has more than 30 years’ experience in strategy development and business transformation for a range of global clients.

Michael R. Wade

TONOMUS Professor of Strategy and Digital

Michael R Wade is TONOMUS Professor of Strategy and Digital at IMD and Director of the TONOMUS Global Center for Digital and AI Transformation . He directs a number of open programs such as Leading Digital and AI Transformation , Digital Transformation for Boards , Leading Digital Execution , and the Digital Transformation Sprint . He has written 10 books, hundreds of articles, and hosted popular management podcasts including Mike & Amit Talk Tech . In 2021, he was inducted into the Swiss Digital Shapers Hall of Fame.

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Sustainable supply chain management: a case study at IKEA

• November 2017
• Transnational Corporations Review 9(4):1-10
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How IKEA Evolved Its Strategy While Keeping Its Culture Constant

The Swedish furniture maker IKEA found huge success producing quality furniture at affordable prices. But in 2017, the company was at a crossroads. Its beloved founder had died, and the exponential rise of online shopping posed a new challenge.

In this episode, Harvard Business School professors Juan Alcacer and Cynthia Montgomery break down how IKEA developed, selected, and embraced new strategic initiatives, while fortifying its internal culture. They studied how IKEA made big changes for the future and wrote a business case about it.

They explain how the company reworked its franchise agreements to ensure consistency among its global stores. They also discuss how IKEA balanced global growth with localization, developing all-new supply chains.

Key episode topics include: strategy, growth strategy, disruptive innovation, emerging markets, leadership transition, competitive strategy, company culture, succession.

HBR On Strategy curates the best case studies and conversations with the world’s top business and management experts, to help you unlock new ways of doing business. New episodes every week.

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IKEA’s Localization Strategy: A Masterclass in Global Expansion

• January 12, 2024

Table of Contents

The ikea localization strategy, ikea’s localization strategy: a delicate balance of standardization and adaptation, ikea’s localization strategy in china: adapting to local preferences, ikea’s localization strategy in india: embracing local customs and tastes, ikea’s localization strategy in japan: the importance of understanding local preferences, key takeaways from ikea’s localization strategy, accelingo: your partners in localization success.

In a world where companies are increasingly competing globally, the ability to tailor products and services to local markets is crucial for success . Thanks to their localization strategy, IKEA, the Swedish furniture giant, has mastered this art, becoming a household name in over 50 countries and amassing a staggering $42 billion in annual revenue.

IKEA’s international expansion success can be attributed to its unique localization strategy, which strikes a delicate balance between standardization and adaptation. The company maintains a core set of principles and values that resonate across cultures , but it also makes strategic adjustments to cater to local preferences and market conditions.

This localization approach has allowed IKEA to successfully navigate the diverse and ever-changing landscape of international business. From adapting its product designs to fit smaller Asian homes to partnering with local assembly services in China, IKEA has consistently demonstrated its ability to connect with consumers on a global scale .

In the realm of international business, localization is the art of adapting products, services, and marketing strategies to suit the specific needs and preferences of a target market. This involves a delicate balance between standardization, which ensures consistency and brand recognition, and adaptation, which enables a deeper connection with local consumers . IKEA, the Swedish furniture giant, has masterfully navigated this balance, becoming a global success story with over 450 stores in 52 countries, according to Statista .

Standardization versus Adaptation: Striking the Right Chord

Standardization, often associated with economies of scale, involves creating a consistent product or service offering across all markets. This approach can streamline operations, reduce costs, and enhance brand recognition. However, a purely standardized approach can fail to resonate with local preferences and cultural nuances , leading to missed opportunities and potential brand alienation.

Adaptation, on the other hand, involves tailoring products, services, and marketing messages to specific market contexts. This approach can foster deeper connections with local consumers, address cultural sensitivities, and enhance brand relevance. However, over-adaptation can lead to brand dilution , fragmentation of the global brand identity , and increased costs from localized production and marketing efforts.

IKEA’s Middle Ground: A Strategic Approach to Localization

IKEA has successfully navigated this standardization-adaptation dichotomy, adopting a hybrid approach that strikes a delicate balance between the two strategies. The company maintains a core set of design principles and values that underpin its global identity, such as its commitment to affordable, stylish furniture that can be assembled by consumers . However, IKEA also makes strategic adaptations to cater to local preferences and market conditions.

Examples of IKEA’s Localized Approach

IKEA’s localization efforts are evident in its product designs, store locations, and marketing strategies across different markets. In China, where many consumers prefer to have furniture assembled professionally, IKEA partnered with local assembly services to enhance customer convenience. In India, IKEA adapted its product range to include items more suited to local tastes and dietary habits , such as smaller furniture pieces and vegetarian dishes in the company’s restaurants. And in Japan, where smaller living spaces are common, IKEA introduced smaller-sized furniture designs that better fit the constraints of Japanese homes.

The Importance of Cultural Understanding

IKEA’s success in localization is deeply rooted in its commitment to understanding local cultures and customs. The company conducts extensive market research and cultural sensitivity training for its employees to ensure that its products, services, and marketing efforts align with local expectations. This deep cultural understanding has enabled IKEA to forge meaningful connections with consumers across the globe.

The Value of Localization for Businesses

IKEA’s localization strategy serves as a valuable case study for businesses seeking to expand internationally . By striking an effective balance between standardization and adaptation, companies can enhance their brand relevance, increase customer satisfaction, and gain a competitive edge in global markets .

IKEA’s entry into the Chinese market in 1998 marked a significant milestone in the company’s global expansion journey. However, the company’s initial attempts to replicate its successful Swedish model in China met with challenges due to cultural differences and consumer preferences .

Cultural Barriers to Overcome

One of the primary challenges IKEA faced in China was the cultural norm of having furniture professionally assembled. In Swedish culture, self-assembly is seen as a badge of honor, symbolizing resourcefulness and DIY capabilities. However, in China, furniture assembly is considered a time-consuming and undesirable task , often assigned to hired professionals.

This cultural difference posed a significant obstacle to IKEA’s core business model, which relies on customers assembling their own furniture. IKEA’s initial efforts to introduce self-assembly instructions in Chinese were met with resistance, as many consumers were hesitant to tackle the task themselves .

Partnering with Local Expertise

To address this cultural barrier and enhance customer convenience, IKEA made a strategic decision to partner with local furniture assembly services in China . This move proved to be a game-changer, allowing IKEA to tap into the existing expertise of local professionals while still maintaining its commitment to affordable furniture.

The partnership with local assembly services not only addressed customer preferences but also created new employment opportunities and strengthened IKEA’s ties with the Chinese community. As a result of this adaptation, IKEA’s sales in China skyrocketed, reaching $1.6 billion in 2019 .

Other Localized Adaptations in China

IKEA’s localization efforts in China extended beyond furniture assembly. The company carefully tailored its store locations to suit Chinese shopping habits , opting for central locations near public transportation hubs to cater to busy urbanites.

IKEA also adapted its product range to meet the specific needs of Chinese consumers. The company introduced smaller-sized furniture designs to fit the limited living spaces of many Chinese households, and it also expanded its selection of home appliances to include items more suited to local cooking and dining preferences .

The Success of IKEA’s Localization Strategy in China

IKEA’s success in China is a testament to the power of localization in global business . By understanding and adapting to local preferences, the company has successfully established itself as a leading furniture retailer in China, with over 36 stores and a strong online presence, as per IKEA .

IKEA’s experience in China highlights the importance of cultural sensitivity and adaptation in international business. By making strategic changes to its products, services, and marketing strategies, IKEA has successfully connected with Chinese consumers , demonstrating that localization is not just a matter of complying with local regulations but also about forging meaningful connections with local communities.

IKEA’s expansion into India in 2018 marked a significant milestone in the company’s global journey, opening doors to one of the world’s most populous and rapidly growing markets . However, the Indian market presented its unique set of challenges, including cultural nuances, regulatory hurdles, and a diverse consumer base.

Navigating Cultural Nuances and Regulatory Hurdles

India’s complex cultural landscape presented IKEA with a unique set of challenges. The country is home to a diverse range of religions, customs, and traditions , which IKEA needed to carefully consider in its product offerings and marketing strategies.

Additionally, the Indian market was characterized by complex regulatory frameworks and logistical challenges, requiring IKEA to adapt its operations to comply with local standards and ensure efficient supply chains.

Adapting to Indian Consumer Preferences

To succeed in India, IKEA recognized the importance of tailoring its products, marketing, and customer experience to resonate with local sensibilities. The company conducted extensive market research to understand Indian consumer preferences, cultural norms, and dietary habits.

Tailoring Products and Menus to Local Tastes

One of the most notable adaptations IKEA made in India was the expansion of its product range to cater to local tastes and preferences. The company introduced smaller-sized furniture pieces to suit the compact living spaces of many Indian homes , and it also incorporated elements of Indian design and craftsmanship into its products.

In addition to product adaptations, IKEA also made significant changes to its food offerings in India. The company’s restaurants in India feature a menu that includes a wide variety of vegetarian and vegan options , reflecting the dietary preferences of a large portion of the Indian population.

Pricing Strategy for Affordable Furniture

IKEA’s commitment to affordability, a core tenet of its business model, was particularly important in India, where price sensitivity is a prevalent consumer trait . The company carefully considered pricing strategies to ensure its products remained accessible to a broad range of Indian consumers.

Localization Efforts in Marketing and Customer Experience

IKEA’s localization efforts extended beyond product design and menus; the company also adapted its marketing strategies and customer service approach to Indian sensibilities . The company employed local marketing campaigns that resonated with Indian cultural references and values, and it also trained its employees to provide culturally sensitive customer service.

The Success of IKEA’s Localization Strategy in India

IKEA’s efforts to embrace local customs and tastes have been met with remarkable success in India. The company’s stores have been warmly welcomed by Indian consumers , and its sales have grown steadily since its entry into the market. In 2020, IKEA opened its second store in India, and plans for further expansion are underway according to INGKA .

IKEA’s experience in India serves as a compelling example of the power of localization in international business. The company’s ability to adapt its products, services, and marketing strategies to align with local preferences has been instrumental in its success in this challenging yet promising market.

IKEA’s journey into the Japanese market in 1974 marked a pivotal moment in the company’s global expansion strategy. However, the company’s initial foray into Japan was met with challenges , highlighting the importance of understanding and adapting to local preferences in international business.

Initial Setback and the Over-Reliance on Standardization

IKEA’s initial attempt to replicate its successful Swedish model in Japan failed to resonate with local consumers. The company’s standardized product designs, often characterized by larger sizes, were incompatible with the compact living spaces of many Japanese homes . Additionally, IKEA’s marketing campaigns, which emphasized self-assembly, conflicted with Japanese cultural norms of craftsmanship and professional convenience.

As a result of these missteps, IKEA’s sales in Japan were initially sluggish , and the company was forced to withdraw from the market in 1986 .

Learning from Failures and Embracing Local Preferences

After withdrawing from Japan, IKEA took a step back to reassess its approach and make necessary adjustments. The company conducted extensive market research to understand Japanese consumer preferences , cultural nuances, and design sensibilities.

Strategic Comeback with Localized Adaptations

In 2006, IKEA made a strategic comeback to Japan, this time with a localized approach that emphasized adaptation to local preferences. The company introduced smaller-sized furniture designs, tailored to the limited living spaces of Japanese households . Additionally, IKEA partnered with local assembly services to offer convenient and professional furniture assembly services, aligning with Japanese preferences.

Localized Marketing Campaigns and Cultural Sensitivity

IKEA’s marketing campaigns in Japan also underwent a transformation, incorporating local cultural references and values. The company used traditional Japanese art and design elements in its store décor and marketing materials , creating a more immersive and culturally appropriate experience for Japanese consumers.

Continuous Research and Adaptation

IKEA’s experience in Japan highlights the importance of continuous research and adaptation in the face of cultural and market shifts. The company recognized that globalization does not mean homogenization ; rather, it requires a deep understanding of local preferences and a willingness to adapt to the specific needs of each market.

The Success of Adaptation: IKEA’s Thriving Presence in Japan

IKEA’s localized approach has been instrumental in its success in Japan. The company has established a strong presence in the market, with over 10 stores and a growing customer base . IKEA’s sales in Japan have consistently increased since its comeback , demonstrating the power of localization in connecting with local consumers.

IKEA’s experience in Japan serves as a valuable lesson for businesses seeking to expand internationally. By understanding and adapting to local preferences, companies can successfully navigate the complexities of global markets and build strong relationships with consumers across borders.

IKEA’s remarkable success in expanding its global footprint can be attributed to its unwavering commitment to localization , a process of adapting products, services, and marketing strategies to suit the specific needs and preferences of a target market.

Accelingo is a leading translation and localization agency with a proven track record of helping businesses thrive in the global marketplace. With over a decade of experience and a team of highly skilled linguists and cultural experts, Accelingo provides comprehensive localization services that enable companies to seamlessly adapt their products, services, and marketing strategies to local markets.

Accelingo’s Localization Expertise

On top of our language translation services , at Accelingo we offer a wide range of localization services , including:

• Expert translation: Accelingo’s team of native speakers delivers accurate and culturally sensitive translations across a diverse range of industries and languages.
• Cultural adaptation: Accelingo goes beyond mere translation to ensure that content resonates with local audiences, considering cultural nuances, sensitivities, and market trends.
• Localization strategy development: Accelingo helps businesses develop comprehensive localization strategies that align with their overall business goals and marketing objectives.

As you embark on your global expansion journey, let IKEA’s localization playbook serve as your guide. By embracing a deep understanding of local cultures, continuous adaptation, and a balanced approach to standardization and localization, you can unlock the key to success in the ever-evolving global marketplace . At Accelingo, we’re ready to partner with you every step of the way, from market research and strategy development to expert translation and cultural adaptation . Contact us today for a free consultation and let’s transform your global ambitions into reality.

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• IKEA Case: One Company’s Fight to End Child Labor
• Markkula Center for Applied Ethics
• Focus Areas
• Business Ethics
• Business Ethics Resources

IKEA Case: One Company’s Fight to End Child Labor

A business ethics case study.

In this business ethics case study, Swedish multinational company IKEA faced accusations relating to child labor abuses in the rug industry in Pakistan which posed a serious challenge for the company and its supply chain management goals.

Empty garage with a highlighted walking path in front of an IKEA.

Photo credit: mastrminda/Pixabay

Yuvraj Rao '23 , a 2022-23 Hackworth Fellow at the Markkula Center for Applied Ethics graduated with a marketing major and entrepreneurship minor from Santa Clara University.

Introduction

IKEA is a Swedish multinational company that was founded in 1943 by Ingvar Kamprad. [1] The company mainly provides simple, affordable home furniture and furnishings, and it pioneered DIY, or do it yourself, furniture. Kamprad originally sold binders, fountain pens, and cigarette lighters, but eventually expanded to furniture in 1948. According to the Journal of International Management, in 1953, Kamprad offered products that came as “a self assembled furniture” for the lowest price, which ultimately became a key part of IKEA’s value proposition going forward. In 1961, IKEA started to contact furniture factories in Poland to order chairs from a factory in Radomsko. [2] Outsourcing to Poland was mainly due to other Swedish furniture stores pressuring Swedish manufacturers to stop selling to IKEA. In the mid 1960’s, IKEA continued its supplier expansion into Norway, largely because IKEA didn’t want to “own their own line of production,” [3] and Germany due to its ideal location (downtown, suburban area) to place an IKEA store. Given IKEA’s suppliers were now not just in Sweden, it led to an increased importance on developing strong relationships with its suppliers.

In the following decades, IKEA continued its expansion and solidified its identity as a major retail outlet with parts being manufactured around the world. By the mid 90’s, IKEA was the “world’s largest specialized furniture retailer with their GDP reaching $4.5 billion in August of 1994.” [4] It also worked with 2,300 suppliers in 70 different countries, who supplied 11,200 products and had 24 “trading offices in nineteen countries that monitored production, tested product ideas, negotiated products, and checked quality.” [5] IKEA’s dependence on its suppliers ultimately led to problems in the mid 1990’s. At this time, IKEA was the largest furniture retailer in the world, and had nearly “100 stores in 17 countries.” [6] Also during this time, a Swedish documentary was released that highlighted the use of child labor in the rug industry in Pakistan, which impacted IKEA given it had production there. The rug industry in particular is extremely labor intensive and is one of the largest “export earners for India, Pakistan, Nepal and Morocco.” Here, children are forced to work long hours for very little pay (if there is any pay at all). In some cases, their wages are only enough to pay for food and lodging. In cases where children are not paid, the wages are used by the loom owner to pay the parents and agents who brought the children to the factories. Additionally, the work the children must do comes with a lot of risk. More specifically, children face risks of diminishing eyesight and damaged lungs from “the dust and fluff from the wool used in the carpets.” [7] As a result of these working conditions, many of these children are very sick when they grow up. Despite these terrible conditions, it isn’t that simple for families not to send children to work at these factories. A lot of the parents can’t afford food, water, education, or healthcare, so they are often left with no choice but to send their children to work for an additional source of income. [8]

 IKEA and Child Labor Accusations

The accusations of child labor in the rug industry in Pakistan posed a serious challenge for IKEA and its supply chain management goals. It would need to address the serious issues of alleged injustice for the sake of its reputation and brand image. Additionally, as IKEA also had suppliers in India, it would need to be in compliance with India’s “landmark legislation act against child labor, the Child Labor (Prohibition and Regulation) Act of 1986.” [9]

As a result of these accusations, IKEA ultimately ended its contracts with Pakistani rug manufacturers, but the problem of child labor in its supply chain still persisted in other countries that were supplying IKEA. Marianne Barner, the business area manager for rugs for IKEA at the time, stated that the film was a “real eye-opener…I myself had spent a couple of months in India for some supply chain training, but child labor was never mentioned.” [10] She also added that a key issue was that IKEA’s “buyers met suppliers at offices in the cities and rarely visited the actual production sites.” [11] The lack of visits to the actual production sites made it difficult for IKEA to identify the issue of child labor in these countries.

To make matters worse, in 1995, a German film “showed pictures of children working at an Indian rug supplier... ‘There was no doubt that they were rugs for IKEA,’ says business area manager for textiles at the time, Göran Ydstrand.” [12] In response to these accusations, Barner and her team went to talk to suppliers in Nepal, Bangladesh, and India. They also conducted surprise raids on rug factories and confirmed that there was child labor in these factories. The issue of child labor, along with the accusations of having formaldehyde (a harmful chemical) in IKEA’s best selling BILLY bookcases and the discovery of unsafe working conditions for adults (such as dipping hands in petrol without gloves), led to increased costs and a significantly damaged reputation for the company.

It was later discovered that the German film released in 1995 was fake, and the renowned German journalist who was responsible for this film was involved in “several fake reports about different subjects and companies.” [13] IKEA was now left with three options. First, some members of IKEA management wanted to permanently shut down production of their rugs in South Asia. Another option was to do nothing and proceed with its existing practices now that it was announced that the film was fake. The third option was that the company could attempt to tackle the issue of child labor that was clearly evident in its supply chain, regardless of whether the film was fake or not. IKEA ultimately decided to opt for the third option, and its recent discoveries would eventually help guide the policies the company implemented to address these issues, particularly child labor in India.

Steps Taken to Address Child Labor in the Supply Chain

IKEA took multiple steps to deal with its damaged reputation and issues of child labor in its supply chain. One way in which it did this was through institutional partnerships. One such partnership was with Save the Children, which began in 1994. According to Save the Children’s website, one of the main goals of their partnership is to realize children's “rights to a healthy and secure childhood, which includes a quality education. By listening to and learning from children, we develop long-term projects that empower communities to create a better everyday life for children.” [14] Furthermore, the partnership is intended to “drive sustainable business operations across the entire value chain.” [15] Together, IKEA and Save the Children are focused on addressing the main causes of child labor in India’s cotton-growing areas. [16] Save the Children also advised IKEA to bring in an independent consultant to ensure that suppliers were in compliance with their agreements, which further improved IKEA’s practices in its supply chain. IKEA also partnered with UNICEF to combat child labor in its supply chain. According to the IKEA Foundation, in 2014, IKEA provided UNICEF with six new grants totaling €24.9 million with a focus “on reaching the most marginalized and disadvantaged children living in poor communities and in strengthening UNICEF’s response in emergency and conflict situations.” Additionally, five of the six grants were given to help programs in “Afghanistan, China, India, Pakistan, and Rwanda,” with a “focus on early childhood development, child protection, education, and helping adolescents to improve their lives and strengthen their communities.” [17]

Next, IKEA and Save the Children worked together to develop IWAY, which was launched in 2000. [18] IWAY is the IKEA code of conduct for suppliers. According to the IKEA website, “IWAY is the IKEA way of responsibly sourcing products, services, materials and components. It sets clear expectations and ways of working for environmental, social and working conditions, as well as animal welfare, and is mandatory for all suppliers and service providers that work with IKEA.” [19] In addition, IWAY is meant to have an impact in the following four areas: “promoting positive impacts on the environment,” “securing decent and meaningful work for workers,” “respecting children’s rights”, and “improving the welfare of animals in the IKEA value chain.” [20] IWAY is used as a foundation to collaborate with IKEA’s suppliers and sub-contractors to ensure supply chain transparency.

As mentioned previously, one of the main goals of IKEA’s partnership with Save the Children was to address child labor in India’s cotton-growing areas. To do this, IKEA and Save the Children developed a program that would ultimately help more than 1,800 villages between 2009 and 2014. More specifically, the program moved nearly 150,000 children out of child labor and into classrooms. Also, as a result of this program, more than 10,000 migrant children “moved back into their home communities.” [21] Last but not least, the program trained almost 2,000 teachers and 1,866 Anganwadi workers (whose duties include teaching students and educating villagers on healthcare [22] ) in order to provide each village with a community leader. This was to ensure that the community had a skilled leader to assist in educating the villagers. In 2012, the IKEA Foundation and Save the Children announced that they would expand with new programs in Punjab, Haryana, and Rajasthan. This joint program illustrates IKEA’s commitment to improving communities in addition to helping children go to school.

Conclusion & Looking Ahead

IKEA has taken numerous steps to ensure that suppliers abide by the IWAY Code of Conduct. Companies around the world can learn from the policies IKEA has put in place to ensure that each company has control and complete oversight over their supply chains, which can lead to a more transparent and ethical supply chain. According to The IKEA WAY on Purchasing Products, Materials and Services, one way in which IKEA does this is by requiring all suppliers to share the content of the code to all co-workers and sub-suppliers, thus leading to more accountability among the company's suppliers. IKEA also believes in the importance of long term relationships with its suppliers. Therefore, if for some reason, a supplier is not meeting the standards set forth by the code, IKEA will continue to work with the supplier if the supplier shows a willingness to improve its practices with actionable steps to complete before a specified period of time. [23]

Additionally, during the IWAY implementation process, IKEA monitors its suppliers and service providers. To do this, IKEA has a team of auditors who conduct audits (both announced and unannounced) at supplier facilities. The auditors are also in charge of following up on action plans if suppliers are failing to meet the agreed upon standards specified by IWAY. Along with this, “IKEA…has the Compliance and Monitoring Group, an internal independent group that is responsible for independent verification of implementation and compliance activities related to IWAY and Sustainability.” [24] IKEA also has independent third party teams who conduct inspections on behalf of IKEA. [25] By conducting audits and putting together teams to ensure cooperation from suppliers throughout the supply chain, companies can be better equipped to prevent unethical practices in the production of goods and services. In Ximeng Han’s Analysis and Reflection of IKEA’s Supply Chain Management, Han highlights IWAY’s importance in maintaining links with IKEA’s suppliers. [26] Therefore, IWAY plays a crucial role in ensuring supply chain transparency and in building a more ethical and sustainable supply chain.

In addition to all of the policies IKEA has put in place to address issues in its supply chain, the company has also donated a lot of money to combat child labor in India. More specifically, according to an IKEA Foundation article written in 2013, “Since 2000, the IKEA Foundation has committed €60 million to help fight child labour in India and Pakistan, aiming to prevent children from working in the cotton, metalware and carpet industries.” [27] Furthermore, in 2009, the company announced that it would donate $48 million to UNICEF to “help poor children in India.” [28]

IKEA’s goal to completely eliminate child labor from its supply chain is an ongoing battle, and it is still committed to ensuring that this is ultimately the case. More specifically, it is extremely difficult to completely eliminate child labor from a company’s supply chain because of the various aspects involved. According to a report published in 2018 by the International Labour Organization, these aspects include a legal commitment, building and “extending” social protection systems (including helping people find jobs), “expanding access to free, quality public education,” addressing supply chain issues, and providing more protection for children in general. [29] Furthermore, Han points out the potential downsides that could arise as a result of having a global supply chain like IKEA does. Given IKEA is an international retailer, the company “has to spend a lot of time, money and manpower to enter new markets due to the different cultures, laws and competitive markets in different regions, and there is also a significant risk of zero return.” [30] Han also argues that the COVID-19 pandemic showed IKEA’s and many other companies’ inability to respond to “fluctuations in supply and demand,” primarily due to inflexible supply chains. [31] This information points out the various aspects that need to align in order to completely end the issue of child labor throughout the world, as well as the difficulties of having a global supply chain, which is why child labor is so difficult to completely eliminate.

Specific to IKEA’s actions, in 2021, IKEA announced three key focus areas for its action pledge: “Further integrating children’s rights into the existing IKEA due diligence system (by reviewing IWAY from a child rights’ perspective in order to strengthen the code),” “accelerating the work to promote decent work for young workers,” and partnering “up to increase and scale efforts.” [32] IKEA’s fight to end child labor in India highlights the importance of supply chain transparency and putting policies in place that ensures cooperation from suppliers and all parties involved. Additionally, in a Forbes article written in 2021, “According to the data from the OpenText survey…When asked whether purchasing ethically sourced and/or produced products matters, 81 percent of respondents said yes.” [33] Steve Banker, who covers logistics and supply chain management, also adds, “What is interesting is that nearly 20 percent of these survey respondents said that it has only mattered to them within the last year, which indicates that the Covid pandemic, and some of the product shortages we have faced, has made consumers re-evaluate their stance on ethical sourcing.” [34] These results confirm that customers are now considering how a product was sourced in their purchasing decisions, which makes it even more important for IKEA to be transparent about its efforts to eliminate child labor from its supply chain. Furthermore, the company’s open commitment to eliminating child labor and helping communities in India is beneficial in maintaining a positive relationship with its stakeholders.

The increase in globalization has made it even more essential for companies to monitor their supply chains and have complete oversight over business practices. IKEA is one of the companies leading the way in building a more ethical and sustainable supply chain, but more companies need to follow suit and implement policies similar to IWAY that holds all parties in the supply chain accountable for their actions. Through supply chain transparency and accountability, companies will likely be better equipped to handle issues that arise throughout their respective supply chains. Furthermore, by implementing new policies, conducting audits, and maintaining close communication with suppliers, companies can work to eliminate child labor in their supply chains and put children where they belong: in school.

Reflection Questions:

• What does this case teach you about supply chain ethics?
• What are some of the ways in which management/leaders can ensure compliance of the standards set forth by a company in terms of supplier behavior and ethical sourcing?
• Who is primarily responsible for ensuring ethical behavior throughout the supply chain? Is it the company? The suppliers? Both?
• How can companies utilize the various platforms and technologies that exist today to better understand and oversee their supply chains? 
• IKEA has taken numerous steps to address child labor in its supply chain. Do you think every business working in a context that may involve child labor has a duty to act in a similar way? Why or why not?

Works Cited 

“ About Ikea – Our Heritage .” IKEA.

“Anganwadi Workers.” Journals Of India , 16 June 2020. 

Banker, Steve. “ Do Consumers Care about Ethical Sourcing? ” Forbes , 9 Nov. 2022.

Bharadwaj , Prashant, et al. Perverse Consequences of Well-Intentioned Regulation ... - World Bank Group .

“ Child Labor in the Carpet Industry Rugmark: Carpets: Rugs: Pakistan .” Child Labor in the Carpet Industry RugMark |Carpets | Rugs | Pakistan .

“ Creating a Sustainable IKEA Value Chain with Iway. ” Sustainability Is Key in Our Supplier Code of Conduct .

“ Ending Child Labour by 2025 - International Labour Organization .” International Labour Organization .

“ Film on Child Labour Is Eye-Opener for IKEA .” IKEA Museum , 31 Mar. 2022.

Foundation , ECLT. “ Why Does Child Labour Happen? Here Are Some of the Root Causes. ” ECLT Foundation , 17 May 2023.

Han, Ximeng. “ Analysis and Reflection of IKEA’s Supply Chain Management. ” Analysis and Reflection of IKEA’s Supply Chain Management | Atlantis Press , 27 Dec. 2022.

“ Human Rights and Global Sourcing: IKEA in India. ” Journal of International Management , 13 May 2011.

“ IKEA and IKEA Foundation .” Save the Children International .

“ IKEA Foundation Contributes €24.9 Million to UNICEF to Help Advance Children’s Rights. ” IKEA Foundation , 26 May 2020.

“ IKEA Foundation Helps Fight the Roots Causes of Child Labour in Pakistan .” IKEA Foundation , 18 Feb. 2013.

“ Ikea Gives $48 Million to Fight India Child Labor .” NBC News , 23 Feb. 2009.

“ IKEA Supports 2021 as the UN International Year for the Elimination of Child Labour. ” About IKEA.

The Ikea Way on Purchasing Products , Materials and Services .

Jasińska, Joanna, et al. “ Flat-Pack Success: IKEA Turns to Poland for Its Furniture. ” – The First News .

Thomas , Susan. “ IKEA Foundation Tackles Child Labor in India’s Cotton Communities .” Boston College Center for Corporate Citizenship , 15 July 2014.

[1] “About Ikea – Our Heritage.” IKEA .

[2] Jasińska, Joanna, et al. “Flat-Pack Success: IKEA Turns to Poland for Its Furniture.” – The First News .

[3] “Human Rights and Global Sourcing: IKEA in India.” Journal of International Management , 13 May 2011.

[4] “Human Rights and Global Sourcing: IKEA in India.” Journal of International Management , 13 May 2011.

[5] “Human Rights and Global Sourcing: IKEA in India.” Journal of International Management , 13 May 2011.

[6] “Film on Child Labour Is Eye-Opener for IKEA.” IKEA Museum , 31 Mar. 2022.

[7] “Child Labor in the Carpet Industry Rugmark: Carpets: Rugs: Pakistan.” Child Labor in the Carpet Industry RugMark |Carpets | Rugs | Pakistan .

[8] Foundation , ECLT. “Why Does Child Labour Happen? Here Are Some of the Root Causes.” ECLT Foundation , 17 May 2023.

[9] Bharadwaj , Prashant, et al. Perverse Consequences of Well-Intentioned Regulation ... - World Bank Group .

[10] “Film on Child Labour Is Eye-Opener for IKEA.” IKEA Museum , 31 Mar. 2022.

[11] “Film on Child Labour Is Eye-Opener for IKEA.” IKEA Museum , 31 Mar. 2022.

[12] “Film on Child Labour Is Eye-Opener for IKEA.” IKEA Museum , 31 Mar. 2022.

[13] “Film on Child Labour Is Eye-Opener for IKEA.” IKEA Museum , 31 Mar. 2022.

[14] “IKEA and IKEA Foundation.” Save the Children International .

[15] “IKEA and IKEA Foundation.” Save the Children International .

[16] “IKEA and IKEA Foundation.” Save the Children International .

[17] “IKEA Foundation Contributes €24.9 Million to UNICEF to Help Advance Children’s Rights.” IKEA Foundation , 26 May 2020.

[18] “IKEA and IKEA Foundation.” Save the Children International .

[19] “Creating a Sustainable IKEA Value Chain with Iway.” Sustainability Is Key in Our Supplier Code of Conduct .

[20] “Creating a Sustainable IKEA Value Chain with Iway.” Sustainability Is Key in Our Supplier Code of Conduct .

[21] Thomas, Susan. “IKEA Foundation Tackles Child Labor in India’s Cotton Communities.” Boston College Center for Corporate Citizenship , 15 July 2014.

[22] “Anganwadi Workers.” Journals Of India , 16 June 2020.

[23] The Ikea Way on Purchasing Products, Materials and Services .

[24] The Ikea Way on Purchasing Products, Materials and Services .

[25] The Ikea Way on Purchasing Products, Materials and Services .

[26] Han, Ximeng. “Analysis and Reflection of IKEA’s Supply Chain Management.” Analysis and Reflection of IKEA’s Supply Chain Management | Atlantis Press , 27 Dec. 2022.

[27] “IKEA Foundation Helps Fight the Roots Causes of Child Labour in Pakistan.” IKEA Foundation , 18 Feb. 2013.

[28] “Ikea Gives $48 Million to Fight India Child Labor.” NBC News , 23 Feb. 2009.

[29] “Ending Child Labour by 2025 - International Labour Organization.” International Labour Organization .

[30] Han, Ximeng. “Analysis and Reflection of IKEA’s Supply Chain Management.” Analysis and Reflection of IKEA’s Supply Chain Management | Atlantis Press , 27 Dec. 2022.

[31] Han, Ximeng. “Analysis and Reflection of IKEA’s Supply Chain Management.” Analysis and Reflection of IKEA’s Supply Chain Management | Atlantis Press , 27 Dec. 2022.

[32] “IKEA Supports 2021 as the UN International Year for the Elimination of Child Labour.” About IKEA .

[33] Banker, Steve. “Do Consumers Care about Ethical Sourcing?” Forbes , 9 Nov. 2022.

[34] Banker, Steve. “Do Consumers Care about Ethical Sourcing?” Forbes , 9 Nov. 2022.

IKEA: The omnichannel strategy the Swedish furniture retailer used to reach the top

We have already talked about the value of case studies before, but we cannot stress enough how our readers can benefit from complete and detailed case studies. At ContactPigeon, we love writing about all-things-retail, and case studies about retail giants is our cup of tea . Therefore, this time we will extensively inspect IKEA, a conglomerate mostly known for its ready-to-assemble furniture, kitchen appliances, and home accessories. The IKEA omnichannel strategy is an exemplary model that made the brand the leading furniture retailer in Europe and one of the most valuable retail brands in 2021 worldwide .

As you can imagine, we have a lot to learn from IKEA’s founder; Ingvar Kamprad started the company in 1943 and strategically transformed it later into the empire that it is today. eCommerce and retail professionals can get inspired and learn valuable tools from a brand with a 78-year course and 456 stores around the world . 

Table of Contents

• > IKEA’s history
• > The awards IKEA has won up until now
• > The key success factors that drive the IKEA omnichannel strategy
• > 4 examples when IKEA’s omnichannel strategy skyrocketed customer experience
• > IKEA’s eCommerce website
• > Interesting eCommerce technology and tools IKEA uses
• > Retail technology that IKEA is missing
• > Impressive IKEA stats you shouldn’t miss

IKEA’s history

IKEA is an acronym standing for the founder’s initials, I ngvar K amprad, the name of the farm he grew up in, E lmtaryd, and the nearby village, A gunnaryd. In 1943, Ingvar’s father rewarded him for doing well with his studies with a small amount of money. Ingvar, always the entrepreneurial spirit, used the money to set up the IKEA company at his uncle’s kitchen. 

Later, in 1948 the founder of IKEA included furniture in its product range, establishing from the start the brand’s low-cost philosophy. In the ‘50s, because Ingvar’s success intimidated the competition, his rivals coerced local suppliers to exclude IKEA from their business dealings.

Always resourceful, IKEA’s mastermind decided to look for partnerships abroad and in 1953, despite all the obstacles, he managed to open the company’s first showroom in Älmhult. Additionally, in the same year, to save transportation costs and damage rates, Ingvar introduced the flat-pack, ready-to-assemble concept that, eventually, made IKEA so famous, and solidified its branding.

A decade later, Ingvar observed his customers’ habits and noticed that the IKEA stores were losing traffic during lunchtime. As a consequence, to avoid losing the customers’ attention and ability to purchase, he opened the first IKEA restaurant in 1960. Fast forward, in the ‘70s, IKEA has already expanded its physical presence in Norway, with more stores opening in Switzerland and Germany.

Lastly, in the early ‘80s, all this development called for a change in the company’s structure. With the aim of achieving a sustainable organization, Ingvar separates the ownership of the operations from the IKEA brand, thus introducing the franchise system.

The awards IKEA has won up until now

Before proceeding to the definitive aspects that form the IKEA omnichannel strategy, first things first. A retailer such as IKEA has gained enormous recognition and has been nominated on a global scale for various awards. After careful consideration, we have gathered the most important distinctions for its marketing campaigns, designs, and sustainability practices over the years.

• The “Unböring” campaign, Lamp – Grand Clio Award 2002
• The “Unböring” campaign, Lamp – London International Award 2002
• The “Unböring” campaign, Lamp – ANDY Awards 2002
• Grand Prix for the The “Unböring” campaign, Lamp – Cannes Lions International Festival of Creativity 2002
• Product award for the Hallarum Kitchen – EDIDA 2014
• Thank You Award – World Childhood Foundation 2015
• Innovative and Cutting-edge Designs Awards to four IKEA collections – Good Design 2018
• Circular Economy Award – World Economic Forum 2018
• CSR Engagement/Marketing Campaign of the Year – Edie Sustainability Leaders Awards 2019 
• Product design awards to nine IKEA collections – Red Dot 2019
• Gold Award for Best Performance in Home, Furniture, and DIY – PEAK Awards 2019
• Gold Award for Best Digital Multi-Channel Campaign – PEAK Awards 2019
• Silver Award for Best Video Campaign – PEAK Awards 2019
• Silver Award for Best Display Campaign – PEAK Awards 2019
• Silver Award for Best Paid Search Campaign – PEAK Awards 2019
• Gold Award for Best of YouTube / Innovation – Social Media Awards 2019
• Gold Award for Best of Facebook Family of Apps / Communication – Social Media Awards 2019
• Silver Award for Best of Facebook Family of Apps / Innovation – Social Media Awards 2019
• Gold Award for the IKEA Love Story campaign – PEAK Performance Marketing Awards 2020
• Platinum Award for Best In Retail / eCommerce for the best Facebook and Facebook family of Apps communication campaign – Social Media Awards 2020
• Platinum Award for Best In Retail / eCommerce for the best YouTube communication campaign – Social Media Awards 2020
• Gold Award for Best Use of YouTube for Action Campaigns – Social Media Awards 2020
• Gold Award for Best Dynamic Facebook Ads – Social Media Awards 2020
• Silver Award for Best Real-Time Activation for COVID-19 – Social Media Awards 2020
• Best Instore Solution – Reta Awards 2020
• Employer Recognition Award – MOSAIC Awards Ceremony 2020
• eTailer of the Year – e-Bizz & Social Media Awards 2020
•  eShop of the Year – E-volution Awards 2020
• Platinum Award for Customer Service and Operations – E-volution Awards 2020
• Gold Award for Home, Furniture, and DIY – E-volution Awards 2020
• Gold Award for eBusiness Innovation – E-volution Awards 2020
• Gold Award for Redesign – Relaunch (Website) – E-volution Awards 2020
• Gold Award for Customer Support – E-volution Awards 2020
• Gold Award for Omnichannel Experience – E-volution Awards 2020
• Silver Award for eCommerce Innovation – E-volution Awards 2020
• Silver Award for Mobile Commerce – E-volution Awards 2020
• Silver Award for Information Architecture – E-volution Awards 2020
• Corporate Award in Collaborating with Social Entrepreneurs – Catalyst 2030 Award, March 2021
• Gold Award in the Retail Stores category – Retail Business Awards 2021
• Silver Award in the eRetailers category – Retail Business Awards 2021

The key success factors that drive the IKEA omnichannel strategy

IKEA’s vision is “ to create a better everyday life for the many people ” and this message has been embodied in the brand’s strategy since its conception. This section is dedicated to the inspiring IKEA omnichannel strategy and the key axes that contributed to its stunning growth.

Democratic design approach

IKEA is the greatest furniture vendor around the world and the second-largest in the US, and these facts were the result of the brand’s holistic approach. The Democratic Design refers to the five dimensions that IKEA takes into account when they design a new product, evaluating the process of their product range.

These five elements are based on function, form, quality, sustainability, and affordability. The form reflects the minimalistic aesthetics of each furniture piece, while the quality is their durability and resistance through time. The minimalist architecture is both a statement and a very resourceful way to easier manufacture . Easier forms require less time to be produced, and less time to assemble, resulting in efficiency and lower labor costs. 

With regards to functionality and sustainability, IKEA’s strategy focuses on using mindfully the available resources to create proper goods for their clients. IKEA is famous for its sustainability practices and its recyclable products from particleboard (recycled wood chips blended together).

DIY mentality

Affordability is the fifth pillar of IKEA’s positioning and requires a section on its own. Ingvar desired a franchise that would make life easier both for the company and for the consumers. The aforementioned qualities that encompass the company’s production line would be meaningless if transportation and installation costs were sky-high.

Every element is carefully selected and the flat-pack delivery/self-service method is the final piece of the puzzle. The distribution system reduces both the manufacturing process and the damage costs, increasing productivity and trading at a massive scale.

Demographic targeting and (literal) shelf life

IKEA had an incredible insightfulness to its target audience, without even realizing it.  Older generations stumbled upon an endless headache when buying home supplies because they wished for furniture that would last a lifetime. IKEA’s biggest asset and offer to the fundamentals of the retail industry is the ephemeral; a mentality we observe in the younger generations, starting from the Millenials and thereafter.

This philosophy was embraced by a younger demographic that wasn’t interested anymore in lifetime investments; by making an archaic tradition moot, the brand relieves a huge amount of stress from the buyers. With quality and affordability but not meant to last forever, the IKEA brand supplies its clients with easy-to-use furniture that, ultimately, is even easier to dispose of and be replaced. As a result, this trend influenced the majority of the retail big leagues, forced conventional furniture businessmen to realign their interests and recreate this model, albeit unsuccessfully. 

People and Planet Positive

The Swedish giant has dedicated its life’s work to make the world a better place within the planet’s boundaries. The People and Planet Positive strategy is the conglomerate’s agenda summarizing the ways in which they are already making a difference and stating their future plans.

This IKEA strategy abides by the UN Sustainable Development Goals , is updated annually, and is infused in the entirety of the brand’s value chain. This agenda is divided into three sections, one more significant than the other; healthy & sustainable living, circular & climate positive, and fair & equal. 

The ratification of the Paris Climate Agreement was an important step towards the company’s attempt at a global coordinating action. So far the enterprise is already working with recyclable materials, provides solutions to water and energy efficiency, and gradually eliminates harmful chemicals or virgin fossil plastic.  IKEA’s social impact relies on the support of children’s rights, gender equality, social entrepreneurship, and inclusiveness. 

Unparalleled shopping experience

IKEA has mastered the art of destination marketing, redefining the customer experience and paving the way even in the post-COVID-19 era. Before social distancing and gathering restrictions became the new norm, the company’s physical presence altered the customer journey in more ways than one.

In-store amenities, such as children’s playrooms and the well-known IKEA restaurants serving Swedish delicious food, have played a very significant part in the company’s growth, recognition, and longevity. Last, but not least, we couldn’t omit the indoor structure of their stores, with its “showroom” architecture. This arrangement allows for proper product demonstration, fortifying the visitor’s shopping experience.

4 examples when IKEA’s omnichannel strategy skyrocketed customer experience

We have already highlighted how the pandemic expedited the already existing inclination towards the omnichannel experience. Making the implementation of a strong eCommerce strategy mandatory, many organizations changed their methods, IKEA included.

Example #1: Physical and eCommerce Integration

Ever so cautious, the company was very careful when they decided to actually expand their digital presence. Slow and steady wins the race, with IKEA firstly broadening its online product range, and then proceeding to the creation of high feature mobile applications, and digital catalogs.

Example #2: The Store Visits metric as IKEA’s main offline measurement solution

Store Visits is the epitome of the IKEA omnichannel strategy, measuring the impact online ad clicks have on their stores’ physicality. With the application of brick-and-mortar conversion rates and average basket values, the retailer estimates how their store visits are shaped by the use of mobile ads .  This is one of the tactics that make IKEA’s strategy an exceptional omnichannel marketing example .

Example #3: Buy online and pick up in-store model

IKEA’s Click & Collect service was available long before the unfortunate COVID-19 pandemic began, but was briefly paused, due to global government restrictions for non-essential retailers.  Luckily, collective inoculation will eventually allow consumers to resume their pre-crisis everyday activities, slowly but surely notwithstanding. 

On that note, the brand’s service is working like clockwork, with an entire ecosystem to support it. Clients place their order online, choose their preferred pick-up location and the company’s Customer Service department informs them accordingly when their purchase is ready for collection.

Some skeptics would say that this is not such a groundbreaking feature, though the brand begs to differ. IKEA’s physical presence is an exemplary location with specially designed spaces for the Click & Collect service and explicit signage. Of course, the company’s ready-to-assemble/flat-pack model is what makes this procedure easy and acknowledged by peers and customers alike. 

Example #4: IKEA’s innovative apps and the AR application that changed the digital furniture retail

The Scandinavian giant knows how to create original mobile apps and it shows. Apart from the  Click & Collect feature, the furniture retailer is determined to erase the gap between the offline and the online with many retail innovation methods.

IKEA’s mobile app, promoted as The Smallest IKEA Store, was designed to elevate the customers’ journey and form a seamless experience by providing a very useful functionality. According to stock levels and estimated deliveries inventory, the app offers incredible insights on item availability with a detailed index. This important piece of information offers customers the ability to estimate each product’s stock availability, organize their purchases, and always stay updated on shortages.

Additionally, the app creates wish and shopping lists and collects points for the IKEA loyalty program. The shopping list can be used either on the website or in-store, includes prices for non-subscribers or loyal members, and guides visitors where they need to go to acquire their items.

In total, IKEA lists three incredibly interesting and useful applications on its official website. The first was mentioned above while the second is based on IKEA’s sustainable philosophy, and it is named the IKEA Better Living App. The application offers green advice on everyday habits, logs the user’s behavior, and incentivizes the clients with a point-based reward system.

For those of us that love to shop online, measuring dimensions and imagining an appliance or a piece of furniture in our home space has always been a nightmare. IKEA saved us the trouble and conceived the revolutionary AR application, the famous IKEA Place. Using the magnificent properties of augmented reality, customers now have a definitive view of the products they desire before ordering them online.

All of us have wondered at some point if this chair will fit in our kitchen, or if we will even like it once we see it up close. The AR offers consumers a much-needed and much-appreciated complete visual of the IKEA catalog so that they can proceed with their order easier and with more confidence.

IKEA’s eCommerce website

As in all our case studies, we’ve analyzed 4 pages as templates of the company’s website to identify eCommerce best practices and mistakes you should avoid.

A. Analyzing IKEA’s Home Page

What we liked:

• Short, but informative and comprehensive: Minimalism for IKEA is not just an aesthetic direction at this point, it is a state of mind. The home page enlists three major and explicit categories in the drop-down menu located in the upper left corner, and the middle is divided into two spaces. All in all, the user can find everything, from store locations to the renowned IKEA services, easily, in no time, and without scrolling forever. 
• Sofia, the friendly AI:  Just like Boots , IKEA trusted the AI technology creating a friendly AI virtual assistant named Sofia. The easy-to-use chatbot is an extra bonus to the existing easy-to-use interface. 
• Sticky elements: An extremely useful feature including delivery tracking, login, the customers’ wishlist, and, of course, their shopping cart.

What we didn’t:

• No sign-up/entry pop-up: Sometimes users may find themselves irritated by the presence of pop-ups, but as a retailer or a CRM do not be alarmed. Surprisingly, pop-ups have an average conversion rate of 3.09% ; that is why consumers are hesitant at first, but in the end, they can’t resist the urge to subscribe.

B. Analyzing IKEA’s Category Page

• Compare, quick-add-to-cart, and quick-view functions: A very successful element is the quick features, as they make the visitor experience smoother and a lot easier. As far as the “compare” possibility is concerned, now this is amazing. Customers can compare up to three different products and estimate what suits them best without opening multiple tabs or searching endlessly. 
• Reward points: Each product includes the exact amount of points that the loyal members of the IKEA family will collect from their purchase. The company’s loyalty program offers different prices to its subscribers, making it all the more seductive. 
• Out-of-stock notifications: Interesting feature that lets the customers know when a product is out-of-stock, it offers simultaneously the option for a notification when available. 
• Recently seen section: The “recently seen” reminder is a nice way to increase AOV while keeping your customers engaged in your website a little longer.
• In need of more sticky elements on the menu: The presence of sticky elements is paramount due to its increase in mobile conversions. Besides the technical standpoint, it makes the interface more functional and cohesive.

C. Analyzing IKEA’s Product Page

• Credit card monthly installments: Customers always appreciate alternative payment options, and IKEA has made sure to present lenient options.  
• Availability per store: Location, location, location. Convenience is the mother of revenue and website users wish to know the whereabouts of their favorite products. 
• Relevant product recommendations: Divided into three categories: “similar products”, “other people also bought” and “especially for you”, the Swedish company invests in the boost of the average order value (AOV), personalization, and the need to create scarcity and demand.  
• Detailed product description: The product page includes everything; from dimensions to product guarantees, and of course, the most important info of all: the PDF assembly instructions. 
• Not enough visuals: Unfortunately, the IKEA product page does not have enough clear product photos. This can prove potentially harmful for the retailer and prevent potential buyers from completing their purchases.

D. Analyzing IKEA’s Checkout Process

• Delivery options and shipping charges: Apart from the Click & Collect service, visitors can place their postal code and schedule their online delivery. Both options are located in the Checkout menu and are really user-friendly. In the case of home delivery, the shipping costs are already included.
• Guest checkout : Always a favorite eCommerce best practice, the guest checkout alternative increases conversions and revenue. Approximately, 28% of the customers abandon their carts when asked to create an account.
• Bestselling recommendations: Another resourceful and frequent way to increase the AOV is product recommendations and the brand has done that incredibly well.  
• No exit-intent pop-up: An exit-intent pop-up is always eye-catchy and informative. It is also a very well-known eCommerce best practice that increases conversions by ~1-2%.

Interesting eCommerce technology and tools IKEA uses

Using the buildwith tool we scanned the Swedish conglomerate’s website and we highlighted the most impressive technologies spotted. 

• Microsoft Bot Framework : Sofia the AI was built with this framework. Great tool for constructing conversational virtual assistants. 
• Google Conversion Tracking: Free tool that monitors and analyses customer behavior towards the website’s ads. 

Some other interesting eCommerce tools that are worth mentioning, are the ones used by the top supermarket chains in the UK, like  ASDA with the Omniture SiteCatalyst and Hotjar, Sainsbury’s with the Pay@Browse and Screwfix with the Content Square & Bazaarvoice.

Retail technology that IKEA is missing

Apart from the tools we did find on the company’s website, we could not omit the ones that were missing. The IKEA omnichannel strategy would significantly improve with the use of a powerful marketing automation solution. 

• ContactPigeon: To fully nullify the distance between the offline and the online world, IKEA could include some of ContactPigeon’s unique key features. Integrating data from physical stores with online customer data and running omnichannel QR code campaigns would be a significant step in that direction.

Impressive IKEA stats you shouldn’t miss

To fully grasp the company’s reach in the global retail industry, we present you with some interesting statistics and facts about IKEA. 

• As of 2021, the Swedish group is valued at $48.1 billion and has stores in 55 countries around the world.  
• IKEA has 445 warehouses on a global scale.
• In 2020, more than 800 million people made their purchases from an IKEA store. 
• IKEA has 52 warehouses in 27 states in the US. 
• IKEA Canada operates 12 robots, 30 storage and retrieval systems, and a floor conveyor system that reaches 750 meters. 
• Germany has 53 IKEA stores and in 1974opened its first warehouse in Munich. 

Omnichannel leads you to the top

As you can imagine, the IKEA omnichannel strategy has been at the forefront from the beginning, even if Ingvar didn’t intend to at first. This success, undoubtedly, was the result of a consistent, carefully executed strategy across all channels, and customer touchpoints. 

Although, even in major cases like IKEA, where every part works perfectly towards a common goal, constant optimization and restlessness are very important. Omnichannel technologies evolve day by day, therefore keeping up to date with the latest technologies is essential. Customer retention and customer lifetime value (CLV) are immediate results of brand loyalty, and brand loyalty is based on customer engagement. 

ContantPigeon’s sophisticated platform is dedicated to building strong relationships between customers and the brands they love. Specifically designed for the retail sector, our company’s advanced automated features allow retailers and marketers to reach their audience through a wide range of channels. As one of the leading omnichannel marketing automation brands in Europe, we invite you to book a free consultation and explore in detail the benefits of a truly customizable platform. 

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Unlocking skills and growth: how ikea is empowering its workers.

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Ulrika Biesèrt, the chief human resources officer and global people and culture manager at Ingka ... [+] Group, the parent to Swedish furniture company IKEA

Employee engagement in the United States is dropping. A recent survey by McKinsey & Company reveals that worker engagement fell to 32% , down 3% from the prior year. While these individuals fulfill the basic job requirements, they do just the bare minimum. Factors that lead to disengagement include feeling undervalued, poor work-life balance and a toxic workplace culture.

In a conversation with Ulrika Biesèrt, the chief human resources officer and global people and culture manager at Ingka Group, the largest IKEA retailer, the executive shared how she looks after her 170,000 workers in more than 31 countries.

Biesèrt is committed to strengthening workers’ employability at Ingka through lifelong learning, development and reskilling. The CHRO emphasizes employee values, kindness, collaboration and prioritizing mental health and emotional wellbeing.

Values Are As Important As Performance

Employees, specifically in the tech sector, dread being subjected to a performance improvement plan, fearing they’ll be pushed out the door. In stark contrast, at IKEA, performance evaluation is equally weighted, with a 50% focus on the business KPIs, deliverables and performance goals and 50% on values and leadership.

Leadership expectations at the company cover the following topics:

• “I communicate with impact.”
• “I communicate in an inclusive and straightforward way.”
• “I act with honesty and transparency and show my vulnerability in dialogue with others.”
• “I lead by example.”
• “I live our IKEA values while performing in our business as what we do and how we do it is equally important.”

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“We ground our work in our vision and values, striving to take responsibility and take care of people,” Biesèrt said.

IKEA has several initiatives to support its workers' mental health and emotional wellbeing. The international retailer offers flexible wellness days to its employees and has a “co-worker experience manager” tasked with fostering a great workplace for employees to facilitate a great customer experience. This entails focusing on areas such as health and wellbeing, employment practices and reward structures.

Looking After Workers

The company champions the concept that everyone is a learner, has talent and can lead, referring to this movement as “leadership by all,” in which the organization empowers individuals to help lead the business together.

Employees are encouraged to share their career goals and take ownership of their development. For example, an IKEA employee can meet with their manager and openly state, “I want to become a team leader. What do I need to do to achieve that?” Nearly 90% of the company’s managers were hired from within , according to Alejandra Piñol, who is responsible for talent at Ingka Group.

Piñol said about the company’s inclusive leadership initiatives, “We want to encourage each of us to lead, to feel trusted and take decisions, so that, in turn, we better serve our customers.” She added, “Giving everyone the opportunity to lead allows for real entrepreneurship, which is in the DNA of IKEA.”

The company has a program in which staff at all levels try new assignments to gain new skills and a sense of appreciation for the jobs being carried out by colleagues. If you pop into an IKEA store one day, you may see Biesèrt or Piñol onsite doing manual tasks.

Deploying AI to Help Managers And Increase Retention

In an evolving business landscape, the company must contend with trends like digitization, automation, e-commerce, diversifying workforce models and changes in traditional retailing.

“These changes mean that life-long learning and innovation are prerequisites, and our future needs are about unlocking skills and driving growth,” said Biesèrt. To meet the demands of the future, IKEA is leveraging artificial intelligence to improve its operations and enhance the customer experience.

Biesèrt is focused on upskilling and reskilling workers for resilience in the age of AI. For instance, the company uses AI to transform call center employees into interior design advisors.

Other Use Cases For AI

• Support managers with automated retention analysis customized for their team
• Help pinpoint the employees in most need of attention and suggest topics to address
• Keep track of agreed actions
• Enables follow-up that managers take their responsibility to act on employee turnover

The deployment of AI to help increase retention has been rolled out to 122 stores in six countries, with more coming. The results from the first three countries showed an improvement of voluntary turnover by 2.7%.

Managers will conduct a probability analysis using data, such as time in their position, salary, schedules and more, to determine who is at high risk for voluntary turnover. Armed with this valuable insight, supervisors can initiate a dialogue with the employees regarding their work life.

For example, if the data shows that hours worked is the most significant contributing factor to an employee potentially voluntarily separating from the company, the manager can touch base with the employee and inquire if everything is okay and whether they feel they are working too much and any adjustments are needed. This practice also holds managers accountable for making the necessary improvements to ensure employee retention, engagement and happiness.

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IKEA: leading the way in sustainability

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Reducing carbon emissions

IKEA recognises the impact its operations have on the environment and is taking action to minimise that impact. For example, the company has made significant investments in renewable energy, such as wind and solar power, and is actively working to transition its energy sources away from fossil fuels. IKEA has also set ambitious targets for reducing its carbon emissions, such as reducing energy consumption in its stores and distribution centres by 80% by 2030.

Developing sustainable products

IKEA is further committed to developing more sustainable products that will positively impact the environment. The company is investing in research and development to create products that use less energy and resources and have a longer lifespan. For example, IKEA developed furniture made from renewable materials, such as bamboo, and is working to improve the recyclability of its products.

Inspiring action

IKEA's commitment to sustainability is not just limited to its operations. The company also works to inspire others to take action and make a difference. Through its commitment to becoming climate positive by 2030, IKEA is setting a bold example for other companies to follow. Additionally, it is working to educate its customers about the importance of sustainability and its role in creating a more sustainable world.

The future is bright

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IKEA culture and values

We have a strong set of values. They are the compass that guides us in everything we do. Our culture is formed when we put these values into action.

The IKEA values were shaped during a time in Sweden when the living conditions were harsh. People had to get by with what they had. This fostered a culture of entrepreneurship and hard work, and made people more pragmatic and mindful of resources. A lot has changed since the early days of the IKEA brand. Today we have grown into a global business with the size and reach to create positive change, not only for people but also for the planet. But on the inside, not a lot has changed.

We are straightforward, innovative, creative and common-sense problem-solvers. We’re constantly trying to find better ways to get things done and to bring out the best in ourselves and others. We strive for a nurturing environment that encourages the entrepreneurs in us. We’re passionate about innovation and finding new solutions.

We’re constantly trying to find better ways to get things done and to bring out the best in ourselves and others.

The 8 IKEA Key Values

Togetherness.

Togetherness is at the heart of the IKEA culture. We are strongest when we trust each other, pull in the same direction and have fun together.

Caring for people and planet

We want to be a force for positive change. We have the possibility to make a significant and lasting impact — today and for the generations to come.

Cost-consciousness

As many people as possible should be able to afford a beautiful and functional home. We constantly challenge ourselves and others to make more from less without compromising on quality.

A simple, straightforward and down-to-earth way of being is part of our Smålandic heritage. It is about being ourselves and staying close to reality. We are informal, pragmatic and see bureaucracy as our biggest enemy.

Renew and improve

We are constantly looking for new and better ways forward. Whatever we are doing today, we can do better tomorrow. Finding solutions to almost impossible challenges is part of our success and a source of inspiration to move on to the next challenge.

Different with a meaning

We are not like other companies and we don’t want to be. We like to question existing solutions, think in unconventional ways, experiment and dare to make mistakes - always for a good reason.

Give and take responsibility

We believe in empowering people. Giving and taking responsibility are ways to grow and develop as individuals. Trusting each other, being positive and forward-looking inspires everyone to contribute to development.

Lead by example

We see leadership as an action, not a position. We look for people’s values before competence and experience. People who ‘walk the talk’ and lead by example. It is about being our best self and bringing out the best in each other.

China Case Study: Retail - Underage Employees

A major global retailer received a hotline allegation that underage workers were at a factory producing one of their suppliers in China. Kreller was asked to conduct a surprise audit, utilizing the right-to-audit clause in their contract. 

Corporate Investigation

Kreller conducted due diligence at the company, which included interviewing employees, touring the facility, including the residential dormitories, and obtaining copies of personnel records, including resident identity cards. While we were provided many excuses to deter our interviews, such as that they had a handicap such as being deaf or mute, were sick, or were out on holiday, we were able to convince several employees to open up and confirm the names of four underage workers from the personnel records. 

According to management, the employees were not at the factory that day as they were on “holiday” and would not return for a month. We requested to interview one employee we saw in the facility who looked particularly young; however, no personnel records could be provided for her by management, and she indicated that she did not have her ID with her.

Key Findings

We requested the factory to send us copies of their identification documents for all employees we couldn’t interview or didn’t have identification on them on the day of the interview. Then, we compared the ID provided against the personnel records, compared the Chinese Zodiac Animals provided by the employee during the interview, and conducted validation of their ID number configuration to determine which employees appeared to have fraudulent identification. As a result of the investigation, the client discontinued their supplier relationship with the factory. Because of the corporate investigation, the supplier revealed a lack of due diligence by not verifying employee ages and ensuring compliance with labor laws.

This discovery highlights unethical and illegal sourcing in the global supply chain. Due diligence and transparency in business practices must be prioritized to ensure that all factories and businesses do not employ underage workers. Due to our findings, the major global retailer took responsibility and sent a message to the industry by terminating their relationship with the factory.

About the Kreller Group

For nearly 30 years, Kreller has relied on “extensive boots-on-the-ground” research, conducted by investigators who are well-versed in worldwide military, law enforcement, business and government matters to deliver the concise information our clients need to make decisions.

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Harvard Business School examines DBS' AI strategy and implementation in its first case study focusing on AI in an Asian bank

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Sep 16, 2024, 10:00 ET

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Authored by Feng Zhu , HBS Professor of Business Administration, the case highlights the bank's use of AI and takeaways for companies navigating technological change

SINGAPORE , Sept. 16, 2024 /PRNewswire/ -- Harvard Business School (HBS) has published a case study on DBS' strategy towards Artificial Intelligence (AI), highlighting the bank's use of AI. Developed over the course of eight months, the case is the first relating to AI that HBS has done on an Asian bank, and the first for a Singaporean company.

Authored by Professor Feng Zhu, MBA Class of 1958 Professor of Business Administration at HBS and Co-Chair of the Harvard Business Analytics Program, the case maps the bank's strategy and implementation as it industrialised its use of AI since 2014 to unlock business value, as well as how DBS is now approaching Generative AI.

Professor Zhu has authored over 80 articles, cases, and notes in prestigious practitioner and academic journals, including the Harvard Business Review, American Economic Review, and Management Science. His research has also won international awards, such as the Inaugural Practical Impacts Award from the INFORMS Information Systems Society, which recognises business school academics with outstanding leadership and sustained industry impact through their research.

Professor Zhu said, "The case study on DBS illustrates how AI technologies can potentially transform traditional industries, such as financial services, while driving value creation. By integrating AI into core processes, companies can unlock new potential for customer-centricity and operational excellence."

DBS has scaled the use of AI across all parts of the bank, embedding the technology into use cases to enhance customer experience and boost employee productivity. For instance, DBS leverages AI to generate hyperpersonalised nudges to enable customers to make better investment and financial planning decisions, provide relationship managers with deeper insights to better engage their customers, and develop tailored career and upskilling roadmaps to help every employee build long-term careers with the bank.

DBS CEO, Piyush Gupta , said, "AI is shaping up to be an absolute game changer in the way we live and work. DBS has been working with AI for over a decade now, and in recent years, we've managed to industrialise the use of AI across the bank. We today deploy over 800 AI models across 350 use cases, and expect the measured economic impact of these to exceed SGD 1 billion in 2025, after sequential doubling in the last few years. More importantly, the infrastructure and governance framework we established during our AI journey have put us in good stead to unlock the potential of Generative AI while managing its emergent risks."

The case will be taught in the HBS Master of Business Administration (MBA) Program, the Senior Executive Leadership Program – China , as well as executive education courses relating to AI and digital transformation.

In 2023, DBS was ranked #1 for AI Strategy Leadership in the Global Evident AI Index, an independent benchmark which ranks 50 of the largest financial institutions in North America , Europe and the Asia-Pacific based on their approach towards AI readiness. Overall, DBS ranked #10, and was the only Asian bank to be in the Index's Top 10. In 2024, Celent, a leading global research firm focused on technology for financial institutions, recognised DBS with a Global Model Bank Award for AI Industrialisation.

The case study can be accessed at:  https://www.hbs.edu/faculty/Pages/item.aspx?num=66332

DBS is a leading financial services group in Asia with a presence in 19 markets. Headquartered and listed in Singapore , DBS is in the three key Asian axes of growth: Greater China , Southeast Asia and South Asia . The bank's "AA-" and "Aa1" credit ratings are among the highest in the world.

Recognised for its global leadership, DBS has been named " World's Best Bank " by Global Finance, " World's Best Bank " by Euromoney and " Global Bank of the Year " by The Banker. The bank is at the forefront of leveraging digital technology to shape the future of banking, having been named " World's Best Digital Bank " by Euromoney and the world's " Most Innovative in Digital Banking " by The Banker. In addition, DBS has been accorded the " Safest Bank in Asia " award by Global Finance for 15 consecutive years from 2009 to 2023.

DBS provides a full range of services in consumer, SME and corporate banking. As a bank born and bred in Asia , DBS understands the intricacies of doing business in the region's most dynamic markets.

DBS is committed to building lasting relationships with customers, as it banks the Asian way. Through the DBS Foundation, the bank creates impact beyond banking by supporting businesses for impact: enterprises with a double bottom-line of profit and social and/or environmental impact. DBS Foundation also gives back to society in various ways, including equipping underserved communities with future-ready skills and helping them to build food resilience.

With its extensive network of operations in Asia and emphasis on engaging and empowering its staff, DBS presents exciting career opportunities. For more information, please visit  www.dbs.com .

SOURCE DBS BANK LTD

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