Digital Transformation of IKEA

What does it mean for IKEA, one of the most well-known retail companies in the world, to go digital? IKEA has been in the analogue business of selling its own brand of home products to consumers for almost 80 years. Barbara Martin Coppola, a veteran of Google, Samsung, and Texas Instruments, was hired three years ago by IKEA Retail (Ingka Group) to lead the firm through a digital transition. These three years were encompassed with lots of changes.

With the pandemic and the closure of around 75% of IKEA shops, IKEA ramped up and accelerated even more as consumers turned to the internet and digital solutions. Things that would have taken years or months to complete were completed in days or weeks. Changes had to be done in flow of goods, supply mechanisms and floorpans of store.

With digital transformation, IKEA wasn’t transforming their business: they were exploring potential new offers to customers, new ways to bring offers to customers and operate business. But even then, in order for digital transformation to be successful, it must be integrated into every element of the company.

This procedure is now akin to an iceberg. IKEA has the consumer requirements and adaptability at the tip of the iceberg — they’ve revamped everything surrounding customer engagement and new purchase experiences — and they’ve made major changes to their company and operational model under the surface. The resulting construction under the surface is much bigger than it’s posiible to see from outside.

IKEA is revamping customer interactions both digitally and offline. For instance, customer can start planning the new kitchen by thenmselves on website and then personally come to store and continue the process. Another example is «Shop & Go» feature in mobile app, which allows customers to use smartphone to scan items and automatically pay for them, thus skipping the checkout line. That required a complete modernization and reengineering of all the tech landscape and the full value chain, which now has to be more flexible to create a seamless customer experience. These changes are occurring at several levels inside the organization and necessitate a multi-year plan.

The strategy’s reach has grown substantially over time, with ecommerce increasing from 7% to 31% of sales in only three years. However, all the changes were planned that way so digitan transformation wouldn’t change original vision of IKEA. In a sense, they remained to be the same company at the core and saved their identity.