Inside IKEA’s Strategy for the Evolving Role of Stores: A Global Perspective

May 10, 2023

Shoptalk 2023 provided an insightful perspective on the evolving role of stores in the retail industry. One of the key speakers, Tolga Öncü, the Retail Operations Manager (COO) at Ingka Group, shed light on how the company adapts to changing consumer needs and behaviors.

An IKEA store in central Vienna, Austria is designed like a beautiful shelving unit (source: Architectural Digest)

Ingka Group, which owns and operates IKEA Retail, is a retail giant known for its flagship blue stores with consistent design and layout. However, Öncü emphasized that the company recognizes the importance of understanding local markets and their customers’ needs. To achieve this, IKEA conducts home visits and surveys to get insights into how people live and their desires and frustrations. With that knowledge, IKEA tailors how it presents its range of products in different countries.

However, Öncü emphasized that the flagship stores remain a critical component of IKEA’s presence and will continue to be so in the future. These stores offer customers the opportunity to experience the “full IKEA” and meet the company’s employees, which is not possible through digital channels.

To complement these flagship stores, IKEA has been testing smaller-format stores. These stores are an opportunity for customers to interact with IKEA more frequently in a physical context. They also provide a more significant competitive advantage to offer the full range of products within a 1-hour radius of where people live, reducing the cost of last-mile delivery.

IKEA is also rethinking the role of its flagship stores. One way is to increase the number of room sets and solutions offered to customers. Another way is to make the stores a natural part of the omnichannel network to decrease the cost of the last mile and pass those savings onto customers.

Öncü also discussed how the company has been implementing robotics and automation in its operations. While some may worry that automation would lead to job losses, Öncü emphasized that it has created the opportunity to reskill and upskill employees. Moreover, the cost savings from automation have allowed the company to invest in hiring more people.

IKEA’s small-format store in West London (source: House Beautiful)

Öncü also touched on how changing consumer behavior is affecting IKEA’s strategy. He noted that store visits are up, with the Netherlands and India seeing positive trends. This increase in store visits is likely due to IKEA’s overinvestment in meeting with customers and revamping its stores and experiences. Furthermore, IKEA recognizes that 8 out of 10 customers start their journey on digital channels before coming to the store. As a result, the company has been opening smaller-format stores in downtown locations closer to where people work and socialize.

In conclusion, Ingka Group’s Retail Operations Manager provided a valuable perspective on the evolving role of stores in retail. While digital channels are an important part of retail, IKEA recognizes the need for customers to touch, feel, and experience products. The company is adapting its operations to changing consumer needs and behaviors while continuing to invest in its flagship stores. It is an orchestration of different instruments, as Öncü put it, to maintain IKEA’s position as a world-class retailer.

If you also believe in the power of stores and want to ensure operational excellence in your fleet, reach out to Zipline to see how we can help. Zipline was built in service to stores and has helped its customers triple store execution, engage associates to drive better performance, and ensure complete alignment with HQ through improved communications. 

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