What do we do today if we want to buy a car, an appliance or furniture for our home? No, most of us certainly do not go out and look around 10 stores for the product. We go online, check out the product, its price and other details. We compare similar products, read reviews and finally decide what to buy. Going to a store is only an option when we really want to understand the touch and feel and to finally make the purchase. Pandemic has come and forced even the most adamant of us to shift to online shopping. So, what would a brand like Ikea which has been providing furniture to people in the most analog way do at this juncture? Well, they believed in transforming their business with the words ‘Digital’ and ‘Customers’ at the heart of that transformation.
And There Was a Pandemic
In 2020, when the world was hit by the Coronavirus, nearly 75% of the Ikea stores around the globe were closed. The customers moved towards online shopping. Ikea has seen an opportunity in this challenge. They accelerated the processes, focused on the customer reach and developed digital systems to understand and make sense of the data they have about the customer preferences. The mantra of digital is embedded into every aspect of Ikea. The work, decision making, and managing the company is digitalized. Through their website and mobile application, they have found innovative ideas to engage and interact with customers.
Customers Are the North Star
One of the biggest advantages businesses get from leveraging digital is the data. Customers’ likes, dislikes, personas and behaviors. When they interact with our business online, our digital systems provide us with huge data analytics. According to Barbara Martin Coppola, CDO at IKEA Retail, it is really important to give the level of respect people’s data deserve. The digital transformation of Ikea has put customers at the center of things. They have given the utmost attention on delivering what the customers need, and in the way they want.
As a part of this, they have enabled a functionality which lets the customers choose what data to share with Ikea at a given point of time. This gives more relevant data about the customers and also develops a sense of trust among the customers for the brand. Using technology, Ikea could successfully build the same amount of trust with the customers as their offline stores, while finding better ways to suggest what they need.
Not just this, keeping the customer centric approach in mind, they have developed their platforms which give full control for the customers to take a look at the products, choose what they want and personalize them in the way they like in a seamless way. Ikea started reengineering the existing value chains and hired skilled people who would be able to bring agility to the transformation. The existing workforce was reskilled in a way that they can contribute to the modern vision of the brand.
Ikea Today
In the process of digital transformation, the whole supply chain of Ikea was digitized. Algorithms which provide timely inputs for inventory management and logistics have enabled the company to operate at different speeds for both online and offline stores. In the process, even their stores have become fulfillment centers. The customer interactions were changed. Leveraging the digital, Ikea has completely transformed the way they reach out to customers.
In spite of this giant transformation, CDO Barbara stresses on the fact that the DNA of Ikea remains the same. “The DNA of IKEA doesn’t change, and it’s important that it doesn’t. Operating model wise, it means we’re adding data, increasing speed, using analytics in all our decision-making. Also, the skills we’re using are changing. I recall when I started at IKEA, my boss, Jesper Brodyn said, “We’re changing everything — almost.” To me, this means we’re changing how we do things, but the soul of the company stays the same”, said Barbara in an interview to Harvard Business Review.
This transformation helped Ikea in staying relevant to the rapidly changing customer preferences. They could triple their e-commerce levels in the last three years. Subsequently, Ikea has seen e-commerce growth from 7% to 31%. They have recalibrated their workforce, modernized their supply chain and stayed true to the DNA of their company to enter into an era of everything digital. And in all of this, in Barbara’s words, “The digital transformation is not a goal in and of itself, and it is so much more than technology”.
Understanding our customers and building our digital transformation around their needs is an important step. Having the technology is certainly not enough. Knowing a human centric approach towards using that technology is the difference between a successful and an unsuccessful digital transformation. Probably the biggest take away from the success story of Ikea is to stay true to our company’s values, culture and ethics in spite of a revamp of almost everything that we are doing.
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