What occurs when the disrupter is faced with disruption? Ikea, a retail pioneer in the 1950s, completely transformed the industry with its out-of-town stores and do-it-yourself model. However, the company’s chief executive, Jesper Brodin, quickly realized that customers were no longer satisfied with this approach when he took over in 2017. Brodin personally traveled to various countries to gather feedback from customers, all of whom expressed the same concern: Ikea was not convenient for their needs.
Customers complained about the lack of accessible shopping options, particularly when they needed to make quick purchases. Brodin understood the importance of meeting customers on their own terms and respected their decision. He presented the customer feedback as a “travel report” and realized that the new strategy needed to be shaped by their demands.
Brodin spearheaded changes within Ikea to address these challenges. The company heavily invested in its online business to keep up with competitors like Amazon and Alibaba. It also experimented with smaller store concepts in city centers and shopping malls, which was a departure from their previous approach. Ikea also introduced new services, such as home delivery and furniture assembly through the acquisition of TaskRabbit, an odd jobs service.
One of the outcomes of this transformation is the smaller store in the center of Paris, near the historic La Madeleine church. This marked a significant shift for Ikea, which was known for its massive warehouses located in more remote areas. Brodin acknowledged that making tough decisions was easier because the old business model was clearly failing to meet customers’ needs.
The presence of Ikea’s founder, Ingvar Kamprad, added to the challenges faced by Brodin. Kamprad was initially skeptical of e-commerce and preferred to stick with the established ways of doing business. However, Brodin recognized that society had changed and that Ikea needed to evolve to stay relevant.
Building momentum for change within the company was a slow process for Brodin. As a leader, he had to inspire and engage with the details while tackling difficult problems. Two main difficulties emerged during the transformation: accepting the need to change the business model and dealing with the fear of the unknown. Brodin acknowledged that not taking action was not an appealing option.
The results of Ikea’s transformation are promising, with online sales increasing from 6% to 25% of the total revenue. A new smaller store in Stockholm has also seen a significant increase in footfall. Despite Kamprad’s initial resistance, some of his ethos, such as the acceptance of mistakes, still guide Ikea. Brodin encourages entrepreneurship within the company by giving top staff a “license to go bananas” card, allowing them to take risks without fear of punishment.
Brodin is not exempt from making mistakes himself and admitted to three misjudgments at the Madeleine store in Paris. These mistakes led to the reinstatement of the maze-like layout, adapting logistics in the city center, and reevaluating store ownership. He also acknowledged the need to strike a balance between small and large stores and optimize existing stores to fulfill online orders.
Brodin’s approach for Ikea can be summed up as “love the past, create the future.” The company’s current focus is on a three-year sprint, and the next phase may address sustainability and the supply chain.
Overall, the disruption faced by Ikea prompted a transformation that put customers’ needs at the forefront. By embracing change and embracing new strategies, Ikea has managed to adapt and improve its position in the retail industry.
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