Christina Li

Oct 30, 2020

2 min read

What is Ikea’s latest playbook?

Ikea, a Swedish-based furniture chain, recently announced their furniture ‘buy back’ program in the UK. Under the program, consumers can bring back fully-assembled furnitures to Ikea. And Ikea will then buy it at 30–50% of the original price depending on conditions. These items will then be resold at the same price as secondhand furniture, or donated to charities.

So, why now? What’s the strategic tactic here? What’s the playbook?

It’s hard to imagine that Ikea was once a startup. Ikea disrupted how the furniture industry manufactured and sold their products. They were able to reduce production and warehouse costs, thus reducing the price, for example. The introduction of flat packs which are ready-to-assemble at home were a game changer at the time. Furnitures that were once made to order, are now picked through the famous Ikea catalogue, with standardised processes. Labour costs diminished as the consumers do the assembly at home. And flat packs required less storage space than built furniture pieces.

Ikea is adapting to the changing consumer needs and the call for transparency.

Strategic tactics

Brand engagement

Ikea is closing the loop to create a circular economy. Sustainable initiatives are becoming important to organisations. Consumers want shop and give loyalty to brands that align with their values.

Become a market place connecting buyers and sellers

Ikea might become a marketplace connecting buyers and sellers to second hand furnitures.

Tapping into new customer groups

This initiative is a chance to tap into customer groups that Ikea may not have engaged before. First, existing Ikea customers who want to recycle their furniture (or make some cash on unused items). And second, new customers who are after secondhand product but never shopped at Ikea before.

Creating a community to engage customers

Creating a community for customers to take part in and become part of the sustainability movement. Customers who donate their second hand furniture at Ikea will know that they are part of a green initiative. And they might be in the market for new furnitures. This is a good way to reconnect with existing customers and bring them back to the Ikea stores. This might encourage the existing customers to buy their new furniture while at the store.

This is my opinion. Based on publicly available information. I have no knowledge of Ikea’s strategy or performance. This is my personal challenge to understand business strategy.