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Building A Climate Positive Organization | Jesper Brodin

Jesper Brodin

CEO

Jesper Brodin joined IKEA, the Swedish furniture and home furnishings multinational, in 1995 as a purchasing manager. He is now the CEO of Ingka Group, which owns and operates IKEA Retail in more than 30 countries.

Ingka’s business interests go beyond the world of affordable design. It also owns and operates 45 shopping centres in 15 countries, plus, it has an investment arm that lists renewable energy and the circular economy as two of its priority areas.

The Ingka Group website describes Brodin as believing in the importance of values-based leadership. “The power is where the people are. Believe in yourself and your strengths, but don’t forget to rely on other people’s strengths, too. Because we’re truly stronger together,” he says.

One of the topics being discussed during the Forum’s Davos Agenda Week is the circular economy, which has the potential to create 700,000 net additional jobs by 2040 and generate savings of up to $200 billion a year.

In conversation with the Forum, Brodin explains why embracing circular thinking has become a core business priority for IKEA, too.

Can you explain what climate positive means to you and why it is important to IKEA?

It’s 2021; with all we know now, I believe we simply can’t pass the climate on as a challenge for the next generation. At IKEA, we are in touch with millions and millions of customers – hundreds of millions of them, and we know from them that this issue matters. So, even just as a business that cares about its customers, we think it is essential to be relevant to people.

But this approach is also the new low cost. It’s the new business model of the future. There is a great misunderstanding around the world that being climate positive must come at a premium or that it will only be within reach of the few. But it’s actually the opposite.

To bring this vision to life at IKEA, we’ve developed an extensive plan that involves all parts of our operations, from the forest, industry, transportation, and retailing. We have invested in more renewable energy – wind and solar – than we consume in our retail and logistics operations. And by 2025 we want all home deliveries from IKEA to be done with electric vehicles.

Last year you experimented with buying back used goods over Black Friday. Do you see that as being a bigger part of IKEA’s future?

If you go to any online marketplace, you will find that when it comes to furniture, IKEA is probably top of the list. So this has always been part of the story of IKEA furniture. Now, we are testing second-hand sales and buy-back leasing as new ways to interact with our customers.

We have configured our stores to have a dedicated space to resell the products we take back and the products we use in our showrooms. We’re trying to make sure that nothing goes to waste. The interest from customers has been phenomenal.

Another of your goals is for 100% of IKEA products to be circular. Can you explain what that means?

We have an overall target to be climate positive by 2030. That relates to our own activities and to the activities throughout our value chain. Getting there means hitting several smaller but just as important targets in order to achieve our aim.

So, when it comes to our products, our target is for them to be 100% renewable or recyclable. That calls for making sure products can be broken down into parts in an easy way. It’s about long-lasting solutions, too. We have a business that makes new mattresses of old ones. That’s one example.

But the other part of the equation is to understand it is still okay to use raw materials as long as they’re renewable, like well-managed forestry with a climate neutral value chain.

How do you see IKEA transforming and fitting into this new world where we’re trying to buy less things?

I think this is an incredibly important topic. Historic attitudes towards consumption are not a realistic way for humanity to live and aren’t a practical solution for anyone.

An important part of this is defining what sustainable consumption looks like – what is a climate neutral, climate-positive level of and approach to consumption?

Obviously unnecessary consumption is a significant part of the challenge. One way to tackle that is to emphasize the development of long-lasting, quality products. For us, that has meant identifying ways to create items of furniture that can be disassembled and reassembled again many, many times without damaging the product’s quality.

When you’re designing IKEA products are you thinking about their possible second-hand life?

Designing it for recyclability is important. But those kinds of design principles aren’t really unique to IKEA – at least, they shouldn’t be. They are common sense and I think they represent good economics. Why waste resources?

It’s important to make a low-priced, desirable product that is designed to be easy to disassemble so it can be broken into its constituent parts – wood, metal, plastic and so on.

If you take old-school, traditionally made mattresses, for example, it would be very difficult to disassemble them. Separating the metal springs and the foam and the textile fibres and so forth. So now we design it differently and it is made so that it is easier to take it all apart at the end of its life.

When we’re designing products, we’re thinking about them as items you can move with, or sell, or pass on many times. All without the risk of destroying the materials that item is made from.

Acquiring TaskRabbit Inc. for Growth

Ikea parent Ingka Holding BV announced that it would acquire gig economy startup TaskRabbit Inc. for undisclosed terms.

The deal was signed recently, Ikea said in a statement, adding it anticipated the transaction would close next month. TaskRabbit will become a fully owned, standalone entity operating independently within Ikea out of its current San Francisco headquarters.

TaskRabbit, which matches customers with “Taskers” who can complete tasks such as home repairs, launched a pilot program with Ikea last year in which Taskers assembled Ikea’s notoriously tricky flat-pack furniture.

The company operates in the U.S. and London, but Ikea said in its statement that it may expand TaskRabbit to other countries.

KeyBanc Capital Markets Inc. analyst Bradley Thomas estimates that in the United States, Ikea is the third-largest furniture retailer and the 10th-largest home furnishings retailer.

“We believe IKEA has underperformed in e-commerce in recent years,” he wrote. “Customer service and call centers have not been well integrated into the business, in our opinion.” The addition of TaskRabbit “adds digital customer service capabilities to IKEA that more and more furniture, home furnishings, and e-commerce retailers are offering.”

The Swedish furniture giant, technically owned by a Dutch nonprofit, the Stichting Ingka Foundation, reported 2016 retail sales of €36.4 billion ($42.8 billion), up 8%.

In addition to full fiscal 2016 retail sales, Ikea, which recently changed its fiscal calendar, reported financial results for the eight months ended Aug. 31, 2016 — the new end of its fiscal year. Net income of €258 million during the period was “in line with the prior year’s performance.” The company ended the period with €302 million in cash and equivalents on hand.

“We will be able to learn from TaskRabbit’s digital expertise, while also providing Ikea customers additional ways to access flexible and affordable service solutions to meet the needs of today’s customer,” Ikea CEO Jesper Brodin said in the statement, adding that increasing urbanization and the proliferation of online shopping is forcing Ikea to become faster and more flexible. “An acquisition of TaskRabbit would be an exciting leap in this transformation and allows us to move forward with an even greater focus on innovation and development to meet changing customer needs.”

Ikea readies $2B investment for US expansion

Ikea is assembling a larger United States portfolio, set to land in the coming years after its largest-ever investment in the country.

The Swedish furniture giant is slated to grow by 17 stores on the back of a $2 billion investment from Ingka Holding BV, the largest owner and operator of Ikea stores, the Wall Street Journal reported. 

The stores are expected to open over the next three years, adding to Ikea’s portfolio of 51 stores and two plan-and-order hubs — places where customers can plan layouts with consultants and then order the furniture — in the country. The expansion will be split between the two formats and many will be put in the U.S. South, where Ikea lacks exposure.

There are two other stores set to open this year in San Francisco and Arlington, Virginia. The forthcoming investment will also see the modernization of existing stores, increasing capacity for handling deliveries and spark the development of U.S.-specific products.

Tolga Öncü, head of retail at Ingka, said the company plans to initiate several phases of expansion over the coming decade in the United States, which has “endless opportunities to grow.” The investment is the biggest in a single country by Ingka, which recently had a growth spurt in Europe.

Inter Ikea Holding BV, the holding company responsible for the Ikea brand, reported an annual sales record last year, demonstrating the strength of the brand and continued consumer confidence. The company, however, also took a big hit from previous profit levels due to ballooning logistics and material costs.

Several prominent retailers are planning major expansions in the country. Discount retailer Five Below plans on adding 200 stores this year, bringing its portfolio above 1,500 locations. Dollar General and Dollar Tree were projected to add a combined 1,300 stores by the end of the previous fiscal year.

Ikea launches small business loyalty program

Ikea announced the U.S. launch of its Ikea Business Network loyalty program.

It’s a free-to-join global program intended to support small businesses by offering a variety of perks for companies and employees. The program’s perks include access to Ikea Family loyalty program benefits, like 5% savings on in-store purchases.

Members receive access to all Ikea Family discounts on products, food and services, including discounted delivery options. Ikea said loyalty program perks and discounts also apply to orders placed by phone or email.

Other business loyalty program benefits include access to Ikea interior design services starting at $299 per room; the Learn with Ikea business training program; and a variety of discounts on food, health, fitness and travel through BenefitHub. Business loyalty program members also receive a free hot coffee or tea on each visit to Ikea’s Swedish restaurant.

Although Ikea’s Business Network program was developed for companies with less than 50 employees, businesses of all sizes can participate, according to the program’s FAQ webpage.

“The Ikea Business Network goes beyond product savings and gives access to inspiring design solutions, a range of employee benefits and useful trainings that we hope will serve as a resource for small businesses and enable them to be successful,” Nicole King, customer engagement and loyalty manager at Ikea U.S., said in an announcement.

The furniture and home goods retailer announced earlier this month that it plans to invest over $2.2 billion during the next three years to open eight new stores, nine plan and order points and 900 pickup locations. That growth is expected to create over 2,000 jobs.

Ingka Group, Ikea’s largest franchisee, announced last year it’s making a separate investment of about 3 billion euros — $3.2 billion at the time — in new and existing physical stores. That investment plan covers all of Ingka’s markets, which include the U.S., France, Finland, Canada, Germany and Spain. Ikea also introduced its As-is service. The service allows Ikea Family members to buy gently used or discontinued products online and pick them up in-store. The company touted the service ahead of Earth Day as a sustainability initiative that supports Ikea’s goal to become a circular business by 2030.

" We have invested in more renewable energy – wind and solar – than we consume in our retail and logistics operations. And by 2025 we want all home deliveries from IKEA to be done with electric vehicles. "

Jesper Brodin

CEO

IKEA

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