The BRC (British Retail Consortium) recently held its Retail Symposium, with a number of retailers and brands sharing their thoughts on meeting the challenges facing them in today’s market. Our Strategy Director Jonathon Palmer was there and in this piece he discusses his key learnings.
Over to Jonathon
There were some interesting presentations from the likes of Spar and Pure Gym but the most notable for me was the keynote delivered by IKEA’s UK & Ireland Country Manager, Gillian Drakeford. In it, she told the audience that the organisation was working hard to become less secretive and more open and that her being on stage was a very visible part of that process.
What’s driving this openness is an acknowledgement that they need operate in a different way if they are going to meet the expectations of today’s consumers. When IKEA first launched, its offering was revolutionary but Drakeford admitted that the IKEA customer experience has been very much about doing things the IKEA way.
IKEA’s retail footprint serves only 64% of the UK’s population and as a result people often have to drive an hour or more to their nearest store.
With customers' changing lifestyles, there has been a shift in expectations and the growth in ecommerce has provided easy access to alternatives which means that the business must now adapt. The idea of a day out at IKEA is simply no longer acceptable to busy consumers and so it is looking to build a multi-channel strategy that can allow customers to shop on their own terms.
Part of this strategy is the roll-out of a new 'Order and Collection Point' store format, with the first store opening in Norwich which is currently 2 hours away from the nearest IKEA store. They see this type of store powering their future growth rather than the large format stores.
Across the board, other retailers with very large store formats such as B&Q and Tesco Extra are finding the challenge of utilising such a large space difficult, with the likes of Homebase shutting many of their stores.
IKEA is getting their staff out from behind the counter and into the rest of the store to mingle and engage with people. They recognise that the buying process has changed and people often come to the store having researched a product and are looking for answers, advice or inspiration that they couldn’t find online.
However, looking at their current website there is actually much more that can be done to inspire the customers online before they even get to store. With IKEA’s long heritage in design there is so much they could do to lead the conversation around homeware design and inspire customers to buy.
IKEA clearly works hard to get to know their customers and conducts over 800 home visits every year. They spend this time observing how people live and identify the problems they need to solve, with a lack of space being one of the major challenges today. This same focus on the customer is needed in developing a detailed understanding of the user journeys both online and in-store.
IKEA call their existing store layout and process “the long natural way of shopping” and it was designed to encourage people to put as much in their basket as possible. Undoubtedly digital can dramatically enhance this, not only from the point of view of theatre but also UX and service design can play an important role in creating a fresh and enjoyable shopping experience that maximises sales.
As successful as it is, there are some big challenges ahead for the business as it seeks to achieve its goal:
'inspiring the wonderful everyday'
To reinvigorate the company’s creative spark they are going back to their cultural values as ultimately it is the people working there that will drive any future transformation. As the picture below shows these values include things like “daring to be different” and “constant desire for renewal” as well as “simplicity”. It will also need to draw on its new spirit of openness to find the right partners to collaborate if enough new ideas are to find their way into the business.
IKEA’s entry to the market was ground breaking and its product range is inventive and original. However, for the business to reinvent itself in today’s market it will need to apply the same level of creativity and skill to creating a meaningful multi-channel strategy.
It’s clear from Drakeford’s presentation that they are working hard to do this. For me her speech demonstrated their value of “humbleness and willpower” which will certainly be needed to underpin any new way of doing business.
However the harsh reality is that the current changes do not represent competitive points of difference but are in fact more “permission to play” initiatives that make it as easy to shop from them as it is from their competitors.
If IKEA’s vision is 'to create a better everyday life for the many people' then this applies not only to the products but to the shopping experience itself, as this is a big part of the brand experience. Drakeford has quite rightly embarked on getting in place the basics and from there, they can build on this and play to their strengths.
With the fundamentals in place there is much more they can do about integrating digital into the design of the products themselves. For example, for better or for worse, another part of their brand experience is actually putting together the furniture itself. With the launch of products like Microsoft’s HoloLens which allows instructional graphics to be overlaid onto a view of the real world, there could be some game-changing ways to make this and other parts of its brand experience better.
Ultimately the next few years are going to be interesting times for Drakeford and her team but as is clear from the launch of a vegetarian version of their meatballs earlier in the year, they are definitely up for trying new ideas!