Retail

IKEA, Getting Experimental And The Power Of The Pop-Up

It is known as the “IKEA effect,” and actual scientific study has been dedicated to it. However, even a non-scientist can watch the IKEA effect in action by attending a garage sale somewhere on Earth this weekend where someone is selling a piece of IKEA furniture that they built themselves. Statistically speaking, the seller of that used piece of furniture will ask more for it than one might otherwise expect and be far less willing to negotiate on the price than the average garage sale seller.

Though many stand-up comedy routines have been built on the premise that building IKEA furniture is a good way for a consumer to destroy their happiness, sanity and relationship, as it turns out, consumers end up liking their IKEA furniture better at the end because they had to build it themselves.

An interesting factoid to keep in mind: If for no other reason, it flies in the face of the most common advice on building customer loyalty. When it comes to building good customer experience, specific pieces of advice can vary, but everyone agrees, more or less, that, first and foremost, the retailer’s job is to make the consumer’s life easier. If they have to work for it once, they won’t come back again.

IKEA customers know that, if they go back again and buy a new piece of furniture, they are going to have to build it. And yet, those customers keep going back. The work is part of the attraction. It’s a little counterintuitive, but IKEA makes it work.

In fact, one might be tempted to say that “out-of-the-box” thinking is kind of IKEA’s thing — both literally and historically, given how it sells its furnishings, and currently, given the interesting twists and turns IKEA has taken this year. The Swedish seller of all things DIY home is working hard on a renovation project of its own.

“We are undertaking a total conversion of IKEA from a traditional brick-and-mortar retailer to a multichannel retailer with the stores at the heart,” said Chief Executive Peter Agnefjäll in a recent interview.

And that big, multichannel conversion has meant a lot of new and, for IKEA, different developments as it pushes forward.

For example…

 

The Power Of The Pop-Up 

While most of us think “furniture” when we think of IKEA, the brand also attracts a good deal of excitement for its food — particularly the meatballs. Which means it comes as little surprise that IKEA has pushed more focus onto its food sales efforts this year.

Currently, food makes up about 5 percent of IKEA’s overall revenue, and the company has recently taken a creative approach to driving sales, setting up pop-up cafes in London. The restaurant serves up some of what one might expect — Scandinavian food and produce (though no meatballs) — with some upgraded twists, like offering breakfast in bed or classes to teach the British to cook meals free.

Also, in keeping with the DIY spirit that IKEA has come to be known for worldwide, the pop-up food shop also includes The Dining Club. According to reports, The Dining Club is a fully immersive DIY restaurant that allow members of the public to cook meals for up to 20 friends and family, supported by their very own IKEA sous chef and maître d’.

“Our research has found that more of us want to host dinner parties but feel that they are unable to do so. With the launch of The Dining Club, we hope to create the perfect place to bring people together to enjoy a meal from beginning to end without the stress,” IKEA’s Jordi Esquinas noted in a statement.

Whether the pop-up food shop will gain any traction remains to be seen. Agnefjäll told Financial Times it is “too early to say” if the concept would be repeated elsewhere, but so far, the single London location has gotten high marks.

And while the recent food-related pop-ups have gotten a lot of press, IKEA has spent much of 2017 using the pop-up format to innovate on its store design.

Earlier this year, at a pop-up location in France, IKEA shoppers were able to scan items into a digital shopping cart via their phone’s camera. At checkout, the app combines the total purchase and creates a QR code that is scanned at checkout instead of the individual items.

It may not seem like a massive change, but as anyone who has ever put a large item into a cart barcode side down can attest, it is a small change that can utterly change how a shopper experiences commerce that day.

“When you think about the whole of the mCommerce piece, how you are combining the online experience and how people act in the store, and you start providing services that make sense, giving the customer the power to decide what to do and where to take the next step is what we are looking at,” said Victor Bayata, global head mobile solutions at IKEA. “What we need to do, and this is again the formula that everyone tries and tests, is that we need to understand our customers’ needs and wants.”

 

Changing The Face Of The Organization 

While pop-up shops and locations have become interesting labs for retail innovation, as 2016 is drawing to a close, it is becoming clearer how those experiments are now being baked into the design of IKEA stores.

For example, IKEA has recently begun rolling out centrally located click-and-collect points. These smaller locations — 20,000 square feet — allow customers to collect online orders and carry a limited range of products for immediate purchase. It is not exactly the same as the QR pop-up, but it is clear how exactly it draws from the same inspiration of looking to streamline the customer experience.

“What we can see is a pattern that we are curious and we are ambitious about growth. We are constantly trying to interact with customers in a way that suits them. Where that takes us, we don’t know,” Agnefjäll told FT.

The company opened its first click-and-collect location in Pamplona, Spain, in March 2015 and went on to open an additional three. In this year alone, it has opened 19 click-and-collect points. By comparison, in 2016, IKEA only built 12 “classic showrooms.”

And those click-and-collect points are also conceived as data centers, according to IKEA’s CEO, that can help the company better understand what sorts of products it ought to stock and how different factors, like location and distance from home, affect customer purchases.

IKEA believes it has a product for everyone currently living indoors and that the mobile era gives it a plethora of ways to connect customers to those objects. And when IKEA talks about a building project, everyone probably should listen. It is the world’s leading expert on DIY.

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