Brick-and-mortar retailers are reinventing their business models amid changes in consumer preferences and the emergence of the sharing economy. IKEA, which is known for selling flat-packed furniture from 276 locations in 25 countries, is experimenting with a subscription offering in Switzerland. The pilot, which is set to start “as soon as this month,” is said to encompass multiple furniture types, according to a Financial Times report.
Inter IKEA Chief Executive Torbjörn Lööf told the outlet of the move, “We will work together with partners so you can actually lease your furniture. When that leasing period is over, you hand it back and you might lease something else.” He noted that the retailer could then revamp the items before they are sold again. That process could extend the life of the products and give consumers more flexibility with their existing decor.
Lööf pointed out that there is some flexibility built into the company’s furniture designs. The retailer allows consumers to swap out the cupboard doors in their kitchens without having to take out the entire installation. “It’s interesting if you as a consumer say, ‘I can change and adapt and modernize my kitchen if that’s a subscription model,” Lööf told the outlet.
Beyond the kitchen, the service also has apparent benefits to consumers in other parts of the home. An article in Vox, for instance, pointed out that the business model could help consumers avoid the trouble of getting rid of furniture that is no longer needed. “Imagine renting those Billy bookcases or that Hemnes bed, only to hand them back once you’re on to the next apartment instead of figuring out how to sell or disassemble them during the move,” the outlet noted. While IKEA has drawn in customers by offering affordable options, the company hasn’t publicized the pricing options as of now, the report said.
IKEA, however, is not the first company to offer furniture-as-a-service options. Feather, which launched in 2017, offers rental furniture spanning bedroom sets to dining room sets. As of 2017, the company offered items by the piece, by the room or as a package deal for consumers in San Francisco and New York. Founder and CEO Jay Reno said in a previous PYMNTS interview that “ownership of things ties you to a specific place … and removes the ability to have flexibility” in daily life.
IKEA’s Pivot Points
Furniture subscriptions are not IKEA’s only recent innovation, as the company has doubled down on service offerings. In 2017, the company purchased contract labor marketplace TaskRabbit. The site had taken in roughly $50 million in investments and had just turned profitable as news broke of its acquisition. At the time, it was reported that IKEA would also benefit from the deal. As Amazon and other digital competitors amp up their home goods and installation offerings, IKEA had reportedly been seeking ways to bolster its digital customer service capabilities.
That same year, IKEA also said it planned to experiment with showrooms, as well as an “open-source” design.
In October of 2017, it was reported that the retailer has already launched concept stores as trials in smaller city centers. IKEA rolled out a showroom in the financial district of Stockholm, as well as order and pickup points. That effort came after the company said in June that it intended to try selling its products on other platforms to reach more shoppers. Lööf said at the time, “Our customers will see new initiatives, both physical and digital.”
But amid news of the city store concept, the furniture retailer scrapped the brick-and-mortar stores it had planned to open in North Carolina, Tennessee and Arizona last year. Instead, the company decided to focus on eCommerce sales, per a USA Today report in June. GlobalData Retail Analyst Neil Saunders told the outlet that the company has discovered it is not up to speed in terms of online presence in “a number of established markets.” Saunders noted, “They want to really start investing and ramping that area up. That obviously means they have to be more careful on things like store expenditure.”
However, IKEA announced last year that it was opening a new Manhattan location called the IKEA Planning Studio, geared toward urban living. IKEA Retail U.S Country Manager Lars Petersson said in an announcement in December, “We recognize that we are in a rapidly changing retail environment, and to be fit for long-term growth, IKEA is transforming in a way that lets us meet our customers where they are. New York City is the natural choice to open the first city center store — the most vibrant, dynamic city in the U.S., and the epicenter of retail, business and culture.”
From store openings in big cities to the rollout of new offerings like subscriptions, IKEA is changing its business model to focus on services and cities as it adapts to consumer needs and the sharing economy.