CBS Case Competition GLOBAL 2021

Executive Summary
-Red Consulting Team

Situation: Changing business environment is posing new opportunity and challenges

for IKEA’ s sustainability goal
IKEA Climate change, resource scarcity and Covid 19
1. Consumer are more careful about their purchases and
1. The company is currently the front actions and demand more from global corporations
runner in implementing sustainable 2. Higher concern for a healthy and sustainable lifestyle
solutions to mass consumer creates higher endorsement in sustainability
2. Vision: to create a better everyday for development
the many people 3. Higher needs for affordable consumable items
4. Indoor housing segments see promising prospects
Complication: Effective 2-way communication with customers’ needs to be
established to satisfy their needs.
1. Decrease in retail sales, decrease in store visits >< a 45% increase in IKEAs online sales; 4 billion
website visits (August 2020)
2. “Sustainability is noticeably absent in consumers’ dialogue about furniture and home furnishings”
3. Consumers need good alternatives that are not just more sustainable, but also convenient and
affordable.

Questions Answer
1. Which existing strategy has the greatest Integrating the Buy-Back initiative and the Repair Service
potential to be the key driver towards to augment more circularity in its retail operations.
the sustainability goal?
Improve and Reinvent a new digital platform to better
2. How to increase the number of users in communicate with customers’ needs and remove barriers to
the existing strategy? change in users’ behavior towards sustainable consumption.
- The Circular IKEA application
Strategic collaboration with like-minded businesses to create a
3. How should the strategic initiative be powerful sustainable movement among communities.
implemented within the next five years? Pilot and expansion in the use of IKEA application in all sales
channels.

Impacts
Financial Environmental
• 51.09% circular initiatives user growth • Limiting consumption waste in furniture and home
by 2025 furnishing retail.
• 81% projected sales increase of circular • Decrease emission through a bulk collection process
item sales by 2025 of Buy-back items.
 Ảnh furniture

Presented to “A unified movement Presented with

Presented to IKEA towards sustainable consumption”

(logo) CBS Global Business Case Competition
By RED Consulting Team
 Situation: The changing landscape creates challenges and opportunities
for IKEA to lead the market through innovation and sustainability.

Climate change and

Introduction
resource scarcity + Effects of Covid 19 =
- Higher demand from the - Increased digitalization
Insights global corporations to be
more environmentally - Consumers shift from browsing
conscious to targeted purchase in offline
Solution channels (stores and shops)
- Higher concern for a healthy
- Wallets are thinner > higher Need for Sustainable
Implementation and sustainable lifestyle ->
higher endorsement in
demand for affordable products and Digital Solutions
sustainability development
Impact

Impact on IKEA performance

● Global homeware market seeing flat growth (2014 – 2019) – CAGR 0.15%
● Decrease in retail sales, decrease in store visits >< increase in IKEA online
sales 45%; increase website visit 4bn

Source:
Case Material
 Executive Summary: Digitalize to unify

Complication
Social Situation
1. IKEA already has some circular initiatives.
The changing landscape creates challenges and
Introduction 2. However, consumers are still reluctant to
opportunities for becoming a truly circular IKEA
change their buying habits.

Insights
Goals
Develop new ways of meeting consumers’ need to achieve a growth of min 30% users in our circular
Solution
initiatives within the next 5 years

Implementation
Key Questions

Impact 1. Which existing or additional 2. What strategic initiative(s) to

3. How to implement?
circular initiative(s) to focus on? implement?

Focus on a process utilizing

Create better communication and Launch “Circular IKEA” to digitally
both the Buy Back initiative and
greater convenience for customers engage with consumers
Source: IKEA Repair Service.
Case Material,
Team Analysis
 IKEA should leverage the Buy-Back initiative and the Repair Service
to augment more circularity in its retail business model

Buy-back Initiative
- Potential - 600,000 quotes globally Repair Service
Introduction - Launched in 30 countries
- Significant demand for this service
- Advantage: reach directly customers
among customers (spare elements
Insights instead of the whole new product)

- Low cost offering to customers as it

Helps private
Solution cuts the cost of employing trained
individuals play
personnel specialized in the entire
an active role in
prolonging the Repair Service product line and of the whole product.
Implementation Buy back
product life of
their everyday
Impact items.

Advantage of combining:
Source: in sync with circular future of IKEA
Case Material,
Team Analysis
 IKEA should bring up a solution that facilitates customer experience to
overcome the barriers to change consumption behaviors.
Barriers Solutions
Consumers are facing a lack of support Create a community to drive the need for change
Introduction 1 to act sustainably.

Insights Consumers don’t see how their action of Personally empower the consumer by making

Solution
2 making sustainable purchase decision will
help the environment.
the direct impact of one’s action visible.

Implementation Consumers perceive buying sustainable Offer a more affordable and convenient service.
3 products as an expensive and inconvenient
option.
Impact

Digital Platform: Integrate 3

solutions

Source:
A Mobile App
Case Material
 The mobile app “Circular IKEA” is created to firstly, integrate and
enhance both initiatives following a more completed circular process

The key difference is new

Completed
connection among existing
circular process initiatives via one unified
Introduction platform, in order to strive for a
truly circular IKEA
quality check
Insights

Solution

Implementation

Impact
 Secondly, it improves the way we communicate with customers

Introduction

Insights

Solution

Implementation

Impact
 Thirdly, it promotes the convenience of sustainable consumption
lifestyle with affordable prices

Introduction

Insights

Solution
Reconvert
Implementation

Impact
 Fourthly, it helps customers visualize their own impact and others’ ,
made by sustainable consumption

Green Footprint Map Green Message

Participants will receive a appreciation letter from
Green Footprint Map to visualize the impact. After each
IKEA for reducing CO2 of industrial waste
Introduction successful transaction, 1 green dot will appear on the map.
(both seller and buyer).

Insights

Solution

Implementation

Impact
 By collaboration, IKEA aims to create a movement among customers
towards sustainable consumption and better life for the many people

Partnership with Partnership with

shared-values businesses like-minded NPOs/NGOs
Introduction
1 Logistics Business ● Increase promotional and
social impact
Insights ● Reduce delivery cost
● Achieve the goal of “Fair and
● Reduce emission of
Equal” by donating furniture
Solution customers’ travel from/
to underprivileged for
to IKEA shops
better life
Implementation Other Retail Business
2 (Ex: Electronic household…)

Impact
● Share platform building cost
● Create a massive impact on
customers’ sustainable lifestyle
● Faster roadmap towards achieving
“Healthy and sustainable living”
+ “Circular and climate positive”
 “Circular IKEA” enhances online touchpoints for more engaging and
long-lasting communication with customers
1. While shopping in the city mall, Jane
stumbled upon a striking marketing stunt
about our Buy-Back services in a IKEA shop.
2. She is then recommended by a salesperson
Introduction at IKEA to try out the new application for
product promotion. Meet William
3. Jane downloads the app to browse through
● He is a 22 male from Copenhagen,
Insights affordable refurbished furniture and place
Denmark.
order to home delivery. She thinks the service
● Attitude towards climate change: Idealist
is much safer and more convenient concerning
● He is a bachelor, non-parent who shares
Solution the pandemic situation.
his apartment with friends.
● He is a regular consumer of IKEA furniture
and also a technology enthusiast.
Implementation

Impact 1. William is informed about our Buy-Back

Meet Jane
● She is a 27 female from London, UK
● Attitude towards climate change:
Supporter.
She is a mom with two young children,
● 3. He orders spare parts to repair and sells his
living in her own house in the suburbs.
● She has used IKEA a few times but still
concerned about price and convenience
for future purchase.
They both connect with IKEA
and other users of the app ->
feels a sense of community by
joining in the sustainability
movement and are motivated
to take further actions.
service is reluctant to try
2. William also notices IKEA collaboration
campaign with Apple on the website, decides
to download and try the app
old furniture instead of throwing them out. He
is informed about the exact impact he made
through each purchasing and selling decision to
the environment and feels good about it.
 We target at the“Idealist” persona at the age of 18-30 (non parents or
parents with young children) with our first launch in Denmark
Idealist - accounts for 34%, believe they can have a positive impact but do
however not want to take action at the expense of their own current lifestyles,
craving the easy solutions to the issue.
our offer
Introduction

Insights
Denmark - has higher than average proportion of idealists, also witnesses
Solution piloting initiatives and experienced significant revenue growth -3.3% (2019 - 2020)
compared to Europe region.

Implementation Timeline
Y1: Development Y2: Initial launch Y3+4: Europe Expansion Y5: Global Scale
Impact
Circular App Data-collection and
development Evaluation
IKEA
App Initial launch Platform improvement and expansion

Promotion
Find potential Campaign
Source: Collabo- partners Implementing collaborative campaign
Case Material, IKEA ration
Sustainability Report Logistic partner
2020 alignment
 In conclusion, mobile app “Circular IKEA” offers benefits for every
involved stakeholders

Introduction
IKEA ● Prolong product life and reduce emissions
● Data collection for sustainability goal calculation
Insights

Solution
● Develop a sense of community towards the
Customers movement of sustainable consumption
Implementation ● Inexpensive and convenient choices

Impact

Business ● Collaboration to achieve sustainable goals

Partners ● Minimize costs
 Given a successful launch and expansion, the circular initiatives user
growth are expected to reach 51.09%
Expected circular initiatives user growth of Sales of circular initiatives items projected to
expected to reach 51.09% increase by 81%
millions
Projected circular initiatives user growth % Projected circular initiatives sales of unit
Introduction

Insights

Solution

Implementation

Impact
User growth scenario analysis
Worst Expected Best
10.4% 51.09% 121.5%

Source: IKEA
Drivers Direct marginal increase Uplift in consumer Increase consumer conversion rate.
sustainability
for through natural market awareness as more are willing to change their behaviour to act more
report FY20, Case
growth growth rate for the circular initiatives sustainably with further revenue increase in Conventional Sales
material.
 Employ a risk mitigation strategy will boost the potential of our
circular initiatives in the long run
Risks Mitigating Actions

User Impact
Introduction
7 ●
Insights 6 ●
2
Solution 1

3
Implementation
5
Impact 4

Low

Low Likelihood to
happen