IKEA is no doubt one of the most successful businesses in the world and is in more than one way a frontier in retail, especially when it comes to simple and democratic, yet innovative design and solutions for our home.
IKEA has gone from a strategy where “They created products that were nicely designed, if not particularly durable, that were intended to be used immediately… and disposed of when they wore out or, more likely, when the user had moved on to a different taste level or purchasing strata”, to recognising the impact the disposable society has had on our environment and planet and the rising consciousness around this.
Since then they’ve taken multiple steps in the right direction towards a better planet, one being launching People and Planet Positive; a strategic intent with the aim to contribute to a healthier, more sustainable environment by adopting Circle Economy thinking and ways to tackle climate change. As they put it: vintage is the new black. In fact, their ambition is to be 100% circular and climate positive in their operations by 2030.
“People everywhere are searching for solutions for a healthier and more sustainable life. We want to inspire and enable as many people as possible to live more sustainably and to make it easy and affordable. We’ll also do our part by transforming the way we work to become circular and climate positive and to have a positive social impact wherever we are in the world.”
– Jan Gardberg, Country Retail Manager, IKEA Australia
What is Circular Economy?
We currently have a ‘take, make, use, dispose’ economy. Circular Economy aims to minimise the ‘take’ part of the equation; extend the ‘use’ part; and eliminate the ‘dispose’ element.
The Circular Economy is “restorative and regenerative by design. Relying on system-wide innovation, it aims to redefine products and services to design waste out, while minimising negative impacts. Underpinned by a transition to renewable energy sources, the circular model builds economic, natural and social capital.”
So, you could say it’s the economy of the future – here’s to hoping anyway.
How is IKEA incorporating a Circle Economy?
IKEA’s latest initiative towards adapting a Circle Economy was unveiling two concepts: a Circular Living Pop-up Store and furniture take-back service at IKEA Tempe.
Sustainable Matters reports the following on the pop-up concept:
“For the next eight weeks, the pop-up store will give consumers an in-depth look at the recyclable and renewable materials that make up their favourite IKEA products. From turning plastic PET bottles into KUNGSBACKA kitchen cabinetry, to leftover glass into the IKEA PS 2017 Vase, the pop-up will showcase the stories behind the products while educating customers on the importance and value of the circular economy through sustainability workshops.”
The take-back service however is here to stay. With the intent to expand the lifetime of their products, IKEA now lets customers recycle their old goods by filling out an online form and emailing photos of their old IKEA furniture, which will then be assessed by an IKEA employee. If their item qualifies they’ll be offered a price and once agreed upon, customers have 14 days to bring their furniture into store, where they’ll receive a gift voucher in that value.
IKEA then puts the item up for sale for that same value of the voucher given to the customer. Lastly, customers are invited to browse second-hand items and purchase for a lower price.
What does this mean?
There are many great outcomes from these initiatives, but a few worth pulling out are:
- It shows that IKEA understands the need for change in order to tackle climate challenges and today’s disposable society. It will have an overall positive impact on the brand in the eyes of the consumer, with the halo-effect these initiatives generally bring.
- More than half (56%) of Australians threw out furniture in the last year, even though a quarter would keep it if they knew how to repair or reuse it. With their pop-up store serving as an educational hub for sustainability, they tackle a knowledge gap in the Australian society.
- They solve a problem for customers who might struggle to sell their old furniture or who don’t want to let it go to waste.
- Paying the customer back in vouchers as opposed to money transfer into their account means they close the loop in the customer journey by forcing them to return to IKEA for their next purchase.
- By introducing even lower prices than they already offer, IKEA is tapping into a different market segment and will likely take market share from ‘discount’ players.
- They take back some of the marketshare that currently goes to private sellers on marketplace websites like eBay, Gumtree and Facebook Marketplace.
So, if you happen to be in the neighbourhood, make sure to stop by IKEA Tempe for a good bargain or to learn a thing or two about being circular!