Canadian car dealers attending the 2020 CADA Summit will hear from a member of the senior leadership team at IKEA, the world’s largest furniture retailer, about how the company is staying close to customers, and competing against threats from online retailers like Amazon and Wayfair.
In an interview with Canadian auto dealer about his Summit keynote, Lars-Johan Jarnheimer, Chairman of IKEA Group, said the pace of change is accelerating, and companies need to adapt more quickly. “I think customer demand has constantly been changing,” said Jarnheimer. “What is different today, from my perspective, is that change is much, much faster. It’s a totally different speed than what I have seen Before.”
Companies don’t have as much time as they once did to adjust their value proposition. “You need to act almost instantly,” he said.
Jarnheimer said when it comes to adjusting IKEA’s online systems, for example, the company used to have a general update about every six to eight weeks. “If you compare that to ‘new kids on the block,’ like Amazon, I think they are adjusting their systems about five times a minute. I think that speed is of the essence…You need to act here and now.”
In the world of algorithms that constantly monitor and adapt to consumer demands for products online, he said it’s even more important than ever for companies to get closer to the customer. “Otherwise you will be totally overtaken by these new kids on the block who have a must faster interaction with their customers than traditional companies,” said Jarnheimer.
“It’s important with these newcomers, for companies to move out of the denial phase,” said Jarnheimer. “At the end of the day, you should not deny their ambitions in the Market.”
Jarnheimer said that a few years ago when he worked in the telecommunications industry, he asked leaders from Telecom giant Ericsson if they were worried about then upstart Chinese provider Huawei. He said they weren’t worried. Last year Huawei outsold Ericsson in Telecom equipment.
Ingvar Kamprad founded IKEA in 1943, and the company has grown dramatically over the years. The company now has 433 stores in 50 markets, and they served more than one billion visitors in 2019 alone.
Jarnheimer said the original business model for IKEA was to place lots of “big boxes out in the potato fields” a few kilometres from the city centres. “Now all of a sudden, all the people are moving back into the city centres. Now they don’t have the time to spend to take their cars out to the suburbs and back. That is a trend which affects us. We need to get closer to the customer.”
Jarnheimer said the company has to do a better job providing a rich e-commerce experience for customers. “We have been late. We are starting to pick up now,” said Jarnheimer. “I think we are starting to get our act together.”
According to their 2019 financial report, the company is making rapid strides overhauling its online presence. In 2019, around 2.8 billion people visited the IKEA website, and e-commerce sales grew 43 per cent.
Jarnheimer said the company is having to adapt to other trends, like millennials who have never visited their retail stores, don’t own cars and can’t transport the furniture home themselves. They also don’t want to spend their time assembling it. That’s leading the company to provide things like more home delivery and assembly services.
Jarnheimer became Chairman of IKEA Group in 2015. He has a distinguished business career, including being the former President and CEO of Tele2 AB — a major European telecommunications operator, and he has worked at SAAB Automotive, according to his speaker’s bio.
The early bird registration for the CADA Summit ends October 21. Visit www.cada.ca to register. TD Auto Finance has been the Exclusive Sponsor of the CADA Summit since its inception.
