by We’ve lamented in this space before about the absence of an after-market of meaningful scale for furniture, a marketplace offering a bit more than the one-offs on eBay or craigslist. Unlike homes, cars, smartphones, or even books and vinyl, there still is no reliable means for reselling home furnishings. Even from a sustainability perspective, this is at best inconvenient and, more troubling, maybe even immoral.
Thus, the options consumers have to move out the old to make room for all that new furniture we hope they will buy can generate no more than dimes on the dollar, regardless of the condition of the item. And for those of us shopping these online yard sales, we have to rely on luck and good key words, precluding anything resembling the pleasures of choosing from a luxury of abundance. This reliance on serendipity also means a shallow pool of potential buyers for any one item.
Circular economies have the best chances of success when consumers trust the brand. The company that figures out this phase of the lifecycle of more-than-disposable home furnishings stands to earn no small measure of consumer loyalty much in the same way that “Certified Refurbished Apple” programs keep the new iPhones flowing into our homes with lockstep regularity.
Ikea Preowned
We noted almost three years ago that not surprisingly it was the Swedish meatball specialists working on a “Certified Refurbished Ikea” sort of program. Launching first in Australia as a test market, Ikea’s “as-is” e-commerce platform presents secondhand Ikea products for pick up in stores. This distribution model allows Ikea to repair or otherwise refurbish items that need some attention to bring them up to Ikea standards, and store pickups keep the chain out of the messy and often unprofitable business of last-mile delivery into homes.
The test in Australia saw more than 200,000 customers in 2023, or more than twice as many as in 2022, according to The Economist magazine. Since that test Down Under, Ikea has added “Ikea Preowned” programs in Spain and Norway. If these trials produce positive results, you can expect to see a much wider rollout at Ikeas throughout the world.
Using a service provider called Archive and harnessing AI, the “Ikea Preowned” platform positions Ikea as an intermediary for customers who list and sell their preowned Ikea items to other customers much as they do on eBay in the United States or Gumtree abroad, only in this case, the platform is ensured of a level of scale because of Ikea’s sales volume. Similar to Facebook marketplace, the Ikea site facilitates the negotiation of a place and time for pickup.
The secondhand furniture market globally has a projected annual growth rate of 6.4% this year, a market in which Ikea already has a 10% share, according to the vertically integrated Swedish giant.
I’ve been an active eBay-er since July 1999; I’m intrigued about the possibility of Ikea adding its preowned program to our Ikea just down the slab in Atlanta. I know many of the college students I teach would be pretty interested, and I can tell you precisely when: August for college move-in.
During the tests in Oslo and Madrid, which will continue into the new year, listings on Ikea’s marketplace are free, and they resemble the listings for new product on the main site. Sellers pay Ikea 15% when a sale is made, and they are eligible for Ikea vouchers good for discounts on new goods. These sellers can be paid either in cash or by Ikea gift card, according to Tolga Oncu, head of retail at Ingka Group, Ikea’s largest franchisee, in a Bloomberg report.
The world’s largest furniture retailer has quietly become a major player in e-commerce. Since the pandemic, when Ikea stores shuttered and had to turn more to online, the share of e-commerce to total sales has jumped to nearly a quarter, according to the company.
Shrinking the footprint
Ikea is quick to stress that its after-market program is just one facet of a longer-range plan to achieve net carbon neutrality. The $53 billion company has grown its sales volume by a third since 2016, according to The Economist in September, but has cut its carbon emissions in operations by 50% and emissions from its supply chain by 20%. In other words, while Ikea has grown bigger, it has also grown greener.
Approximately 80% of the energy needed by its stores and factories comes from renewable sources, according to the company, and in Germany, its second-largest market to Sweden, Ikea operates five wind farms and 23 solar plants.
The drive toward sustainability will depend in no small measure on AI, and one of the many applications of AI in Ikea’s operations is the deployment of autonomous drones in warehouses. Keep in mind, even Amazon hasn’t quite figured this out yet.
Working with AI and robotics company Verity, Ikea has been deploying the inventory-optimizing drones since 2021, according to CE Noticias Financieras last month, which put the current drone count at 250 in 73 different locations. The drone program launched with 100 units and now is installed in 16 European stores as of April this year.
The drones “enable simultaneous inventory checks, eliminating the need to block aisles and interrupt workflows,” Ikea told the Miami-based publication. “Employees can take immediate action based on real-time data from the drones, significantly increasing product accuracy and reducing their workload.”
These drones often hover over autonomous robots that pick and pack products, using packaging materials more efficiently along the way. These robots are powering Ikea’s new 275,000-square-foot distribution center in Tianjin.
Store openings
As long as we’re updating Ikea, I’ll note a handful of store openings by the home furnishings leader since last we checked in, including new locations in Portugal and the UAE, with one headed for lower Manhattan, as well.
For the Colombo shopping center in Lisbon, Ikea opted for a pop-up store that opened early last month with just 11 employees and a focus on sleep products. The pop-up will close down in March. Ikea has traded in Portugal, where it has five large-format stores and 13 planning studios, for two decades.
Checking the real estate news in July revealed that Ikea acquired an 80,000-square-foot space in a tower on lower Fifth Avenue in Manhattan. Previously announced were plans for new stores in Texas, Georgia and California.
And last month, the chain opened its newest small-format (50,000 square feet) store, cutting the ribbon at Dalma Mall in Abu Dhabi in the UAE. Finally, a new shop should open on Oxford Street in central London this spring, and in November, the Ingka Group bought Churchill Square, the main shopping center in Brighton, England, for another Ikea location.
