How is AI transforming the retail industry and how is Ikea leveraging it?

When I joined Ikea about five years ago, a part of my assignment was to digitise Ikea. Our focus was on how to go from being a big box, physical brick-and-mortar retailer to an omni-channel retailer. I think we have come a long way now, with 30 per cent of our business being omni-channel, digital included.

That also meant we had to adjust our business model and build the muscle for some of these services that we were not used to even 10 years ago.

We have been on this transformation journey from physical to omni-retail. And while we are doing that we need to be ready for a transformation from an AI perspective.

We are working on three different aspects of transformation within the organisation. The first is around customer experience. I believe AI will fundamentally change how customer experience will look like in the digital world. As we are all used to websites and apps, I believe there is also quite a bit of friction in this. But AI makes it easier and conversational. And if you think about it, that will fundamentally change how e-commerce would look like.

And we are working with OpenAI and Google to understand how to build a customer experience that also incorporates AI and what it means in terms of the web, app or agentic commerce of tomorrow. So we are working through that.

Also, we are looking at the areas in our back-office that we can digitise to drive productivity and ensure more man hours are spent on customer experience. We are also working on integrating AI in our supply chains for improvement in areas such as forecasting accuracy and order allocations, among others, so our products reach the customer faster and at a lower cost in a sustainable manner.

Of course, in all of this, we will always ensure that customer trust is at the heart of the transformation. At the core of Ikea’s digital transformation lies a commitment to ethical and responsible AI. We have clear policies on where we will use AI, where we will not use AI and how we will put AI in the service of our customers and co-workers.

As you expand omni-channel presence, have you begun deploying some of these AI capabilities in India?

We will use the AI capabilities more in India as it is a very app-driven market, rather than a web driven market. In many cases, we will experiment with the app in India and see how we can bring it to the rest of the world as well.

We have also doubled down on India by setting up the digital hub in Bengaluru. This team caters to building products not just for India but also our global operations.

We also believe India has a fantastic start-up ecosystem. Last year we acquired a leading logistics company, Locus, which will now power last-mile operations for India and globally as well. (The company, while based in the US, operates mostly out of India). We are continuing our omni-channel expansion in India. While the customer’s journey starts online, we believe the store is where the centre is, as it enables consumers to get the full, immersive experience of Ikea.

You talked about the customer journey changing with the advancement of AI. How is that change taking shape at Ikea?

We have built AI-based design capabilities that our co-workers use internally to plan for customers. So, for instance, if earlier it took our co-workers 6-7 hours to plan one room for a consumer, it has come down to about 30 minutes now and we have improved the scale of quality.

We have also taken the next step to put this technology in the hands of consumers through Ikea Kreativ, which is an AI-driven digital design experience. It allows consumers to scan a room or any kind of living space and visualise how various Ikea products fit in with their creative vision.

We are working on experiences that offer consumers inspiration with 3-4 versions of designs for a living space at different price levels, rather than them having to start from scratch.

Then we allow you to take that journey forward from there or even fast-forward it by using conversational commerce.

So, it is really putting our expertise at the service of the customer through AI, conversational commerce and creative planning.

How are you ramping up digital investments?

We firmly believe digital will be one of the cornerstones and that is a strong commitment from our board to continue to invest in our digital operations that enable us to grow and scale up. So we will be doubling down on investments on the India digital hub and continue to grow it.