6 Quick Lessons from IKEA on AI-Driven Online Growth
While many mega stores have been seeing a decline in sales, IKEA’s grew 13% at the end of 2022 compared to the year before. This is even more impressive when you consider that this notoriously offline brand:
- Now has 30% of its sales come from online sales.
- Just announced it would be investing $2.2+ billion in the company’s US omnichannel growth strategy over the next three years.
And their secret? Early investment in AI technologies and strategies.
The bottom line is that whether you’re a small eCommerce brand just starting out or a mega online retailer, IKEA has a lot to teach us about incorporating AI into our businesses to drive online growth. We’ve compiled a list of the top six.
Let’s jump in!
1. Don’t Wait for Trends, Make Them
The first and most important lesson IKEA’s strategies can teach is that you don’t want to wait until you need to innovate. Instead, online retailers should be proactively looking for ways to innovate — and progressive AI technology is a big driver of this.
This can be as simple as upgrading your merchandising strategy to include AI-optimized product sorting that adapts to real-time market, shopper, or brand changes, or as involved as IKEA’s IKEA Kreativ.
2. Enhance Decisions with Good Data
One of the most significant advantages of incorporating AI into your online store is the collection of high-quality data and insights.
In 2021, IKEA launched an AI-empowered Demand-Sensing tool that can gather and evaluate data from 200 sources in real-time. This quality data has enabled them to not only make data-driven decisions on the backend, but also drive smart product recommendations on the frontend. They were able to predict the most likely shopping behavior on the local level by the following factors:
- Shopping preferences during festivals
- In-store visit volumes
- Customer paydays
- Past buying patterns in holiday seasons
- Seasonal changes
- Weather forecasts
The biggest lesson here is that decisions based on sound data can improve customer experience while boosting engagement and sales.
Of course, you don’t need to have IKEA’s extensive budget to put this into practice. Adding AI-powered product recommendations and advanced merchandising can enable you to automatically ensure you’re making data-driven decisions. This is exactly what Kimonix is designed for.
3. Fine-Tune Your Focus
Another important aspect of IKEA's quick online growth is that with each step, they were laser-focused on what they wanted to achieve and then invested in technological innovation to back it up.
The bottom line is you don’t want to be heavily investing in AI technology just for AI's sake. Instead, eCommerce brands need a sound strategy to back it up. This means looking at a core area of your business, whether it’s front or backend.
4. Combine Generative AI with 1:1 Personalization
Over the course of the past two years, there has been a massive push in the development of generative AI tools. This is driving online retail technological developments in several significant ways.
However, one way that stands out is the ability it gives brands to combine automation and personalization — for real-time intelligent customer engagement. A great example of this in action — and the payoffs that go with it — is IKEA’s AI-powered Billie chatbot.
Launched in June of 2023, IKEA’s AI-powered Billie chatbot has been developed to understand a customer need/problem and then provide a personalized solution without the need for any human intervention.
5. Embrace Authenticity
Even if you’re using AI tools, it doesn’t mean you shouldn’t keep some brand authenticity. Every tool that IKEA has used to drive online growth has not only been highly tuned into their customer's needs. They also ensure that it fits perfectly into their brand vibe.
To do this, you should decide what authenticity means to you as a brand and then create an AI strategy that. This is particularly important when using generative AI. You want to prompt your AI to use your specific voice, tone, and wording before releasing it into the wild — so to speak.
6. Promote Inventiveness
Last, but not least, experimentation is a big part of IKEA's successful framework. In an interview,
Albert Bertlisson, head of engineering at Edge at IKEA Retail, highlighted this point. He explained how IKEA’s teams “created ways to quickly deploy experimental modifications to its existing solution” — using inventiveness to drive customer experience.
It’s this kind of approach that has shaped their recommendation AI models, ensuring they could personalize the customer experience to an advanced complexity. This is something we at Kimonix understand fully, using the same technique to develop our Product Recommendation solution.
There you have it: six quick lessons from IKEA that you can also use to improve your online growth and profitability.
Ultimately, you want to ensure you are incorporating automation and innovation into every aspect of your business, but most importantly, your online merchandising strategy.
Got questions? Reach out to us here.