The past several months for Ikea have been marked by transition and upheaval.
In September, Marcus Engman, head of design at the world's largest home furnishings retailer, announced his departure after a game-changing, six-year run. Then, at the end of November, Ikea revealed plans to slash its global workforce by 7,500 employees as part of a large-scale shift away from the brick-and-mortar retail model that's long worked well for the company, which operates over 300 stores in 38 countries and territories.
The restructuring, the largest in the privately held Swedish company's history, will generate a significant number of new jobs and entail the opening of 30 urban-format "Ikea Planning Studio" locations in numerous cities, including an inaugural stateside outpost on the Upper East Side of Manhattan due to open later this year. (Focused on small space living solutions, these stand-alone showrooms will "give customers the opportunity to discover, select and order Ikea products for delivery to their home." Just don't go looking for meatballs.) Essentially, Ikea is putting a pause — in the U.S. at least — on erecting hulking big-box stores in the far-flung suburban outskirts of cities so it can better focus on urbanites and online shoppers.
But perhaps the most headline-grabbing news out of Ikea-land came early this month when it announced plans to test a leasing model through "scalable subscription services" in one of its European markets.
Yes, this means that some day you might be able to rent that Billy bookcase or the Hemnes bed frame that you aren't 100 percent sold on.
Ikea has seen profits plunge as more and more shoppers go online. In response, the big box-y Swedish export is bolstering its e-commerce presence and delivery options. (Photo: Gabriel Bouys/AFP/Getty Images)
"We will work together with partners so you can actually lease your furniture. When that leasing period is over, you hand it back and you might lease something else," Torbjörn Lööf, chief executive of Inter Ikea, explains to the Financial Times. "And instead of throwing those away, we refurbish them a little and we could sell them, prolonging the lifecycle of the products."
The exploratory move, which is being piloted in Switzerland and for now only applies to office furnishings, is part of Ikea's overall transformation into a more urban, delivery-centric retailer. But more than that, it plays into the company's longstanding commitment to dramatically lower both its own environmental footprint and the collective environmental footprints of its customers.
A quest to keep armchairs and end tables in circulation
By giving shoppers an option to lease — instead of outright buy — home furnishings that will be rehabbed and leased out again, Ikea believes less waste will be generated and sent to landfills. As such, the leasing model envisioned by the company is part of a sharing-based circular economy in which a single piece of furniture can live multiple lives. A man who absolutely abhorred wastefulness, it's likely that Ikea's late and (in)famously thrifty founder, Ingvar Kamprad, would no doubt approve of a move to keep Ikea products in circulation for as long as possible.
Per the U.S. Environmental Protection Agency (EPA), Americans discarded 9.8 million tons of home furnishings in 2009 — that's roughly 4.1 percent of all household waste.
"We have an ambition to inspire and enable people to play an active role in making the circular economy a reality, which we can support by developing new ways for people to buy, care for and pass on products," an Ikea spokesperson tells CNBC. "In certain markets, such as Switzerland, we're exploring and testing potential solutions and have a pilot project to look into the leasing of furniture, but it's still too early to confirm exactly what this will look like."
Beyond leasing office furniture, Lööf tells the FT that Ikea is also looking into launching a spare parts business that would allow customers to buy screws, hinges and other lifespan-extending bits and bobs for furniture that's been phased out from stores. This pivot to championing repair over replacement is major given that it comes from a build-it-yourself Scandinavian furniture emporium with offerings that have long been deemed reasonably priced, on-trend and, well, disposable — not exactly heirloom-quality stuff. (Those who have been watching Ikea over the past several years, however, probably saw this shift coming.)
And depending on how the office furniture leasing pilot pans out in Switzerland where Ikea operates nine stores, Lööf says rented kitchen components could potentially be next up to bat.
"You could say leasing is another way of financing a kitchen. When this circular model is up and running, we have a much bigger interest in not just selling a product but seeing what happens with it and that the consumer takes care of it," he tells the FT.
From using more recycled materials in the manufacturing process to calling for a zero-emissions delivery fleet, Ikea's list of environmental goals is long and commendable. (Photo: Spencer Platt/Getty Images)
Buyback scheme a smash in Canada
While firm details surrounding Ikea's office furniture leasing trial in Switzerland and the potential for it to be unrolled on a wider scale are, as mentioned, sparse, some consumers have already made up their minds … and they're not too keen on the idea.
"I don't want to rent everything I have to touch or see with my eyes on a daily basis," writes Rhik Samadder for The Guardian. "It is the idea of having an ongoing relationship with a company that I kick against. I understand that I have to consume things to live. But I would prefer the transaction to be short, self-contained and an accepted source of shame, like going to the toilet."
He adds: "If I take home a Tobias or a Fanbyn, I want to buy it, sit on it and be left alone."
And Samadder, who claims not to have "any particular beef with Ikea," likely isn't alone with his sentiments.
But from a customer engagement perspective, such schemes can and do work.
Case in point is another planet-friendly Ikea initiative launched at Canadian stores in November. Dubbed the Sell-Back program, the scheme allows customers to trade in old and unwanted Ikea merchandise for in-store credit. These gently used dressers, dining room tables and whatnot are either donated or sold secondhand at Ikea stores for roughly 30 percent of what they'd sell for in brand-new condition.
In its first two months, 8,000 customers participated in Ikea Canada's Sell-Back initiative — a surprise success. There is, however, legwork involved.
Outside of the leasing trial in Switzerland, IKEA Canada has launched a sell-back program that allows customers to unload their secondhand furnishings for store credit. (Photo: Spencer Platt/Getty Images)
As the National Post details, Ikea customers wishing to offload used furniture must first submit photos of the furniture in question along with a short online application. Based on the photos and application, their local store can either accept or decline the furniture, which must be in acceptable resale condition — that is, it must be structurally sound and free of any post-purchase modifications. If accepted, the customer must then transport it to Ikea, at which point store credit is given.
Similar buyback/resale programs have also been launched at Ikea stores in Scotland, Spain and Japan, per the World Economic Forum.
It's admittedly a lot of hoops to jump through just to get store credit. But as Ikea Canada's head of sustainability Brendan Seale relays, the process is well worth it for many of its customers (especially those who have been inspired by a certain Netflix series to take action) eager to be rewarded for cleaning house.
"At this time of year, we know many of our customers are decluttering their spaces and organizing their goods," says Seale in a press release. "We are thrilled at the response to the Sell-Back program which enables us to establish a longer-term relationship with these customers, supporting them to live more sustainably, while adding convenience and value for their next shopping trip at Ikea."
What's more, Ikea's newly opened Greenwich outpost in London — touted as its most sustainable store yet — places the company's closed-loop leanings front and center. In addition to prioritizing public transit and cycling over private car use and boasting a full-on public garden-cum-urban wildlife habitat on its roof, the solar-powered store features a "Learning Lab" where shoppers can attend workshops on how to prolong the life of Ikea products through repair, reuse and creative upcycling.
As for me, loyal Ikea fanboy that I am, at this point I'm not entirely sure if I'd want to lease a piece of Ikea furniture or even haul something back to my local store for resale. As for repair, it's doubtful that I'd have much luck in that department given my complete ineptitude in putting Ikea furniture together. But that could change.
Ikea is a retailer that has demonstrated remarkable prescience over the years — this is a company perpetually ahead of the curve, particularly in the realm of corporate sustainability. (For example, it phased out single-use shopping bags long before it was even a thing.) Subscription-based furniture leasing is one trend to keep an eye on as Ikea continues to make strides to becoming a fully circular business by 2030.
By then, absolutely nothing — not a plate of half-eaten Swedish meatballs or a scuffed-up $40 coffee table — will go to waste.