Ikea Just Announced a Brilliant New Business Model That Makes Refreshing Your Kitchen Ridiculously Easy
What furniture retailer would want their customers to buy fewer tables and chairs? Ikea, that’s who.
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We lease cars. We rent designer dresses. When the lease is up, we return it and get another.
Could a similar leasing model work for furniture? Ikea is game to try it.
The Financial Times reports that the largest furniture retailer is launching a subscription model where people can lease everything from office chairs to kitchen cabinets.
Imagine that you'd like to redecorate your office or update your kitchen. Instead of going through the rigmarole (and expense) of buying all new and getting rid of the old, you just return everything and pick out something else.
It's the same as leasing a car or a piece of designer clothing. Once returned, it gets cleaned up, refurbished, and goes back in to rotation for someone else to rent.
Subscription furniture is coming to Ikea.
Ikea will pilot the program in Switzerland starting as soon as this month. There's no word yet how much subscriptions will cost or exactly which Ikea products will be eligible. If the subscription model goes well, Ikea may launch the program globally.
They'll start by leasing office furniture like desks and chairs to businesses. Kitchen cabinets are also a possibility, Financial Times reports. Because of the way Ikea's cabinets are designed, all you'd have to do is swap out the doors for a completely different look.
"Instead of throwing those away, we refurbish them a little and we could sell them, prolonging the lifecycle of the products," Torbjorn Loof, chief executive of Inter Ikea, told Financial Times.
Less consumer waste. More money for Ikea.
Ikea's pitching this idea as a way to reduce their footprint. There are many great things about Ikea furniture, first and foremost that it's affordable. But because it's so cheap, it's also easily disposable and discardable. Not great for landfills, especially as Ikea's footprint has grown. The Ikea Group owns 276 stores in 25 countries. But with customers leasing furniture, Ikea can divert these products from landfills and refurbish them instead.
The subscription model is also a way for Ikea to build new revenue streams and keep customers coming back. Even as Ikea has become a household name in flat-pack furniture, last year was a little rocky.
In fall 2018, Ikea announced a 5 percent reduction in its global workforce and laid off about 7,500 employees. The company also announced it would be investing in building smaller, showroom-style urban stores. This is a big departure from their massive and sprawling suburban stores. Its profits plunged 40 percent in 2018, though Ikea claimed this was intentional as they overhaul operations to future-proof their business.