IKEA, the Swedish furniture maker whose products are ubiquitous in apartments around the world, has long boasted of its “democratic design.” When considering a new product, the company’s designers evaluate it along five different dimensions: function, form, quality, durability and low price.
But what happens when IKEA moves into a new market with very different tastes? How does it evaluate form and function for another type of house?
Jesper Brodin, CEO of Ingka Groupwhich operates the vast majority of IKEA stores worldwide, explained how the retailer tailors its product range for local consumers in a recorded interview broadcast on Fortune China’the recent China 500 summit in Shanghai.
It turns out that Chinese consumers are more concerned about how they use a product than how it looks.
“The adaptations we make…[are] normally on the functional side, not so much on the style side,” Brodin said. “When it comes to functions (how people cook, stiffness of a mattress, etc.), people are not ready to change.” he explained.
IKEA’s localization strategy
IKEA hasn’t always been a globe-trotting furniture retailer. The Swedish brand initially exported its products with few changes, which had surprising consequences: IKEA first American buyers would buy the retailer’s vases as drinking glasses because the European-sized cups were too small for American tastes.
The company now leads regular home visits to better understand how customers in different markets live their lives. And IKEA adapts its room layout examples to the way people in different countries, or even different subnational regions, arrange their homes.
In 2013, Reuters noted that the furniture retailer would showcase different examples of balcony layouts depending on its location in China. Shops in northern China are said to feature a balcony used for food storage, common to the region. Stores in southern China, on the other hand, included an area used for laundry.
IKEA continues to localize its product range for China today. IKEA China recently debuted a new range of smart bulbs, accessible via the platforms offered by Xiaomithe Chinese smartphone manufacturer.
A “crash course” in AI
Brodin discussed new technologies in his Fortune China interview.
“When it comes to generative AI, we’re still in the early stages… both in terms of risks and opportunities,” he said.
IKEA is entering the world of AI. In June, the company announced that it transferred ordinary customer service requests to a robot named Billie, named after its line of libraries. Instead of answering basic questions, the company’s human call center employees will provide interior design advice to interested customers and hopefully generate more sales.
Brodin said he takes his leadership team through a “crash course” in AI, in which executives discuss questions like “What is AI?” What does this mean for us? And how can we actually bring it back to our leaders?
“It’s something I recommend all businesses do,” he said.
The wealth Think about the design the conference returns on December 6 at the MGM Cotai in Macau, China. Panelists and participants will debate and discuss “Empathy in the Age of AI” or how new technologies are revolutionizing the creative industry.