Ikea services foray boosts loyalty and sales
Ikea is turning to services to increase turnover and boost engagement with customers.
Moreover, partnering with specialist companies in such areas as delivery and assembly allow it to focus on product design and sales, leaving post-checkout experiences in the hands of specialists, rather than committing its own staff and training resources.
An example of the new Ikea services initiative is US odd-jobs app TaskRabbit, which Ikea bought in late 2017. Ikea recommends the service to customers who lack the time or patience to assemble their own kitset furniture products.
Ikea reports that the number of jobs handled by TaskRabbit staff since it acquired the business had doubled and 10 per cent of the jobs undertaken are now assembling kitset furniture – five times the pre-purchase rate.
Since the acquisition, TaskRabbit has expanded coverage to all 48 US cities with an Ikea store, launched in Toronto, Canada, and expanded in the UK beyond London.
In Hong Kong, where few customers own cars, Ikea now offers both a delivery and assembly service with fixed fees according to location. Previously, it partnered with an app-based third party contractor.
In Australia, Ikea has partnered with Airtasker and in India with UrbanClap, to offer assembly services.
Reuters describes the Ikea services strategy as “a major strategic shift that it has been forced to adopt to stay in the game as waves of new competitors in an increasingly online world erode its dominance”.
TaskRabbit’s quick success is prompting Ikea in the US to consider expanding services offered through Ikea, to include such tasks as interior design and furniture repair which would in turn potentially boost sales from stores.
Jesper Brodin, CEO of Ingka Group, which owns most US Ikea stores, says TaskRabbit’s customer data could also help Ikea come up with new ideas for furniture.
“As this community grows, it’s not only about fixing one or two things but actually to add professionalism in interior decoration, into ‘life at home’ practicalities,” Brodin said in an interview.
“TaskRabbit is a super interesting business case because it is scalable, not only geographically but also into services at home.”
GlobalData Retail MD Neil Saunders says a services foray could help Ikea boost its market penetration in the US, which is currently just 2 per cent. Despite the low market share, the US represents Ikea’s second-largest international market behind Germany, where it enjoys as 12 per cent share. Rivals like Walmart and Wayfair in the US have started offering assembly through TaskRabbit’s rival app Handy.
Brodin wants TaskRabbit to expand into more countries.
“We are convinced this is a way to access new customers in our cities. The convenience customer today has so many more choices, and they are used to getting a quick answer.”