How IKEA is Leveraging Emerging Technology for Long-Term Resilience

IKEA, a global leader in home furnishings, has long been celebrated for its innovative approach to retail. In recent years, the company has embraced emerging technologies to enhance operational efficiency, improve customer experiences, and ensure long-term resilience. IKEA is now one of the most noteworthy consumer-facing brands to embrace artificial intelligence (AI).

"We are taking a pragmatic, execution-focused approach, learning by doing and capitalising on our early efforts of a Responsible AI framework,” said Francesco Marzoni, Chief Data and Analytics Officer at Ikea Retail, in a report by Technology Magazine.

"We activated a broad ecosystem of partners to bring to life several experiments, so that we can take part in the AI evolution as we shape our company strategy.”

This article explores how IKEA is leveraging artificial intelligence (AI), augmented reality (AR), and a culture of innovation to thrive in an ever-evolving retail landscape. It also includes tips and suggestions about how brands can stay ahead of the technology curve.

AI-Driven Logistics and Inventory Management at IKEA

At the heart of IKEA's operational efficiency lies an advanced AI-driven logistics and inventory management system. This cutting-edge technology enables real-time demand forecasting and stock level adjustments, significantly reducing stockouts and overstocking issues.

Furthermore, real-time tracking and monitoring capabilities ensure that potential disruptions in the supply chain are identified early and addressed promptly.

By leveraging machine learning algorithms, the system analyses historical sales data, seasonal trends, and external factors such as market conditions or regional preferences to predict customer demand with remarkable accuracy. These insights allow IKEA to proactively adjust inventory levels across its global supply chain, ensuring that products are neither overstocked nor understocked.

Automated and Warehouse Operations

Additionally, the integration of AI into warehouse operations has transformed traditional processes. Automated systems now handle tasks such as order picking, packing, and routing with precision. For instance, robotic systems, including drones, work alongside human employees to identify the most efficient routes for picking items from shelves, reducing time spent on manual searches.

"The Swedish chain of department stores will deploy an upgraded AI-powered system that supports its employees throughout the day,” says a report by Supply Chain Movement.

"The advanced system will be integrated into fulfilment units, including distribution centres, which will operate 24/7.”

Tommy Niemierowski, Fulfilment Project Implementation Manager at Ikea Belgium, said that the project has been a "hugely rewarding experience.”

"The installation process itself is relatively simple, and the rewards are great, as it facilitates cooperation between different stakeholders,” he says.

Reducing Packaging Costs and Improving Sustainability

AI also optimizes packaging by calculating the best way to fit items into shipping containers and the most efficient uses of packaging materials. This allows the brand to ship more items per shipment, which not only reduces costs but improves the sustainability of IKEA’s supply chain.

"Here we are looking into how do we use AI to help us to bring affordability back into our supply chain,” said Parag Parekh, Chief Digital Officer at IKEA Retail (Ingka Group), in a report by Forbes.

"How do you put in an algorithm which optimizes for cost but also optimizes for a greener planet, and make sure that we ship the product from where it’s the most available and [also] the most convenient for the customer?"

This strategic use of technology in supply chain management positions IKEA at the forefront of retail innovation, ensuring that products are available when and where customers need them, whilst maintaining optimal inventory levels across their extensive network of stores and distribution centres.

IKEA’s Generative AI Shopping Assistant

IKEA has also introduced a generative AI shopping assistant that leverages advanced natural language processing to interpret customer queries and deliver highly personalised product recommendations. This cutting-edge technology is designed to understand not just keywords but the context and intent behind customer questions, enabling it to provide tailored suggestions that align with individual preferences and needs.

For instance, a customer searching for "a comfortable chair for a small reading nook" might receive recommendations for compact armchairs, paired with matching side tables and lighting options to create a cohesive setup. Customers can even engage the assistant in conversation.

"Principally the AI Assistant chats about furniture choices with users, answering questions and trading suggestions,” says a report by Digiday.

"Its primary means of engagement, though, is sending users toward the Ikea website to read a blog post or, ideally, to buy something.”

Overcoming Initial Challenges at Launch

IKEA’s launch of its AI assistant can also serve as a playbook for other brands thinking of launching similar products. That’s because IKEA initially ran into challenges with the tool, as many organizations do when they first adopt AI.

IKEA’s "AI Assistant” was made available to the public via the OpenAI GPT store.

According to the Digiday report, 20% of the interactions with the assistant in the first month resulted in visits to the IKEA website, and 5% of those visits resulted in a transaction. However, in the first days of its launch, "several users used the GPT to ask about DIY modifications they might make to Ikea products, and that the GPT didn’t initially give out correct (or safe) information in response.”

The company decided that future applications of the chatbot would be designed with this in mind to avoid erroneous information.

"Search is expected to change forever,” said Francesco Marzoni, chief data and analytics officer.

"We’ll now be working in that direction in our website, in the app, potentially also in our digital touchpoints in stores.”

IKEA’s Culture of Innovation

Fostering a culture of innovation is central to IKEA's digital transformation strategy. The company views technological advancements as a collaborative effort, ensuring alignment with its mission.

"IKEA is about creating a better everyday life for the many,” said Chrstina Monkman, Head of eCommerce at IKEA US, at eTail Boston 2024.

"From our operational priorities to the way that our physical and digital experiences work together, we're very purpose-led and we let that drive our decisions.”

Cross-functional teams played a crucial role during the COVID-19 pandemic, rapidly implementing omnichannel solutions like click-and-collect services, Monkman said. This agility underscores the importance of an organisational mindset that embraces change.

To drive innovation across all levels, IKEA empowers employees with tools and training on emerging technologies. This inclusive approach ensures that advancements are seamlessly integrated throughout the organisation, rather than being siloed.

By cultivating a workforce that is adaptable and forward-thinking, IKEA positions itself to continually evolve and meet the challenges of an ever-changing retail landscape.

The Benefits of Early Technology Adoption

New technologies enable companies to bridge the gap between physical and digital retail spaces, streamline operations, and align with growing consumer expectations for sustainability and innovation. Furthermore, early adopters are better positioned to build resilience in an ever-evolving industry by establishing robust infrastructures and processes.

Below are some of the key advantages that highlight the importance of embracing these advancements:

• Enhanced customer experiences through tools like virtual try-ons and AR visualisation, bridging the gap between physical and digital retail environments
• Streamlined operations via AI-driven logistics and inventory management, reducing inefficiencies and operational costs whilst improving responsiveness to market trends
• Improved sustainability through AI-powered energy management, aligning with consumer demand for eco-friendly practices
• Competitive edge in the market by meeting and exceeding current customer expectations
• Long-term resilience in an increasingly tech-driven industry by setting up infrastructure and processes ahead of competitors

By investing in these innovations early, companies position themselves for sustained success and adaptability in the face of rapid technological change and evolving consumer preferences.

Build a More Resilient Brand with Technology

Early adoption of emerging technologies provides a transformative opportunity for retailers like IKEA to redefine their business strategies and customer engagement. By integrating cutting-edge solutions, retailers can not only address current market demands but also anticipate future trends, ensuring they remain ahead in a competitive landscape.

To learn more about the latest technology transforming retail and eCommerce, don’t miss eTail London 2025. It’s taking place from June 24-25 at the QEII Conference Centre in London, UK.

Download the agenda and get tickets today.