IKEA could be your answer to lower energy bills

Ross Greenwood speaks to the boss of IKEAIKEA could be your answer to lower energy bills Australia, Jard Gardberg, about its extraordinary four-point plan to increase market share, and even lower your energy bills.

Introduction: IKEA could be your answer to lower energy bills

Ross Greenwood:  A lot of people in Australia know IKEA but not necessarily the concept behind the store. You’re running the stores now; you’ve run Russian and Germany and China previously. Just explain to people where you would like to see IKEA go to, how would you like to see it grow over the next five years in Australia?

Interview with: Jard Gardberg, IKEA Australia, CEO

Jan Gardberg: I think we’ll have the brand presence in Australia almost for four decades now and the past five years we have put a lot of focus to establish more stores and we are now 10 stores. For the future, I believe that there’s still an additional five to six stores that we can implement here in Australia but parallel to that one the biggest offer is to offer online services. Truly doing multi-channel transformation for the next coming five years.

Ross Greenwood:  I’ll come back to the internet shortly but in terms of those four or five stores that you see where you could expand, what are your criteria for where those stores should go?

Jan Gardberg:  Today, of course, we already exist in the heavy populated cities in Australia. I’m imagining that we’re going with the smaller format stores and that we will put them where people already are shopping today. That could close to shopping centers or integrated into shopping centers.

Ross Greenwood:  You could actually see Ikea which right now have stand-alone big mega store like the one we’re in now. You could actually see yourself going into shopping centers into the future?

Jan Gardberg:  Yes, I don’t exclude that I mean in the old way of saying this that we want to establish ourselves on the potato fields but I think that is already in the past. Now we have to look at where are the people and how should we trade touch points that are closer and so it’s very much about the accessibility that we have to work on.

Ross Greenwood:  How important is it for you to actually have people come into the stores to look and to touch? Because based as you poured out you’re going to expand the online side of it very quickly.

Jan Gardberg:  I think that absolutely biggest strength we have is our fantastic stores, I mean they’re really palaces with home furnishing solutions where people can come and touch and feel and you can come together and dream about what you would like to change into your home. That’s going to continue to be the base and the fundamental for everything that we’re doing. Parallel to that one we add the online experience where of course it gives us other possibilities to show magnitude of different type of solutions online but coming back to that the store is really going to be the center piece in everything that we’re doing.

Ross Greenwood:  In other words, if you were to go in shopping centers around Australia, West fields or whatever it might be that you go to it’s because you think that they are viable stores not because they’re effectively shop funs for your online business?

Jan Gardberg:  Definitely the range is our identity and today we carry around 9500 different type of home furnishing items and that’s going to continue to be in the forefront of everything that we’re doing. With the accessibility part to step in to areas where we may be today don’t have the possibility to put the 3,500 square meter store concept what about maybe 15,000 square meters where we have knowledgeable staff and parts of the and that in combination will really also drive the business growth for us for the future.

Ross Greenwood:  Given the fact that in Australia home furnishings in particular it’s a highly competitive area I mean you’ve got Harvey Norman and the Mangrove, you’ve got a range of others out there doing precisely the same thing trying to attract the customers. Why is it that you’re confident the people will keep on coming into Ikea stores?

Jan Gardberg:  I think we have a deep understanding about life at home in Australia. We are obsessed with the notion that we want to create a better everyday life for the many people so as an example just last year we again did 500 home visits to visit people in the real-life situations with our interior designers, listening to the problems and frustrations that people have and then we translate that into our solutions in the stores.

The best way to kind of experience that is, of course, to look at our fantastic room sets and the range. As long as we will stay true to that I believe that the customers will recognize that we understand their situation and that we can provide their really affordable and beautiful solutions.

Ross Greenwood:  I want to get to that point of affordable because right now of course it seems that we live in a disposable society we continue to throw things out. There is no doubt a lot of things in our lives; the price of home furnishings has come down over a period of time. Is that something that Ikea is conscious of?

Jan Gardberg:  Yes, I can say that now with the operations that we have today in Australia we’re coming up to threshold where it actually makes it possible to look into how we can maybe bring even domestic production into Australia. Today we don’t have any domestic production here it’s all imported into Australia and within categories like for example, bulky goods like appostored mattresses and so on we’re seriously looking into now a possibility to actually bring domestic production here. What will that then happen is that that will help us to lower the prices even further but still keep a high quality and we can then translate that into the lower prices and then to drive further volume.

Ross Greenwood:  If you would have to bring domestic production in the play here, would that be Australian companies or would that be IKEA itself doing the domestic production?

Jan Gardberg:  I would say that the first step we’d look for steady partnership with already existing Australian suppliers that would be the first step.

Ross Greenwood:  In other words that’s more jobs, that’s more investment kept in Australia resisting from bringing Ikea goods in from overseas?

Jan Gardberg:  Yes, definitely.

Ross Greenwood:  That’s good. Do you think Australia has now how to do that?

Jan Gardberg:  Yes, we have actually been doing already some pre-studies and we know that a know-how and the competence exist here and this is also part of our long-term directions to actually develop not only the presence and the accessibility but really to address also the affordability part.

Ross Greenwood:  The affordability part is important because obviously everybody’s got pressure on price right now. We know that households around to some pressure when it comes to price, try to keep prices down and yet having people turn over their furnishings over a reasonable period of time that’s also a key isn’t it here because ultimately if it is affordable the people will turn it over more quickly.

Jan Gardberg:  We hope of course that people one day buy something from us can really recognize the quality, the built-in sustainability, all the effort that’s been put into the range. Of course, we understand that at a certain time a product might come to its end of its life time so therefore already from the design part and I can give us one example, we now designing our sofa range. We’re actually going in with the platform thinking which means that already from the beginning we have thought about what should happen when the sofa comes to its end of its life.

It makes it easier to take apart and to separate the different waste fragments and so forth and when thinking from that totality we can see that we actually get a better product to a lower price by already thinking about this from the moment of design.

Ross Greenwood:  Just one aspect of that also is that our furnishings home furnishings in particular such as Ikea sales are they becoming more like the clothes that we wear, that we do change them with the fashion that is becoming more affordable to do that?

Jan Gardberg:  I would say I don’t see right now that trend happening really if you talk about the furniture part is more about home accessory parts, the home decoration, curtains, textiles etc and so on. There I can really see the similarity with the fashion industry but when it comes to bedroom furniture, the living room furniture and so on it’s still something that is not turning over in that quick manner.

Ross Greenwood:  In terms of your growth in Australia are there any other areas that you’d really love to see Ikea move into where it’s not at the moment?

Jan Gardberg:  Yes, we are really deep into looking at IKEA home solar.

Ross Greenwood:  Solar panels?

Jan Gardberg:  Yes solar panels. It’s not something that immediately would associates of course the home furnishings company are like but we believe that– we already have introduced that in to the UK market and in Poland and I believe also there are just on its way to introduce something similar like that in Japan. I and the team here would like to be able to find a way to introduce that also to the Australian market and that would mean that we’re not stepping in to that area or that category to make any profit it would be actually cost Norton because we believe that this is another positive way that we as a big company can contribute for a sustainable life at home for the many people in Australia.

Ross Greenwood:  If you deal with the profit that could genuinely disrupt the whole solar panel industry in Australia. Australia has one of the deepest penetrations of solar panel you’d see anywhere in the world.

Jan Gardberg:  Yes. I’m thinking then that call it disruptive or I think why are we doing this? Because we morally feel that is the right thing to do. We have the possibility to do it and then I think it’s a moral obligation that we also should be able to give affordable energy solutions to private people.

Ross Greenwood:  Just one thing. Get back to your growth expansion ideas is the way you’d like to go you say in areas you’re generally in the big cities with the big box format retail warehouses. If you were to go to other areas where may be it’s a little inaccessible right there to get those formats what sort of areas do you think would fill the gap for IKEA right now?

Jan Gardberg:  We have in our immediate vision to be accessible for all Australians. That means cover all populated areas in Australia and if you think about it we’ve been here as I mentioned before almost four decades with IKEA brand but we’re still just hovering around the single-digit 6% market share. My vision is that in a short period of time we’ll be able to double this. To go up to a double-digiting figure maybe is 12%, 15% market share and to be able to do that we have to work not only on the accessibility part, is a affordability part and the third one is also to expand our services that we’re giving. If I would be a little bit self-critical maybe we have been a little bit stuck in the old way of serving, expecting that people come to the store and you have to pick all of the items yourself. Now it’s not about either/or. We have to do both and that means to expand our service offers of all sorts. We have people that want to have everything served to them and then we need to able to also offer that and today I would say that we are not really there yet but in the coming 12 months we are going to put into place a new kind of service of the sort also all across in Australia.

Ross Greenwood:  Will that be coincidental with you moving into the shopping centers to really if you like take a more traditional retail approach to those new stores as new outlets?

Jan Gardberg:  Yes. Definitely because there’s this- not only talk about stores, we talk about touch points. IKEA touch points and that can be anything from a virtual touch point to a big physical store as here in Tempy and everything in between. That means also that the only way to do that is to get really high-class online capabilities. Without that we’ll not be able to move the growth agenda for that and that gives us then also possibilities to maybe work with popup stores that are also present in shopping center for maybe six months and then it closes down and then it pops up somewhere else. We’ll still establish some new stores.

Ross Greenwood:  In terms of that you’ll see big expansion for IKEA in Australia from where you’re today?

Jan Gardberg:  Yes. Definitely. As I mentioned before we have a brand awareness that is just fantastic all over Australia but still a market share on around 6% so there’s a lot of potential. I think also it has to do with that we have not been yet fully accessible to all Australians. We really want to create a better everyday life for the many Australians and by that we need to be able to reach many more of the many.

Ross Greenwood:  That is Jan Gardberg the new Australian Chief Executive of IKEA and his plans. It’s quite incredible to try and double the market share that IKEA’s got in Australia to roll out at least five or six new stores around the country, radical manufacturing and then also to sell you solar panels at cost. It’s a pretty bold plan you’d have to say and it’s interesting to see the sort of shake up that comes from some of these big fan retailers that decided that Australia’s a place they want to really concentrate. IKEA of course having a very long history of being here for many decades but now trying to ramp it up.

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