Some Assembly Required as Ikea Expands ‘Circular’ Supply Strategy

With its clean Scandinavian aesthetic and affordable prices, Ikea has produced some 12,000 products and outfitted millions of homes and apartments around the world.

The company, known for its flat-pack boxes and unpronounceable product names, also wants to overhaul the way consumers think about and shop for furniture.

In an exclusive interview with Bloomberg Environment on Oct. 22, Pia Heidenmark Cook, chief sustainability officer for Ikea Group, said the company is adapting its global operations to become circular and climate neutral by 2030.

“If we truly want to enable sustainable lifestyles and really be an advocate for change, we need to use our size and scale to create change across the whole sector,” she said.

Earlier this year, Ikea updated its long-term strategy around “climate change, unsustainable consumption, and inequality,” Heidenmark Cook said.

The plan includes a specific emissions-reduction target of 80 percent of its total climate footprint by 2030, while also becoming a net producer of renewable energy by 2020.

A circular economy tries to reverse the old “take-make-dispose” industrial model, by decoupling economic activity from the consumption of finite resources and designing waste out of the system.

Beyond ‘Peak Stuff’

Heidenmark Cook was elevated to the executive position a year ago, after spending more than a decade in different roles.

Her predecessor, Steve Howard, famously said in 2016 that the world had hit “peak stuff,” including home furnishings.

In practice, Ikea customers will still be able to buy their Poang chairs and Ektorp sofas, but Heidenmark Cook said they may just look a bit different or be made from more sustainable materials.

“We’re still very much a home furnishing company,” she said. “We believe that everyone, no matter where you live, should have the opportunity to have a beautiful home, and not just people with a thick wallet.”

“The next part is very much about becoming more climate positive, basically, changing the business model that we have today, which is still very linear, to one that is more circular,” she added.

Climate positive means reducing greenhouse gas emissions by more than the Ikea value chain emits.

To get there, Ikea wants to get tougher up and down its supply chain, including new restrictions on suppliers, materials, and transportation. Even its new “veggie hot dogs” being served at its cafeterias will play a role in reducing climate impact.

Love-Hate Relationship

Ikea plans to expand to about a dozen new markets in the coming years, including South America, giving the Swedish retailer a reach of 3.2 billion potential customers and 360-plus stores.

Many in the environmental community have long questioned the idea that a company built on a low-cost, high-volume strategy that encourages impulse buying can ever be considered “sustainable.”

In her book, “Cheap: The High Cost of Discount Culture,” author Ellen Ruppel Shell, wrote that “IKEA designs to price, challenging its talented European team to create ever-cheaper objects, and its suppliers—most of them in low-wage countries in Asia and eastern Europe—to squeeze out the lowest possible price.”

Others, such as English architect and designer Edwin Heathcote say Ikea has been so successful at installing itself as the only option for affordability and style that most people don’t even consider alternatives.

“Take the Billy bookcase. It is, arguably, the most successful piece of modern furniture,” Heathcote wrote in the Financial Times. “It is also rubbish, the materials are shocking and the back is a piece of pressed card held in place with tacks and duct tape. Yet I still have five.”

Swedish Frugality

But Heidenmark Cook said the do-it-yourself assembly and materials efficiency pioneered by Ikea’s founder Ingvar Kamprad is itself an act of environmentalism.

The company uses 1 percent of all the timber and cotton in the world, which from her point of view also represents an opportunity, as seen by Ikea’s recent push to use only wood harvested from sustainably managed forests by 2020.

“There is this perception that big companies are automatically bad, or that low-priced means less quality,” Heidenmark Cook said. “But from my perspective, I actually think big is quite good.”

The company also plans to purge its global inventory of all single-use plastic products by 2020, a move that came on the heels of an announcement by the European Union of a similar ban on single-use straws, drink stirrers, cutlery, and balloons.

Recycling and Secondhand

Ikea is also planning to launch more e-commerce options, as well as a number of smaller city-center stores to better cater to customers’ changing needs, Heidenmark Cook said.

The company has come to openly embrace the popular consumer pastime of “hacking" Ikea furniture, through DIY customization, and regularly hosts workshops at its stores, she said.

In June, the company started buying back its baby furniture in Japan, in response to the growing online market for secondhand furniture.

“Kids grow quickly, so you can take something back and then get a new one,” she said. “Renting, leasing, secondhand—circular means all of those things.”