According to IKEA's strategic plan, the transformation is mainly centered on the three directions of multi-channel integration, digitalization, and home life service providers. The main layout is to embrace the online, walk into the urban area and commercial complexes.

On December 8, 2020, IKEA announced that it would officially stop publishing the Household Guide. This magazine, which may have projected the lifestyles of several generations, quietly passed away amidst the regrets of fans at the moment when it was about to usher in its 70s.

The reason is simple. Under the trend of digitalization, Home Guide has completed its mission. In an interview in 2019, the relevant person in charge of IKEA had already faced this question calmly: “Environmental protection factors and digital versions that reach readers, the circulation of the paper version of the Household Guide has declined year by year since 2018.

Coincidentally, 2020 happens to be 30 years since IKEA has entered China. Since the barbaric era, IKEA has witnessed the rapid development of the home furnishing market in mainland China, and has also acted as a leader in the home furnishing market in China.

At this key node in 2020, Home Guide has completed the historical tasks belonging to the previous era, and at the same time opened another era for IKEA and the entire home furnishing industry. Facing the trend of digitalization, IKEA is on the starting line for the first time. This is also the first time that a Chinese home furnishing company competes with IKEA.

IKEA has been in China for 30 years

In 1982, Beijing, Shanghai, Guangzhou, and Shenzhen took the lead in conducting pilot house sales, which drove the home furnishing industry to an era of industrialization. Although this kind of change has been relatively slow in the cautious pilot, both Che Jianxin and Liu Shaoxi took 800 yuan one after another, and during this time they moved on to the road of entrepreneurship.

Of course, the real industrialization era has to wait for the 1990s. After several years of development, the home furnishing market has gradually gained a certain scale, and the original furniture workshops have grown and moved towards corporate operation. Following the spring breeze of the 1990s, IKEA entered the Chinese market in 1990 and successively opened purchasing offices in Qingdao, Shanghai and Shenzhen.

In 1995, China's first modern home furnishing mall "JSWB International Furniture Expo Center" opened. Three years later, after 16 years of pilot house sales in Beijing, Shanghai, Guangzhou and Shenzhen, the housing reform came to the last moment. In July of that year, the State Council issued the Notice on Further Deepening the Reform of the Urban Housing System and Speeding up Housing Construction to completely stop housing distribution and implement the monetization of housing distribution.

Also in 1998, IKEA no longer regarded China as a simple source of procurement, but viewed it as the market. IKEA opened their first home furnishing store in Shanghai. By 2020, IKEA has 36 stores in mainland China, covering 17 major provinces and cities including Beijing and Shanghai.

After the housing reform, the decoration and home furnishing market began to enter a period of rapid development. The home furnishings really began to be industrialized. The concept of "emphasizing decoration and light decoration" began to reverse. Customized furniture began to sprout in the market, and domestic furniture brands gradually formed and began to appear in the market, gaining a competitive advantage.

Entering the new century, as China is more deeply integrated into the international market, the outline of the home furnishing industry has gradually matured, and the boundaries of industrialization have become more obvious. Some growing companies have begun to focus on supply chain integration and upstream industry resources. At that time, IKEA was almost all the object of the company's learning, whether it is its business philosophy or its ability to integrate the supply chain.

In the second decade of the new century, the Internet boom was surging, online and offline began to merge, and the home furnishing industry began to transform from a traditional manufacturing industry to a lifestyle industry.

Based on the high popularity of the Internet and mobile Internet, home furnishing companies are facing the pressure of digital transformation. In this process, IKEA is also facing a reorganization of the links with consumers. They have set up a brand-new business unit in China-IKEA China Digital Innovation Center, and since 2016, they have continued to carry out digital transformation attempts.

In March 2020, IKEA launched the world's first online official flagship store on a third-party platform on Tmall, and released its own APP. It also launched Taobao Live, which is rapidly advancing its online process.

On December 8, 2020, IKEA made a "sad but sensible decision" and announced that it would officially stop publishing Household Guide.

The transformation that had to be done

In 2018, the growth rate of IKEA's operating income has slowed down significantly, and its net profit has experienced a plunge. Especially in China, there was only 9.3% year-on-year growth. This is the first time that IKEA's growth rate has fallen below double digits since 2011.

As a new generation of young people grow up, they have become repelled by the lifestyle that IKEA sells.

On the one hand, the rapid explosion of entertainment methods and a wealth of entertainment products have made IKEA, which had been used as a weekend travel destination, no longer popular among young people.

On the other hand, the sources of low-cost and high-quality products have become more and more diverse. The rapid development of e-commerce has begun to take away the traffic of traditional retail brands on a large scale; the rapid integration and upgrade of the supply chain has made the shopping experience of local home furnishing brands and IKEA no longer obvious. People no longer need to set aside time to buy their favorite furniture in IKEA stores in the suburbs.

When the experience gap between the two parties gradually narrows, for consumers, more accessible and convenient channels or brands may be important factors in consumer decision-making.

This point is more evident in the data. During Double Eleven in 2019, with the online and offline construction and integration of new retail, Red Star Macalline and Easy Home delivered sales of 21.9 billion and 20.8 billion respectively. In sharp contrast, IKEA China has only 15.77 billion yuan in cumulative sales throughout the 2019 fiscal year.

Transformation in progress

In 2019, at the IKEA China Strategy Conference, Anna Kuliga officially launched the "Future+" strategy. “Future+” mainly has three directions, namely, multi-channel integration, digitalization, and home life service providers. Matching this grand strategy is IKEA's largest annual investment in China's history-10 billion yuan.

• Embrace online

Throughout 2019, 4 billion users visited the IKEA website, and online sales increased by 45% year-on-year, which has also indirectly promoted IKEA's transformation in China.

In March 2020, in the Tmall flagship store, IKEA listed more than 3,800 products in one go, and the online and offline membership system was established. During the 6.18 promotion season, IKEA reproduced the Shanghai Baoshan store 1:1. With the increasingly mature AR technology, consumers can easily achieve free matching and preview.

• Walk into the city

IKEA's offline transformation is also in full swing. In 2016 and 2017, I tried 1800-3000 square meters PUP stores in Wenzhou and Beijing respectively. In July 2020, IKEA chose to enter the urban area and opened China's first urban mini store in Yangpu, Shanghai. According to IKEA's plan, by 2021, there will be 30 such mini stores worldwide.

Different from the previous IKEA stores, this type of urban mini-store will get rid of the positioning of the home experience center, and more of it will act as a lifestyle service provider. It will exist in the city's consumption hotspots and increase the accessibility and reach of young people. With digital technology to create a home retail experience that integrates shopping, leisure, and social interaction, so as to solve the problems and needs of the young generation Z at home.

• Commercial complex

  
  

In fact, as China's land prices continue to rise, the pressure to replicate the IKEA model is visible to the naked eye. In order to avoid this pressure, in addition to building digital stores with small urban mini stores, commercial complexes are also an expected very beautiful concept.

In IKEA's original home + shopping center model, the introduction of office products not only reduces the risk of the project, but more importantly, it will form a natural flow pool and further stimulate the value of IKEA and commercial space.

IKEA is not a company that wins with conceptual innovation.

At the front end, it tends to pay more attention to detail optimization, humanistic care and guidance on customer consumption psychology; at the back end, it focuses on system construction and supply chain integration. IKEA has surpassed pure business dealings and become the operator of the brand. This is also the most important factor for IKEA to become a "business icon".

Therefore, when IKEA, which has witnessed the rise and fall of the Chinese home furnishing market for 30 years, stands on the starting line for the first time, it is still competing in the area that IKEA has been best at before-the optimization of experience and details, and the transmission of values. Perhaps this can give IKEA a little calmness.

When millennials walked to the stage, they were using their own power to change the appearance of IKEA, and they were also changing the business model.