Ikea’s Chief Supply Chain Officer on Driving Transformation

Ikea has set its sights on the U.S. in a new way: While the company has 52 retail locations in the country, it’s investing $2.2 billion to add more U.S. stores, expand its omnichannel options, and improve the customer experience for American shoppers.

Speaking at the Home Delivery World conference in Philadelphia on Wednesday, Ikea's chief supply chain officer, Tanja Dysli, said in order to accomplish the stated goals above, the company must transform its supply chain operations.

“We believe there's a lot of space to bring more Ikea to more Americans,” Dysli said.

Ikea wasn’t immune to the challenges retailers faced during the pandemic and in the supply chain disruption aftermath and ensuing inflation, and as a result has struggled to keep costs down. The Guardian reported in 2021 that Ikea was raising prices of its furniture and homeware goods in order to keep up with the increased cost of raw materials and transport — despite having greater success than most retailers during the pandemic when customers found themselves spending much more time at home, including having to reconfigure their spaces to create home offices.

“We need to continue to pursue ways of lowering our costs in supply chain so we can pass those savings on to consumers," Dysli said.

One way Ikea is looking to do that is by transforming its fulfillment centers. It’s putting distribution hubs inside some of its massive brick-and-mortar stores, serving as a last-mile distribution network for online orders. Doing this, Dysli said, will allow customers to get orders in half the time with a large reduction in delivery costs.

“We really believe this is the future,” noted Dysli. “This is the best way forward for us."

Earlier this year, Ikea’s parent company, Ingka Group, acquired Made4net, a global provider of cloud-based warehouse management system and end-to-end supply chain execution software, to help with the transformation.

“As a person working in supply chain, I get slightly nervous because doubling sales means doubling volume,” Dysli said.

Ikea is also investing in circularity and finding ways to make its supply chain more sustainable. The company has been at the forefront of the environmental sustainability movement within the retail industry, including investments in solar and wind to power its stores and warehouses, responsibly managed forests as a growing part of its supply chain, and integrating more electric vehicles into its home delivery service fleet.

In 2021, Ikea piloted a buyback and resale program, giving customers who are part of the company's loyalty program the option to sell their gently used Ikea furniture in exchange for store credit. The items will then be available for resale in the retailer’s “as-is” section at discounted prices.

"This needs to be something we invest more into the future," Dysli said. "How can we create more circular supply chains? How can we use more pre-loved products in more ways in the future?"