IKEA, the Swedish furniture maker whose products are ubiquitous in apartments the world over, has long prized itself on its “democratic design.” When thinking about a new product, the company’s designers evaluate it on five different dimensions: function, form, quality, sustainability, and low price.
But what happens when IKEA moves to a new market with very different tastes? How does it evaluate form and function for a different kind of home?
Jesper Brodin, CEO of the Ingka Group, which operates the vast majority of IKEA stores worldwide, explained how the retailer adapts its product lineup for local consumers in a recorded interview that aired at Fortune China’s recent China 500 Summit in Shanghai.
Chinese consumers, it turns out, are more concerned with how they use a product, rather than how it looks.
“The adaptations we do…[are] normally on the functional side, not so much on the style side,” Brodin said. “When it comes to functions—how people cook, the stiffness of a mattress, and so forth—people are not prepared to change." he explained.
IKEA's localization strategy
IKEA wasn't always a globe-trotting furniture retailer. The Swedish brand initially exported its products with few changes, leading to some surprising consequences: IKEA's first American shoppers would buy the retailer's vases as drinking glasses because European-sized cups were too small for U.S. tastes.
The company now conducts regular home visits to better understand how customers in different markets live their lives. And IKEA tailors its sample room layouts to how people in different countries, or even different sub-national regions, set up their homes.
Back in 2013, Reuters noted that the furniture retailer would show different sample balcony layouts depending on its location in China. Northern Chinese stores would feature a balcony used for food storage, common to the region. Southern Chinese stores, instead, featured a space used for laundry.
IKEA continues to localize its product line-up for China today. IKEA China recently debuted a new lineup of smart lightbulbs, which can be accessed through platforms offered by Xiaomi, the Chinese smartphone manufacturer.
An AI 'crash course'
Brodin touched on new technologies in his Fortune China interview.
“When it comes to generative AI, we are in our early days…both on the risks and the opportunities,” he said.
IKEA is dipping its toes into the world of AI. In June, the company announced that it was shifting ordinary customer service requests to a bot named Billie, named after its range of bookcases. Instead of answering basic questions, the company’s human call center workers will provide interior design advice to interested customers—and hopefully drive more sales.
Brodin said that he was making his leadership team go through a “crash course” in AI, in which executives discuss questions like “What is AI? What does it mean for us? And how do we actually bring it back to our leadership?”
“This is something I recommend all companies to do,” he said.
Fortune’s Brainstorm Design conference is returning on Dec. 6 at the MGM Cotai in Macau, China. Panelists and attendees will debate and discuss “Empathy in the Age of AI” or how new technologies are revolutionizing the creative industry.
