New Ikea store in downtown Toronto will be more than just a showroom for e-commerce, Mike Ward says

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This article was published 03/04/2021 (1624 days ago), so information in it may no longer be current.

Ikea, a pioneer of suburban box stores, announced last week that it will open a location in Toronto’s downtown core. A year from now, urban dwellers seeking a Vonsbäk rug, some Jubla candles or simply a leisurely stroll through the famously circuitous showroom will be able to head to the Aura skyscraper (at Yonge and Gerrard Streets) instead of the boonies. While Canadians have a love-hate relationship with the world’s largest furniture retailer (Those textless assembly manuals! Those warehouse hunts through acres of brown flatpacks!), most of us have “done” Ikea. Mike Ward, the head of Ikea Canada, is counting on that brand affinity to carry the retailer through the e-commerce era.

The timing of the announcement seems surprising given all we’re hearing about the exodus from downtown cores. Was the plan in place for some time or are you anticipating a reversal in the trend?

It’s more the second. A couple of years ago we said, “OK, we see three things to work on in the future: becoming more affordable, more sustainable, and more accessible.” Even if the pandemic has led some people to move to the suburbs, in our minds it doesn’t change the bigger trend of people moving to metropolitan areas. It’s all about being close to where people live and work and shop, and a lot of Ikea fans live in the downtown core.

You tried smaller store formats before, including one in Ottawa, that didn’t pan out. What’s different about this one?

I was actually part of developing the one in Ottawa. The idea there was to have a traditional store with a big cash-and-carry operation in a smaller city. Within a year, we learned it was too small and had to expand it. The store in downtown Toronto is part of our omnichannel approach. People will be able to see all of our product and service offerings but they won’t be able to pick up the entire product range at that location. But we’re building a network of pickup points in partnership with a company called Penguin.

It sounds like the new store is an e-commerce showroom.

It’s more. People can use it that way, but you’ll be able to get planning done there, you’ll be able to have the food experience.

What products have particularly increased in popularity through the pandemic?

The first thing we saw is the obvious: desks and desk chairs and lamps for home offices. We also see a big increase in demand for our services, such as click and collect. That convenience element has massively accelerated. The second phase has had to do with the renovation kick: we see strong demand for our kitchen range. The biggest surprise was that we expected a downturn and a gradual return in demand but demand peaked right away.

You’ve been with Ikea for three decades, starting as an intern. How has it changed over that time?

The best way to describe the evolution is in phases. I joined in the mid-’80s when the company was still in an entrepreneurial phase, not even a 10th of the size it is now, and testing lots of things. The second phase was a period of tremendous growth and globalization where Ikea went from being in a few countries to having stores in most parts of the world. We’re now going into another entrepreneurial phase around a massive transformation that’s been accelerated by COVID, driven by this rapid urbanization and by technology that’s allowing interesting business models to pop up.

One of those business models are online marketplaces like Amazon and Wayfair, which also emphasize affordability. How are you approaching that competition?

My belief is that the true winners will be those who are truly omnichannel in their approach. People are also more demanding, not just about your core offer but your stance on issues like sustainability and social equality.

You’ve worked for Ikea in several countries. Do perceptions of Ikea vary around the world?

I worked with the Swedish organization, in the U.S. and the Netherlands. What’s striking is how similar the positioning and consumer perceptions are from country to country. What you have to pay attention to are things like comfort, which is such a subjective measure. For North Americans, firmness of beds is important, and so are height and size. But the perception of firmness is very different in Germany. Their preferred beds are rock hard.

I understand those famously tongue-twisting product names are part of a system invented by the founder. Bath accessories have Swedish names of plants, for example.

Yeah. Some product categories are named after lakes, others after regions.

Do you have a favourite name? In my family, it’s Bekvam: we call any kitchen caddy a Bekvam.

There are a lot of funny names. A recent favourite is the Förnuftig air purifier.

What’s your favourite Ikea product?

I think our kitchen system is incredible. I’ve actually installed three Ikea kitchens over the years. Lately I’ve gotten these LED bulbs, you can change their colour and intensity with hand-held controls.

Tell me about the “bulla bulla” concept.

You know about bulla bulla? That’s cool. In a way, it’s a basic merchandising technique of volume pricing. We pile up low-cost items in bins in a way that shows volume and everyone can see them.

In some countries, Ikea has ventured into categories like hotels, mobile connectivity, even flatpack houses. Are any of these coming to Canada?

We don’t have plans for any of these. The ones I’m most interested in now are renewable energy products. In 10 countries, you can now buy PV (solar) panels for your home at Ikea. We’re working hard to get those into Ikea Canada.

Ikea has long emphasized sustainability but many people view it as a maker of disposable, fast-fashion type of furniture. Do you see merit in that perspective?

No, I don’t. A lot of people hang on to Ikea furnishings for a long time and there is a massive second-hand market in Ikea furniture. That doesn’t mean we can’t do more to make not only our products but our whole operation more sustainable. Because we design our own products, we have control over the components. We have what’s called a sustainability scorecard made up of a dozen criteria like what materials are used, how much energy the product requires to manufacture and transport. We’re making more products from bamboo, which is more sustainable than other materials. We’re looking into furniture rental and leasing. We have committed to 100 per cent of our delivery vehicles being electric by 2025 and we’re coming out with programs like buybacks: when people want to change their furniture, they can sell it back to us instead of throwing it away. People may have the impression that Ikea is just throwaway furniture, but that’s not my starting point.

(This interview has been edited for length and clarity.)

Joanna Pachner is a business writer and a freelance contributor for the Star.