IKEA has big growth plans. According to the Wall Street Journal, it aims to increase its revenue by €50 billion by 2020 — 74% higher than its 2014 revenue (IKEA Can’t Stop Obsessing About Its Packaging, Jun 17). Part of that growth is going to come from expanding into new markets, some may come from new formats, but a lot of it has to come from selling more stuff through existing stores. And that is going to require finding ways to cut prices to move more volume.
That’s where design comes in. IKEA is reviewing products in order to find ways to reduce their production and — importantly — their distribution costs. As this graphic demonstrates, this is pretty much a war on air.
IKEA is the king of flat-packing. Finding ways to flatten or otherwise compress items allows for more efficient shipping and, notably, IKEA is willing to share a chunk of those gains with consumers through lower prices.
The article discusses a number of things that IKEA is doing to pull this off, many of which reflect generally sound design principles. For example, they are making a greater effort to emphasize shipping efficiency earlier in the design process. How do you reduce the packing size of an Ektorp sofa by 50%? You move from an integrated design in which the sofa leaves the factory with its arms attached to a design in which the arms are separate and attached by the end consumer. It is clearly more efficient to not introduce the integrated design to begin with. That is, it would be better to do things once than to have to redesign the product after launch. This would be true whether one is interested in lower logistical costs or higher quality or easier field service. Said another way, management needs to give designers clear priorities in order to achieve a desired trade off between the inherent attractiveness of the product and its production cost, shipping cost etc.
A related point is that designers have to have some idea of the downstream implications of their choices. Thus the article reports that IKEA is now sending its designers on factory visits in order to better understand the capabilities of its supply chain before they start working on a new collection.
A final point which is somewhat special to IKEA. The redesign of the Ektorp shifts work from the firm to the consumer. What once showed up in one piece now requires assembly. That is clearly something that can go too far. There is relationship counseling built around assembling IKEA furniture with a particular entertainment set termed the “Divorcemaker.” So while requiring a little futzing with an Allen wrench might be a worthwhile trade off for a lower price, it can clearly go to far and be a reason not to buy a product.
