Kingfisher and IKEA poised for business model shake-up

EXCLUSIVE: DIY retailer Kingfisher and flat-pack furniture maker IKEA have both indicated a strong desire to move towards the sharing economy and servitisation, as a "natural progression" of their business models.

Speaking exclusively to edie at a business summit in Bristol last week, Kingfisher’s group sustainability director Richard Gillies spoke of offering more skills-based solutions combined with tool rental schemes, while IKEA’s UK sustainability director Joanna Yarrow unveiled details of a new R&D project to trial a behaviour change programme with its customers.

Gillies explained that his desire for B&Q and Screwfix-owner Kingfisher to provide its customers with the skills they need to deliver home improvements was recently reinforced by a ‘how-to’ video on B&Q’s website which has received almost a million views.

“If 900,000 people want to know how they can lay their own vinyl flooring, we need to be looking at the products, services and solutions we can offer to make that easier,” Gillies said.

“There clearly is a big opportunity for rental schemes for the big tools customers use very infrequently, but there probably is another route to the sharing economy model which involves skills – and from that route, there may be equipment and tools that might fall under a rental model.

“The purpose of our organisation is to enable people to improve their homes and lives – that means healthier, warmer, dryer, cheaper to run, low-carbon, and safer. Ultimately, the domestic housing stock needs to be improved, but what are the enablers to achieve that?

“It may be that the straight line might not be the direct one. Some of it is the sharing economy in terms of the physical products; some of it will be the sharing economy in terms of skills. It’s something we’re thinking of and working on at the moment.”

Kingfisher’s latest Net Positive Report includes a 2016/17 target to explore and trial alternative business models such as product hire and repair and the sharing economy, which encourage a perpetual reuse of products. The report cites a number of previous rental and repair services that have been trialled across its portfolio, including B&Q’s ‘Rug Doctor’ and a rental and repair service by French DIY chain Castorama which carried out over 205,000 repairs last year.

IKEA’s holy grail 

Meanwhile, fellow retailer IKEA – which has previously partnered with Kingfisher for a number of sustainability initiatives and climate change campaigns –  is making its own move towards servitisation, leasing and the sharing economy.

Yarrow said: “There are three key aspects we need to focus on to be a sustainability leader: the sustainability of our own operations; the sustainability of our products and supply chain; and – the most exciting bit – the sustainability of our customers’ lifestyles.

“We have billions of visitors to our stores and websites and empowering them to live more sustainably has got to be the holy grail because the net impact of that is going to be so much bigger than any impact of our operations, however big we are.”

Yarrow explained that IKEA has just kicked off a new R&D project to encourage customers across the UK to live more sustainably. The company is working with 250 households that are experiencing a variety of ‘life scenarios’ such as moving house or having a baby, and offering them a portfolio of lifestyle changes that will help them live out those scenarios more sustainably.

‘Natural progression’ 

The selected households will be given a £500 IKEA voucher to purchase a selection of its ‘sustainable life at home products’ which offer significant reductions in energy, waste and water use. Working with the University of Surrey to measure the outcomes of this project, Yarrow hopes the three-year project will ultimately give IKEA a better understanding of its customers’ sustainability requirements.

“This is the natural progression of our business model,” Yarrow said. If we want to continue to grow as a business, we have to accept that the linear model of take, make and sell has its limitations. “We’ll be acting upon the results of this project and looking a lot more at the circular economy, takeback, leasing and the sharing economy.”

“We have to have a pretty transformational business model in order to address the sustainability challenge in the right way.”

IKEA’s 2014 sustainability report notes that the total sales of ‘sustainable life at home’ products reached €1,015m last year – a 58% increase on that achieved in the fiscal year 2013. The firm aims to achieve a fourfold increase in sales of these products by August 2020, from the 2013 baseline. edie also recently reported that Ikea has donated almost 3,000 sofas to people living in poverty through the Furniture Re-use Network.

Kingfisher at edie’s Sustainability Leaders Forum

Kingfisher’s director of sustainability and innovation Dax Lovegrove will be speaking at edie’s Sustainability Leaders Forum in London on 19 November, explaining how the company is moving beyond ‘damage control’ towards achieving positive impacts on the natural world and society.

The Sustainability Leaders Forum will also include sessions dedicated to the circular economy, behaviour change and sustainability leadership. Find out more and register to attend here.

Luke Nicholls

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