As part of a commitment in transforming the way we shop, IKEA has taken a significant leap in enhancing the customer experience with the introduction of an artificial intelligence (AI) driven technology. The demand sensing initiative is a result of a three-year collaboration involving IKEA Retail (Ingka Group), Inter IKEA Systems, Blue Yonder, and other key players, and marks a pivotal step in IKEA’s omnichannel strategy.
AI has been a game-changer for us, making our routine tasks easier with the use smart models. However, the tool is only as good as the data its provided. The real heroes here are our coworkers, as they bring invaluable insights and always ensure the quality of data is there.
– Parag Parekh, Global Chief Digital Officer
Demand sensing examines short-term demand patterns across various channels, that include but is not limited to customer insights, market events, pricing, campaigns, localised weather reports and external economic factors. The technology helps accurately observe customer preferences over time, which not only supports coworkers in their daily job but also elevates forecast accuracy by precisely adapting to shifting variables. The key component of the initiative’s success, however, is the quality of the data which is provided by coworkers.
So far, the initiative has provided coworkers with better planning tools, and ensured the availability of products for specific locations at the right times, enhancing overall operational effectiveness, and allowing coworkers to spend more time making strategic decisions and working better with stakeholders. IKEA Portugal serves as a remarkable example of a market success as forecast accuracy has been improved overall by 5%. According to Parag Parekh, Global Chief Digital Office (CDO) for IKEA Retail (Ingka Group), ‘’AI has been a game-changer for us, making our routine tasks easier with the use smart models. However, the tool is only as good as the data its provided. The real heroes here are our coworkers, as they bring invaluable insights and always ensure the quality of data is there’’.
The initial pilot took place in Norway in 2020 and right away showed noticeable improvement in more accurate prediction of customer demand, meaning more reliable forecasts for each article and each store, which included catching fluctuations earlier. What sets the approach apart, is also the collaboration between the company, its partners and coworkers, all which have contributed to a fruitful outcome. As Jonas Nordquist, Supply Integration Leader at IKEA Retail (Ingka Group) put it, ‘’All parties embraced the initiative, even during challenging periods, demonstrating their commitment by giving it not just a second but a third try, and more, until all objectives were met. We look back on how our co-workers having made the forward-looking project a success.’’
In the fast-paced world of retail, keeping up with technology advances is a constant challenge. But with the rise of cutting-edge technologies, companies like IKEA are looking to create stronger bonds with consumers. By harnessing the power of big data and AI, IKEA is leading the way in offering personalized services that elevate the shopping experience. This integration is not just about staying current; it’s about making smarter, more informed business decisions that benefit both the company and its customers.