market for homeware and home furnishing

Letter from the CEO
Setting the stage
The market for homeware and home furnishing
The story of IKEA
The organizational set-up
The IKEA way
Democratic design
The IKEA value chain
A global company
IKEA today
People & Planet Positive
The circular future of IKEA
IKEA’s sustainable initiatives
Sustainable consumer behaviour
Segmentation of attitudes
Demographic differences
Enforcing change
Closing remarks
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Page 2 CBS Case Competition 2021 GLOBAL � IKEA Page 3
Letter from
the CEO
Dear students,
I am very happy to announce IKEA as the case company for the CBS Global Case Competition 2021.
At IKEA, we want to create a better everyday life for the many people.
This has been the company vision since 1943, when Ingvar Kamprad founded IKEA in Älmhult,
southern Sweden. Back then, life was not easy. People were careful with resources to make ends
meet, and prices on new furniture was often too expensive for people. This is why IKEA set a
goal to make quality furniture, with good design and function available at an affordable price
for the many.
Today, more than ever, we need to be careful with resources as the planet can’t provide us with
endless amounts. Already in 2012, we launched the strategy
People & Planet Positive to
embark on the journey of becoming climate positive and circular by 2030 – reducing more
greenhouse gas, than the entire IKEA value chain emits. The challenges we face today with the
on-going pandemic has not changed that direction, rather the opposite. For IKEA, it is all about
balancing economic growth and positive social impact – even through a crisis. This year our
focus in on taking a leap for sustainability for generations to come.
Life at home has never been more important. During the last year, our kitchens have become
our restaurants, our dining tables are our ofces, and our living rooms acts as playgrounds. At
the same time, people’s shopping behaviors are changing as their dreams and needs in life at
home are changing, while wallets are getting thinner. All IKEA products must fulfl the fve
dimensions of having an attractive form, while being functional, last over time when it comes to
quality, have an affordable price tag and be produced in a sustainable way. This is our promise
to our customers.
Last year we welcomed more than 800 million visits to our stores and had more than 3.6 billion
visits to, meaning we have a huge opportunity to reach our goal to inspire and enable
more than 1 billion people to live a more healthy and sustainable life. Our research shows that
70% or more are deeply concerned about climate change and most are willing to change, but
don’t know how. Few are even willing to pay for it, because sustainable choices only seem to be
available at premium prices. At IKEA, we believe sustainability shouldn’t be a luxury for the few.
So bearing in mind that consumers are in fact willing to act sustainably, my challenge to you is this:
How can IKEA utilise both new and existing circular initiatives in our retail operations to
make sustainable choices easier and more convenient for the many customers?
I hope that you will gain valuable learnings from working with our business challenges, and I
look very much forward to seeing your perspectives and solutions.
Best regards,
Jesper Brodin
CEO, Ingka Group
As Ingvar Kamprad said “Most things still
remain to be done. Glorious future!”
Page 4 CBS Case Competition 2021 GLOBAL � IKEA Page 5
Setting the
IKEA is one of the most recognized and acknowledged brands in the world and is currently a
frontrunner in implementing sustainable solutions
to the mass consumer. Today, IKEA is present in 60
markets with more than 500 sales locations and
217,000 employees worldwide. Given its strong
market position, IKEA has the ability to drive the
sustainability agenda and become climate positive
by 2030, as per their People and Planet Positive
Enthusiasm, community and a can-do attitude
focused on getting things done are the values that
drive the IKEA corporation. With a unique passion
for the home, IKEA is constantly looking for new
and better ways in how we live, produce and use.
This is everything from designing a rocking chair,
which can be shipped in a flat pack to creating LED
lights affordable for everyone.
The world around us is changing, quickly. That
means IKEA needs to change too. With climate
change, resource scarcity, and COVID-19, societies
face a wide range of complex challenges, which will
require innovative solutions from both corporations and consumers.
IKEA therefore asks you to answer the following
problem statement:
How can IKEA utilise both new and existing
circular initiatives in their retail operations
to make sustainable choices easier and more
convenient for the many customers?
1. What strategic initiative(s) should IKEA implement
to increase the users of their existing circular
initiatives such as Buy-back and, soon to be
launched, furniture rental?
2. Which existing or additional circular initiative(s)
should IKEA focus on to ensure more circularity
in their retail business model?
3. How should the strategic initiative(s) be implemented to secure a growth of min 30 % in users of the
existing/additional circular initiative(s) within
the next fve years?
This is why IKEA is transforming into a circular
business prolonging the life of products and
materials, turning waste into resources, and
meeting customers in new ways. IKEA has already
come a long way. Today, 60% of the product range
is made up of renewable materials and 10% is
made up of recycled materials. By 2030, 100% of
the product range will be entirely made up of
renewable or recycled materials.
The vision of IKEA is to create a better every day
for the many people, including the customers, the
employees and the people employed at IKEA’s
suppliers. The vision of IKEA therefore moves
beyond home furnishing, as the ambition is to
affect the world through their activities; from the
local communities where IKEA source raw materials to the ways their products enable customers to
live more sustainable lives.
By telling the IKEA story and being an advocate for
the things IKEA believe in, IKEA is confdent they
can contribute to bringing a positive change in
However, all of the current efforts of IKEA are not
enough. IKEA can and will do even more.
In formulating your solution, you are encouraged to be innovative and creative. However, bear
in mind that a successful strategy should be in
line with IKEA’s values and effectively balance
fnancial validity with responsibility and sustainability. Ultimately, any existing or new sustainable initiative must still constitute a viable
business case. Furthermore, given the size and
reach of the IKEA organisation, IKEA asks you to
carefully prioritise which initiatives you deem
most relevant to focus on in the next fve years.
You will be evaluated equally
on the following criteria:
• Creativity of solutions and bold ideas
• Feasibility of implementation plan
• Validity of business case
Jesper Brodin, CEO, Ingka Group
‘We have a huge opportunity to reach our goal to
inspire and enable more than 1 billion people to
live a more healthy and sustainable life’
Page 6 CBS Case Competition 2021 GLOBAL � IKEA Page 7
The market for
homeware and
home furnishing
The global homeware and furniture market is worth 682 billion USD, but
has seen a flat growth rate in recent years with a Compound Annual
Growth Rate (CAGR) of 0.15% from 2014 to 2019. This flat average growth
rate is impacted by the varying growth rates in each market. While some
markets have experienced negative CAGRs in recent years, other markets
have been growing signifcantly.
The three largest regions for homeware and home furnishing, being Asia
Pacifc, Northern America and Western Europe, constitute approximately
85% of the entire global market. Asia Pacifc is the largest market for
homeware and home furnishing, taking up approximately 1/3 of the entire
global market. In addition, this market has seen the highest CAGR from
2014 – 2019, namely a CAGR of 3.35%. North America and Western Europe
each constitute approximately 27% of the entire global market, North
America having grown with a CAGR of 2.84% from 2014 – 2019 and Western
Europe having seen a negative growth with a CAGR of -2.65% from 2014
– 2019.
The future for the home furnishing market does seem promising: specifcally, the indoor living segment, having realized a CAGR of just 0.1% from
2014 – 2019, is forecasted to have a CAGR of 2.9% from 2019 – 2024.
Please see Appendix 2 for more information on market sizing
and CAGR in various home furnishing markets.
Page 8 CBS Case Competition 2021 GLOBAL � IKEA Page 9
The IKEA name comes from the
initials of the founder
ngvar Kamprad; Elmtaryd, the farm
on which he grew up, and
Agunnaryd, which is the nearby
village. Although the logo and
purpose of IKEA has developed
through the years, the name has
remained as well as the values put
forward by Kamprad.
The story of IKEA
IKEA is a global market leader in home furnishing, but it all started with a
smart, young man with big ambitions. IKEA was founded by Ingvar Kamprad
in 1943 in Älmhult, southern Sweden. Ingvar Kamprad was only 17 years old
at the time, but he had a dream to create a better life for as many people as
possible – whatever the size of their wallet. With IKEA, Ingvar Kamprad
began selling products such as pens, watches, and frames through a mail
order catalogue, which later on included furniture – frst as a test.
Kamprad grew up in the countryside in a rural part of Sweden, characterized
by low income at the time. The people of Älmhult therefore had to get by for
the smallest amount possible and fnd innovative and practical solutions to
unforeseen challenges. At the same time, prices on new furniture were
mostly too high for the common people. The IKEA business model, including
the frst catalogue, was therefore founded with the aim of providing
furniture of good quality at a low cost.
Today, IKEA is a global brand selling home furnishing products; everything
imaginable for the home, including furniture, lamps, carpets, beds,
kitchens, food, and much more.
The IKEA brand has close to 100%
awareness and is loved by customers around the world
– Ingvar Kamprad
IKEA business idea
“Why are beautiful products only
made for a few selected buyers?
It must be possible to offer good
design and good functionality
at low prices”
To offer a wide range of
well-designed, functional
home furnishing products at
prices so low, that as many
people as possible will be
able to afford them.
Did you know that our iconic logo
wasn’t always blue and yellow?
Here is the development of the IKEA
logo over the years.
ARKITEKT work lamps
table lamp
IKEA PS clock
Page 10 CBS Case Competition 2021 GLOBAL � IKEA Page 11
IKEA is founded by Ingvar Kamprad in Älmhult,
a small town in southern Sweden.
Furniture is introduced into the IKEA range.
Shut out in Sweden: Many Swedish furniture retailers feel threatened by the low prices of IKEA products. They put pressure on suppliers to boycott
the IKEA brand. But every challenge has a solution
– this is one of the reasons IKEA started to look
for collaborations abroad.
The frst IKEA catalogue is
launched to reach the
Swedish customers living
far away from the city.
The frst permanent
showroom opens in
The idea of flat packages
and self-assembly is
implemented, and
becomes the unique value
proposition of IKEA.
The frst IKEA store
opens in Älmhult,
The frst IKEA restaurant opens,
as Ingvar Kamprad realizes that
hungry customers buy less.
First IKEA store
outside Sweden
opens in Norway.
Hello Europe: The frst
Ikea store outside of
Scandinavia is established in Spreitenbach,
Switzerland soon followed by stores in
Ingvar Kamprad writes
the Testament of a
Furniture Dealer with 9
points; it is the frst time
that many of his ideas are
written down including
the IKEA vision: to create
a better everyday life for
the many people.
The veggie dog is introduced.
It has approximately 7 times
lower carbon footprint than
the traditional hot dog.
IKEA phases out all single-use
plastics from the range.
Buy-back is launched in
several markets, making it
possible for customers to sell
back old IKEA furniture and
give it a second life.
A new sustainable owner structure is
created: The ownership of the retail
operations is separated from the IKEA
concept and the IKEA brand to create
the best possible solutions for total
independence and secure a long-term
business perspective. The separate
roles are independent business
groups operating under a franchise
“Sow a seed” launches: Ingvar Kamprad hears
of the 18,500 hectares of rainforest due to a
forest fre in Borneo, and instantly wants to
contribute to the rainforest’s regeneration. In
1998, he therefore commences the fnancing of
“Sow a seed” project leading to more than
12,500 hectares of rainforest being replanted.
IKEA launches the sustainability
strategy People & Planet Positive.
IKEA introduces the frst
Life at home report.
All-in with LED: As of
September 2015, a new
emphasis is placed on LED,
as halogen and energy-saving compact fluorescent bulbs are no longer
Page 12 CBS Case Competition 2021 GLOBAL � IKEA Page 13
The IKEA business model is highly characterized by franchising, which
allows IKEA to reach people across the globe with their various products. It is a system that encourages everyone to collaborate and
contribute, and it therefore enables IKEA to grow steadily while developing the concept across the globe.
The franchising system has proved to be a valuable trait of the IKEA
business model, as franchisees provide inputs based on consumer and
market insights. This has contributed to the continuous growth of IKEA,
enabling greater economies of scale, which is necessary to keep prices
low. The franchise system consists of 12 franchisees in 60 markets that
in cooperation with the IKEA franchisor and various parts of the
business continuously develop and improve the brand.
The largest IKEA franchisor is Ingka Group (Ingka Holding B.V. and
subsidiaries), which is divided into three business areas,
1) IKEA Retail,
2) Ingka Centres and 3) Ingka Investments. The IKEA warehouses
(stores), which falls under IKEA Retail, offer in-store shopping experiences, global digital solutions, and e-commerce in 31 countries. Ingka
operates 379 IKEA stores in 31 countries, generating over 90% of all
IKEA store sales.
This franchise arrangement is organized by Inter IKEA Systems B.V.,
which owns the IKEA concept and is the global franchisor. Today, all the
IKEA stores (except for one store in the Netherlands) operate under
franchise arrangements.
The franchisees pay a 3% franchise fee which allows them to sell the
IKEA product range, apply the IKEA trademark and follow the IKEA
values as they operate according to proven work methods. Within this
framework, franchisees can select and adapt 20% of the product
portfolio to local tastes, where the remaining 80% are part of the
standard product range.
This system allows the franchisees to also adapt the timing of seasonal launches to match the
local lifestyle and climate. As an example, in Kuwait, the outdoor furniture is frst put on display
in the winter months, when it becomes cool enough to sit outside. In the implementation of new
solutions, franchising enables IKEA to pilot-launch initiatives in few locations, before it goes
global. Certain initiatives are also excluded from locations, as local adaption is an important
aspect of the IKEA business model.
The organizational
“We have gotten better and better at streamlining
both locally and globally. The organization is not
very hierarchical. You can reach out to anyone
without feeling awkward.”
– Johan Laurell, Country Retail Manager & Chief Sustainability Ofcer, IKEA Denmark
IKEA Franchisor
IKEA assignments
IKEA Franchisees

Inter IKEA
Systems B.V.
1 store

Franchise agreements
Media agreements

Supply agreements IKEA

Sweden AB
House Market
3 markets
3 markets
3 markets
4 markets
Ingka Group
31 markets
1 markets
2 markets
Northern Birch
1 markets
2 markets
Dairy Farm
4 markets
Suplly AG
Page 14 CBS Case Competition 2021 GLOBAL � IKEA Page 15
The IKEA way
From the very beginning of IKEA, the primary idea has been
to make good-quality products at prices so low that as many
people as possible can afford them. This idea remains in IKEA
and is at the heart of everything IKEA does – from product
development to selling products to customers in IKEA stores
all over the world. IKEAs vision is to create a better everyday
life for the many people.
In order to make well-designed and functional high-quality
products at low prices, IKEA has developed methods that are
innovative and cost-efcient.
Johan Laurell, Country Retail Manager & Chief
Sustainability Ofcer, IKEA Denmark
“Cost-efciency has always been
part of IKEA as we think about
getting more out of less. Using
less resources is good for the
environment and good for the
business. Sustainability and low
cost goes hand in hand.”
Page 16 CBS Case Competition 2021 GLOBAL � IKEA Page 17
Democratic Design is a tool used by IKEA in developing and evaluating any product. It
has fve dimensions: Form, function, quality, sustainability and low price. The fve
dimensions of Democratic Design are at the heart of every IKEA product, and when
there is a balance between all fve, IKEA considers the design to be democratic.
Form Form
Low price
Great form has the power to impact people at an
emotional level. Form is not only about the beauty
of a product, but also about how much better life at
home becomes when it’s beautiful and makes
people feel good. For IKEA, a well-designed product
is attractive and affordable for the many. With a
design that uses the material and resources in an
optimal and responsible way. And with an expression that makes a difference at home.
Quality is when objects and materials last over
time. Product-quality perception and cost go hand
in hand – this is value for money. Designing a
quality that is right for the purpose is about not
exaggerating, but about having the best possible
quality where it matters most. It’s about how much
better a home can be if it stands up to the wear and
tear of everyday life.
Low Price
Function is not only about how good a product
works, but about how much better it makes things
work at home. Great functionality is evident in
smart and simple solutions to problems or needs
that consumers have. Good function is quite simply
about enjoyment of the product. And it needs to be
easy to assemble, which is essential to meeting the
needs and wants of the many people.
Sustainability is about producing and transporting
products in ways that minimize environmental
impact. This includes searching for new and
innovative materials, solutions and production
techniques. And it includes flat-packing products
whenever possible for more efcient transport. But
sustainability at IKEA is also about an important
role in contributing to a more sustainable life at
home for the many people. This means providing
products, solutions and know-how that help people
reduce their own environmental impact, such as by
saving water, reducing energy consumption and
much more.
From the frst sketch, IKEA products are designed to
ft the many people’s wallets. Both designers and
product specialists at IKEA constantly look for
solutions and innovations to improve the products
and lower the price. Low price is not only about the
price, but about affording to make things better.
Sarah Fager, Senior Designer, IKEA of Sweden AB
“It’s basically our culture and values boiled
down to fve dimensions, together with simply
putting common sense in everything we do”
Page 18 CBS Case Competition 2021 GLOBAL � IKEA Page 19
A large proportion of IKEA’s success can be traced back to their unique
business model and value chain, as they continuously strive to meet the
demands and needs of their customers.
The value chain stretches from product development to design to supply
to manufacture and sales, and of course both commence and ends with
the customers. The customers therefore complete the circle and enable
IKEA to listen and learn from their previous products. By focusing on
supply chain optimization, IKEA is recognized as much more than a
Step 1
The IKEA value chain is all about putting people frst. The value chain
therefore starts with listening to people’s needs and dreams to ensure
that IKEA understands how they can make a difference. This is, for
example, done with a sketch or product idea, which is then further
developed in cooperation with suppliers.
Step 2
Following the discussion with suppliers, changes often occur in line with
IKEA’s Democratic Design dimensions of form, function, long-lasting
quality, sustainability, and low price.
Step 3
As the product moves through the stages of the supply chain, there is a
continuous focus on improving the product at every stage. This could,
for example, be at the factory, where designers are attempting to
fne-tune a prototype or a technician discovering a more sustainable
Step 4
The next step includes a key competitive advantage of IKEA, namely the efcient packaging and distribution. With a key focus on keeping prices low, IKEA introduced flat packaging to keep transport costs
down. In addition, costs are kept low by having the customers assemble the furniture themselves. The
flat packaging also makes it easier for the customers to carry them home, which, in turn, increases
customer satisfaction. The collaborative mindset of IKEA has not changed since their early days, as the
core belief is that by working together with customers, partners and co-workers, IKEA can add the most
value to people’s everyday lives.
Step 5
The chain ends where it started with selling and learning from the customers and adjusting to news
ways of meeting the customers.
Due to the size of the corporation, the IKEA value chain stretches beyond these steps, and is continuously optimized to mitigate any unforeseen challenges due to for example the current COVID-19
In this case, you are asked to assess the retail operations, and you should therefore not
consider solutions relating to supply chain optimization
. However, as you embark on brainstorming,
keep the size and subsequent complexity of the organization in mind.
value chain
Manufacture and
and create
and learn
and sell
Package and
Page 20 CBS Case Competition 2021 GLOBAL � IKEA Page 21
IKEA is well-known globally for its functionality and Scandinavian style and has been
the world’s largest furniture retailer since 2008. One of IKEAs primary competitive
advantages is their extensive knowledge about their consumers and offering of
modern, high-quality products at prices that as many people as possible can afford.
Through this, IKEA offers unique products and signifcant value for money compared
to competitors. Competitors are using different angles to compete on low price; heavy
discounting, installation and delivery included.
In addition to the classic IKEA stores – which entails the famous IKEA restaurants – and,
IKEA is now creating new ways for people to shop, wherever they are. Customer-travel to and
from IKEA stores including deliveries is the fourth-largest contributor to IKEA’s total emissions.
When working with your solutions it is therefore essential that you consider the customer
. How and where people meet IKEA matters – both in terms of addressing customer
demand for conveniency as well to ensure an even lower footprint from IKEAs operations. IKEA
has managed to build an entirely unique brand that differs signifcantly from competitors in
any market.
As of 2019, IKEA was the most valuable furniture retail brand in the world (brand value of 18
billion USD) as well as the seventh most valuable retailer. IKEA is present in 60 countries (map of
global presence) with a total of 445 stores. IKEAs competitors are generally more locally
present in particular markets. Therefore, IKEA faces various competitors regionally, none of
these having the same global presence and recognizable brand name as IKEA does.
A global
“We are the biggest on a global scale, but in every
country, we have competitors.”
– Johan Laurell, Country Retail Manager & Chief Sustainability Ofcer, IKEA Denmark
“The brand has all the power.
We are here for the long run.”
– Johan Laurell, Country Retail Manager &
Chief Sustainability Ofcer, IKEA Denmark
“Out of 400 stores, there are not two alike. But
customers will feel the same being there. We
ensure a global range, but locally adapted so each
visitor will meet an IKEA that is relevant for them.”
– Johan Laurell, Country Retail Manager & Chief Sustainability Ofcer, IKEA Denmark
Page 22 CBS Case Competition 2021 GLOBAL � IKEA Page 23
IKEA Planning Studios
IKEA is also testing the concept of a Planning Studio, which is a
meeting point where customers can get support for more
complex purchases such as kitchen or bathroom projects. There
are no items for immediate purchase and take-away, but
customers can use the Planning Studios to discover and try out
products as well as get help from planning experts in one-toone planning appointments. Planning studios have been
opened in London, Stockholm, Copenhagen and New York.
Small IKEA stores
IKEA is in the process of developing small stores in various
markets, with the frst already open in cities like Hong Kong
and Taipei. These small stores can be located in shopping
centers and city centers, where it is not practical to open a
typical IKEA store.
Pop-up stores
To really connect with consumers, IKEA uses
pop-ups that aim to surprise, entertain, captivate and inspire. IKEA has been working with
pop-up stores for several years, each pop-up
with a different theme. IKEA has seen an
immense success with these pop-up stores.
In addition to the classic IKEA stores, the use of an online IKEA
sales channel has been prevalent for a signifcant amount of
time and has been of an ever-increasing importance to the
company. The online sales channel has especially grown during
the COVID-19 pandemic, reaching a total of 4 billion visitors to in the fnancial year 2020.
Click-&-Collect near you
IKEA has also launched and extended their Click
and Collect service, where customers can order
online and pick-up orders, not just at the nearest
IKEA store, but from many local pick-up points
near their home. These local pick-up points may
also be considered in the brainstorm of new
circular initiatives. How can these be leveraged or
innovated further to embrace circularity?
IKEA shops
A concept that is currently being tested is IKEA
shops, being small stores that focuses
specifcally on a locally adapted segment of
the IKEA range. These IKEA shops carry items
for immediate take-away, making it possible
for customers to try products out in an
inspiring environment. Examples of these
IKEA shops currently exist in Madrid, which is
a bedroom shop and in Japan, which focuses
on small space living.
Classic IKEA stores
Shopping in the physical IKEA stores is more than
just a standard shopping trip: it can be a full-day
experience. The stores are extremely large and are
flled with products, housing displays and even
restaurants. Consumers love the full experience
they get at IKEA, and some visit the stores only to
eat the traditional Swedish meatballs.
“First and foremost, IKEA
should be a place where one,
through interior solutions,
should be inspired to live a
better everyday life”
– Christian Mouroux Pedersen,
Country Communications Manager, IKEA Denmark
Page 24 CBS Case Competition 2021 GLOBAL � IKEA Page 25
2020 has been a challenging year for IKEA, as the COVID-19 pandemic led to 75% of IKEA stores
being closed for seven weeks on average during the frst lockdown. However, this sparked a
growth in IKEAs online sales, which as a result, grew by 45%. By 31 August 2020 IKEA websites
had welcomed 4 billion visits. In addition, many stores also introduced new services, such as
virtual consultation.
During the short re-opening later in 2020, it became evident that customer behavior changed
after the lockdown. In the past, many have visited IKEA to browse, but today, people visit IKEA
for targeted purchases. Conversion rates and average spend have therefore gone up, whilst
impulse sales have gone down. As a result of this, IKEA stores have sold relatively more
furniture and fewer accessories. Despite the economic and public health challenges posed by
COVID-19, IKEA has performed well in FY20.
IKEA today

Split of retail sales
% Financial Year 2019 Financial Year 2020
Existing stores 92% 80%
Online 7% 16%
Services 3%
New stores 1% 1%


FY20 Retail sales per region (%)
Region Financial Year 2020
Europe 72.6%
Americas 16.5%
Asia 10.9%


FY20 Top retail selling countries, Ingka (%)
Germany 15.6%
USA 12.2%
France 7.9%
UK 6.2%
Italy 4.8%


EUR Financial Year 2019 Financial Year 2020
Retail sales 41.3 billion 39.6 billion
Store visits 1 billion 825 million visits 2.8 billion 4 billion
# stores worldwide 433 445

The greatest proportion of sales is found in Europe, where the franchisor, Ingka operates. From
Ingka’s sales, you can see the top performing countries below:
IKEA Retail Global in numbers
Page 26 CBS Case Competition 2021 GLOBAL � IKEA Page 27
Healthy & Sustainable Living
By 2030, IKEA seeks to inspire and enable more than 1 billion people to live a better
everyday life within the boundaries of the planet.
The impact of pollution and waste is visible in the everyday lives of many people across the
world, and water, food and air quality remain major concerns to be addressed. Consumers are
expecting IKEA to be the frontrunner in providing those new solutions and innovative ways of
living, while enabling a more sustainable life to become both affordable and attractive. This
entails addressing the need for more conscious and less wasteful consumption and the
necessity of prolonging the life cycle of IKEA products.
This responsibility extends into IKEAs position as a large food company and the need to ensure
healthy and nutritious food. A responsibility that should be honored by going beyond merely
providing the sustainable products, but by also being a source of inspiration and positive
People & Planet
“We are a purpose-led company. It means
something for us to create a better living
for the customers”
– Johan Laurell, Country Retail Manager & Chief Sustainability Ofcer, IKEA Denmark
How IKEA will succeed in becoming People and Planet Positive …
With this road map, IKEA doesn’t necessarily possess all the answers on how to solve a
global crisis with all its complexities and various stakeholders. But they are committed to
address the challenges in a collaborative manner together with co-workers, customers,
partners and students. Their approach relies on transparency and a steep learning curve.
Valuing quick impact and continuous improvement rather than waiting for the perfect
Becoming People and Planet Positive is the ultimate goal for IKEA, and
creativity in solutions has no boundaries.
Towards 2030, IKEA has set a goal to become climate positive, while growing the IKEA business.
The ultimate ambition is to achieve a business with an overall positive impact on people, society
and the planet – balancing economic growth with positive social and environmental impact.
The cornerstone of this strategy is to enable a fully sustainable business model by
changing its processes, value chains and overall approach for how IKEA does business
from linear to circular.
IKEA has identifed three major challenges pivotal for their future business:
Climate Change, Unsustainable Consumption and Inequality. In order to address
these challenges, IKEA has equally identifed three corresponding focus areas.
So far, IKEA has worked proactively to ensure that
all products are designed with an eye for sustainability alongside function, design and affordability
based on the IKEA democratic design dimensions.
In addition, the IKEA restaurants are working hard
in offering plant-based alternatives at the same or
lower prices compared to the traditional meals.
That being said, IKEA has only just begun their
journey towards becoming people and planet
positive and a lot remains to be accomplished.
Circular & Climate Positive
By 2030, IKEA’s ambition is to become climate
positive and regenerate resources while
growing the IKEA business.
The last six years have been the warmest years on
record, and we are constantly reminded how the
food security and livelihood of millions are at risk.
At the same time, consumption is growing at an
unsustainable rate as the world population
increases. IKEA acknowledges that this global
resource scarcity is already impacting the IKEA
business and the lives across their value chain.
So far, IKEA has continuously worked with the
approach of making more from less and sourcing
more sustainably. In order to truly become people
and planet positive, however, IKEA has stated that
by 2030, their ambition is to be a circular business
built on clean, renewable energy and regenerative
resources, de-coupling material use from growth.
Fair & Equal
By 2030, IKEA’s ambition is to create a
positive social impact for everyone across the
IKEA value chain.
Given its size, scope and reach, IKEA believes their
responsibility extends beyond climate change and
includes how IKEA can utilize its business to create
a positive change for people. By playing an active
part in ensuring a fair and equal society, IKEA will
enable people to provide a good life for themselves and their families.
This responsibility extends from both IKEA’s focus
on the wellbeing of children and families to the
opportunities and support provided to communities, migrant workers and refugees. Ensuring
equality across gender, ethnicity and sexual
orientation. A responsibility that extends beyond
internal standards and onto suppliers and
business partners.
“While we are trying to transform our own business, we
also want to enable our customers to transform their own
lives as well. So, we can make the transition together –
because that is ultimately the most impactful solution.”
Monica Keaney, Country Sustainability Manager, IKEA Denmark
Page 28 CBS Case Competition 2021 GLOBAL � IKEA Page 29
As IKEA works towards becoming a circular company by 2030, they depend on the ingenuity of
you to accelerate the journey. Based on the circular principles and current initiatives presented
below, you are given the task of rethinking how IKEA does business. How can they improve the
current circular offerings and develop new ways of meeting their customers’ needs in a
sustainable manner? What are the actions and initiatives that should serve as the foundation
for developing a truly circular IKEA?
Circular product design principles
Based on the four loops of repair, reuse, resell and recycle, IKEA has identifed eight circular
design principles that should be considered when developing new customer offerings. These
are built upon IKEAs fve dimensions of democratic design (see section on Democratic Design).
These principles should serve as a guiding framework for you to identify which circular capabilities that should be applied to new, or existing, products and concepts. The principles are not to
be seen as a checklist and the given solution should still pose a vital business case.
From linear to circular
Looking at our current way of life, the world is characterized by rapid climate change, dwindling
resources and unsustainable consumption. A linear ‘take-make-waste’ approach to how we do
business and consume. IKEA wants to change that. What if old products could become new
resources? And subsequently become material banks for the future?
Developing a circular business specifcally centers around enabling customers to acquire, care
for & pass on products in circular ways. However, people should not have to compromise on
quality of life or the ability to renew their living space with functional, beautiful, affordable and
good quality products. As a result, IKEA aims to be a leader in circular business development as
they work to extend the life cycle of both products and materials in every aspect of their
business – moving from a linear business to a circular IKEA.
From a linear business
To a circular
The circular future of IKEA
New circular initiatives are great at kickstarting
an important agenda, but how can they grow
and scale to become the foundation for a new
business model approach that can be integrated
into the whole company?
Monica Keaney, Country Sustainability Manager, IKEA Denmark
Extracting raw
Parts supply Manufacturing
Refurbishment Remanufacturing
Distribution Customer Landfll/
Design for recyclability
Design for standardization
Design for adaptability
Design for renewable or recycled materials
Design for remanufacturing
Design for care
Design for repair
Design for disassembly & reassembly
Page 30 CBS Case Competition 2021 GLOBAL � IKEA Page 31
IKEA is currently testing and exploring new circular service offerings that will contribute
to the transformation of the customer journey at IKEA.
By offering a subscription-based furniture solution, customers can now enjoy the flexibility
and freedom of buying, prolonging and returning as needed – thereby changing the entire
purchasing experience for the IKEA customer. This service changes previous one-off revenue
streams to recurring usage fees and presents a whole new business case in the B2B-segment.
The offer and the service is still being explored and developed by IKEA and future solutions
may include B2C customers.
The subscription-based furniture solution includes rent of a selected IKEA product range with
the option to return, prolong or ultimately buy the used items. The service includes interior
design service, delivery, assembly and installation, a guarantee repair and replace and ultimately a take-back of the items included.
In line with IKEA’s 2030 ambition, several circular initiatives have already been implemented.
However, many of these remain in the early development or implementation stage, and
therefore illustrate the opportunity for further innovation in terms of both distribution,
offering, and overall quality.
IKEA’s sustainable
From ‘cash & carry’ to pay per use. From ‘sell
& forget’ to tracking single products over
multiple lifecycles
Currently, two different revenue models are offered; Leasing and Rental

Leasing Rental
Options after
the fnancial
contract ends
1. Contract can be prolonged
2. Customer purchases the
products by paying their
residual value
1. The products are returned
to the guarantor (IKEA)
2. Prolongation is possible
3. The customer buys the

Furniture leasing service /
IKEA Rental
The results from previous tests showcase an unquestionable demand from other businesses for
second-hand furniture. However, a current challenge remains on how to ensure the fulfllment of all
associated logistical necessities and customer expectations that comes from providing a convenient,
affordable, on-demand furniture service.
Page 32 CBS Case Competition 2021 GLOBAL � IKEA Page 33
The Buy-back and re-sell services enable customers to give second life to their furniture by
selling old IKEA products in good condition in return for a voucher to shop at IKEA. The returned
products are then sold in a Circular Hub in the store. This helps private individuals play an active
role in prolonging the product life of their everyday items.
The service naturally provides cost and benefts as it enables IKEA to reuse materials or resell
the refurbished products. However, an equally important purpose is how it helps move consumer perception of sustainable consumption. Ideally, as people are given a voucher in return
for their used IKEA products, they return to the IKEA showroom for their next purchase – now
even more perceptive towards communication on sustainably produced products.
While the service has been running as pilots in a few selected countries for the past year, the
service was fully launched across 30 countries in the late fall of 2020 on Black Friday. Since
launch, despite current restrictions due to the pandemic, customers have made almost 600,000
quotes globally. This service is, however, yet to reach its full potential, and there are endless
opportunities to build further on the service. For example, you may wonder how IKEA
can increase the users of the Buy-back initiative, while also enhancing the benefts of
responsible purchasing?
The customer journey starts online by making a quote to resell your IKEA product given that it
fulflls certain criteria relating to type, condition and cleanliness. From there the customer
brings the product to the local IKEA store for a fnal assessment before receiving a voucher of
between 10-50% of the original value of the product. The item is then brought to the Circular
Hub, also known as the As Is Area, where it is resold as an even more affordable alternative.
These As Is Areas serve as an integrated part of the existing IKEA store.
IKEA Buy-back
“We want to offer customers’ sustainable solutions
for their furniture they no longer need, even if it
has served them well over the years”
Stefan Vanoverbeke, Deputy Retail Operations Manager, Ingka Group
Page 34 CBS Case Competition 2021 GLOBAL � IKEA Page 35
Currently, IKEA is offering spare parts available for order online so customers
don’t need to purchase a whole new item if all they need is a spare element.
This could be developed even further to help prolong product life.
IKEA has further identifed a signifcant demand for a repair and refurbishment service among its customers. Currently, repairs on site are only offered
as a last resort to address customer complaints that cannot be solved in any
other way. In most markets it would be very costly to employ trained personnel specialized in the entire IKEA product line. This concept has an enormous
potential, though, if it is to be implemented, it would entail considering
innovative solutions in making this a low-cost offering to customers.
IKEA Repair
The Green
Message Thread
IKEA has embarked on a new trajectory with their People and Planet
Positive Strategy with a unique value proposition of affordability and
sustainability. In order to leverage this, customers must meet the great
stories of how IKEA will contribute to create better everyday lives for the
many people.
To ensure an efcient and consistent communication of IKEAs sustainability efforts across every on- and ofine customer touchpoint, IKEA has
created a new communication concept, the Green Message Thread. The
thread is intended to ensure a coherent story line of what IKEA does and how
the customer can contribute at home. Specifcally, the Green Message Thread
entails developing and communicating new sustainable products and
offerings, which enable consumers to consciously make more sustainable
choices. These products are then marked with a “green dot” to symbolize its
sustainability value. For example, a product can be marked with a green dot
if it is made from recycled plastic or if it has been produced with more
sustainable textiles. The messages from the Green Message Thread also
include whether they are produced with no harmful chemicals or stem
from IKEAs existing buy-back service.
Given the increased communication efforts from the Green Message Thread,
the share of sales from “products with sustainability beneft” increased from
27% in 2019 to 31% in 2020. It should, however, be taken into account that
more than 60% of the current product range is characterized as green thread
products. This underlines the signifcant potential in further utilizing the
benefts of the initiative.
& Planet
More plant
based food
Christian Mouroux Pedersen, Country Communications Manager, IKEA Denmark
“IKEA has a goal of becoming a circular
company by 2030. In order to achieve this,
we must communicate it. By communicating
the goal, we are obliged to achieve it”
Page 36 CBS Case Competition 2021 GLOBAL � IKEA Page 37
consumer behaviour
“Sustainability is noticeably absent
in consumers’ dialogue about
furniture and home furnishings”
– Democratic design presentation
”No one wants to be wasteful. Consumers
just need good alternatives that are not
just more sustainable, but also convenient
and affordable”
Monica Keaney, Country Sustainability Manager, IKEA Denmark
Throughout the last decade, sustainability has moved from being a topic of interest to a
fundamental part of people’s everyday lives. Many consumers are more careful about their
purchases and actions and demand more from the global corporations. However, although
consumers genuinely care about the consequences of not buying sustainable products, buying
habits remain relatively unchanged.
While demanding that corporations sell more sustainably produced products, a study conducted by IKEA revealed that consumers are reluctant to buy them if it means an increased
price or a greater inconvenience. Industries such as clothing or grocery shopping has seen an
increase in sustainable purchases, but this shift is yet to occur in furniture.
The ambition of IKEA for 2030 is to inspire and enable more than one billion people to live a
better everyday life within the boundaries of the planet. This is an ambitious objective that
cannot be achieved alone. Large corporations, such as IKEA, are dependent on sustainability
aware consumers to ultimately also consume sustainably.
However, although the consumers are already well aware of the global challenges, they feel
disempowered in relation to how their actions can make a difference. More precisely, 87% of
consumers say that they are willing to change their behavior. However, 37% don’t know how to
act on their good intentions and more than 50% say they lack support from businesses and
government. If communication is not the answer, how can IKEA then transform the buying
habits of the well-aware customers?
To address this issue, one must start by meeting customers’ needs and demands.
Sustainability has for many become of secondary importance, as the economic
beneft is easier to capture in the short run. Thus, in order to get customers to buy
new products, they frst of all need to see the direct practical, fnancial, emotional
and societal beneft for them and their family. In the following section a clear
segmentation analysis is outlined, which may serve as guidance for whom to
target in the future.
Page 38 CBS Case Competition 2021 GLOBAL � IKEA Page 39
Across 30 markets, 40% can be assigned the attitudinal segment of being Supporters.
While acknowledging the importance of consuming less, reusing and recycling more, the
supporters in practice fnd it difcult to do so and less personally empowered. In particular, the
supporters look to the broader society, governments and businesses for more structural and
systematic changes. Countries like Norway, the UK, Australia and the US have a higher-than-average proportion of supporters.
of attitudes
Across countries and cultures, a common factor is that most people believe climate change is
caused from human activity. Another common factor is that people, although wanting to, do
not know how they can help and consequently need support and advice to do so.
Current and prospective IKEA customers are more inclined to change their behavior than those
who do currently not nor intend to shop at IKEA. While most acknowledge the severity of
climate change, the attitudes towards how society and the individual should address the issue
In terms of concern for the future, frequent IKEA customers are concerned to a larger extent
than non-customers. 79% of frequent customers worry a lot about climate change, whereas 60%
of non-frequent customers worry a lot. This is important to remember in the identifcation of
IKEA’s customer group, as it reflects a large knowledge and recognition of climate change from
frequent customers.
On the other hand,
34% are deemed Idealists. Idealists believe they can have a positive impact
but do however not want to take action at the expense of their own current lifestyles. They
believe that they are already doing their bit to make a difference. They therefore tend to look to
technology and new innovative solutions to make the change for them, craving the easy
solutions to the issue. Countries likes Denmark, Sweden, Germany and Japan have a higher-than-average proportion of idealists.
The remaining
18% and 8%, noted as the Disempowered and Sceptics, respectively, either
believe it is too late to bring about change or even believe climate change is not the result of
human activity at all.
Disempowered & Sceptics
Page 40 CBS Case Competition 2021 GLOBAL � IKEA Page 41
Key barriers
preventing more
In terms of demographic differences, there is a greater tendency among non-parents
to believe that human activity is a cause of climate change. In addition, parents with
younger children are deemed to know the most about climate change and consequently also worry the most.
In terms of age groups, 18 – 24-year-olds are the most likely to agree that humans are
a cause of climate change, whereas those aged 55+ are least likely. It is also the 18
– 24-year-olds, who generally know the most about climate change. In terms of
concern, the numbers are fairly similar across age groups, as both elder and younger
customers are concerned about the future of climate change.
Nearly 90% of consumers are willing to change their behavior in response to climate change.
However, the study identifed three key problem areas that currently act as barriers for people
to do so. Unlocking customers’ desire by addressing these barriers in products, services and
solutions is key in order for businesses to ensure change and induce action:
You do not want to be in this fght alone
There is a general tendency that before being willing to act themselves, people frst of all
need to experience support and action from the majority. This particularly translates into not
experiencing enough support form governments and businesses in driving the needed
change and providing the right solutions.
How exactly does it help the world, that I make sustainable purchase
There is a feeling of disempowerment of not knowing what to do or not seeing the signifcance of one’s own actions. When asked to imagine what the future will look like, only 3% of
associations include actual solutions.
Why should it be more expensive and inconvenient to buy more sustainably?
There is a clear perceived inconvenience and increased expense associated with taking action
which is a key barrier for the consumer. In designing new solutions, it entails an inherent
focus on convenience and particularly the extra expense endured when opting for the more
sustainable solution. Over a third of consumers argued the perceived expense as one of the
primary barriers.
Page 42 CBS Case Competition 2021 GLOBAL � IKEA Page 43
Enforcing change
The frst key motivator to unlock sustainable consumer behavior is addressing and presenting
clear consumer benefts. People want practical solutions that save them money, beneft the
health and wellbeing of themselves and their family and generally make their lives easier and
more convenient. Secondly, certain enablers can help overcome the barrier of lack of information among consumers. This partly entails providing clear advice and information on what to do
and how, as well as examples of what other individuals, companies and governments are doing.
In addition, easy solutions and the necessary infrastructure to act sustainably, should always
be highlighted in the communication towards the customer. Lastly, a key strategic lever is to
better portray the understanding of the link between one’s own personal actions and the
associated positive impact. Bringing this to life for consumers will empower them to act
more sustainably.
How can IKEA motivate different demographics?
The global top motivators are largely consistent across demographics, yet some
differences prevail.
While men favor comfort, saving time, and new technology, women are encouraged by
improved health and organization, as well as knowing actions and specifc impact. Building on
this, parents favor similar traits as women in general, while non-parents wish to save time
and money.
In terms of age groups, the young people from 18-24 are motivated by friends and family taking
action and saving time. The ones that are 55+ are more motivated by improved health, new
technology and knowledge about actions and impact. Lastly, the non-frequent IKEA customers
are motivated by the prospect of saving time, improving health, and making life comfortable.
These small, yet important differences in perception, knowledge, behavior are crucial in making
customers change their habits, and purchase more sustainable products.
But where should
IKEA start?
Christian Mouroux Pedersen, Country Communications Manager, IKEA Denmark
“We want the consumers to perceive IKEA as
a responsible actor in society that actively
works towards a sustainable future for the
people, environment and climate.”
Page 44 CBS Case Competition 2021 GLOBAL � IKEA Side 45
“We need input from the outside,
so it is very appreciated with the
fresh eyes. Think about what makes
sense, when you think of solutions.
Size is important to remember in
IKEA. Do not be afraid of size. If it
is scalable it is better. Take the
perspective of one customer – how
can IKEA help that one person?”
– Johan Laurell, Country Retail Manager & Chief Sustainability
Ofcer, IKEA Denmark
Sustainability has moved from being a trend to a global priority,
requiring innovative solutions to tackle the many obstacles that lie
ahead. As a result, the responsibility of global corporations is
increasing, as they not only influence own operations, but also have
the power to influence the average consumer.
IKEA is already at the forefront of implementing green solutions but
realizes that the future holds enormous potential to affect even more
people than they currently do. However, as IKEA incorporates more
circularity in its business model, the consumers also have to make
the change in their purchasing behavior.
The goal to become climate positive in 2030 is highly ambitious and
requires new and innovative thinking from internal as well as
external partners. Building on the current circular initiatives of IKEA
or creating new ones, the possibilities for your future brainstorming
are endless.
As you embark on this task, bear in mind the size and complexity of
the IKEA value chain. Remember to clearly state any assumptions
made in your analysis to ensure that your solutions are feasible,
viable and aligned with IKEA’s mission and vision.
Page 46 CBS Case Competition 2021 GLOBAL � IKEA Page 47
Page 48 CBS Case Competition 2021 GLOBAL � IKEA Page 49
To provide you with data on a single market the
following section zooms in on IKEA Denmark. As
you think of potential solutions, you may consider
to roll-out your initiative in the Danish market.
However, this is by no means a requirement, and
you may roll-out your initiative in the market you
deem most relevant.
Throughout its 50 years on the Danish market,
IKEA has managed to become a key player. IKEA
has seen signifcant growth in its revenues in
Denmark in recent years, most recently a 3.3%
increase from 2019 to 2020. IKEAs revenue in
Denmark is currently 4.8 billion DKK. In addition
to its revenue growth, IKEA Denmark is seeing
growth throughout all sales channels including
online, physical stores and IKEA Food.
More than 20% of the Danish population is part of
IKEA Family – a membership program of IKEA
– which provides customers with discounts on
furniture as well as in the restaurant when they
visit the IKEA stores. Importantly, IKEA underlines
that while some memberships are for the few,
IKEA family is for everyone.
Appendix 1

Revenue 4.8 billion DKK
Revenue growth 3.3%
Members of IKEA family (Denmark) 1.8 million visitors
Visitors (physical stores)
IKEA Denmark employees
43 million
9.5 million

IKEA Denmark in numbers 2020
IKEA Denmark
Physical stores – 5 stores, 1 Planning Studio
IKEA Planning Studio, Copenhagen
Page 50 CBS Case Competition 2021 GLOBAL � IKEA Page 51
Homeware and home furnishing by region

Market sizes of homeware and home furnishing by region (mUSD)
Geography 2014 2015 2016 2017 2018 2019 CAGR
World 675,673 626,867 628,120 655,073 680,965 681,858 0.18%
Asia Pacifc 186,460 187,917 193,738 202,987 216,189 219,850 3.35%
North America 160,082 164,152 167,844 173,424 179,054 184,112 2.84%
Western Europe 210,536 182,631 180,257 184,087 191,894 184,068 -2.65%
Latin America 48,319 35,952 31,981 35,149 32,780 33,041 -7.32%
Eastern Europe 33,439 22,544 21,129 23,929 25,049 25,324 -5.41%
Middle East and
24,691 23,240 22,631 24,270 24,726 24,767 0.06%
Australasia 12,147 10,433 10,540 11,229 11,274 10,695 -2.51%

The 10 largest markets within home furnishing

Market sizes of largest markets within homeware and home furnishing (mUSD)
Country 2014 2015 2016 2017 2018 2019 CAGR
USA 143,916 149,793 153,638 158,500 163,714 168,637 3.22%
China 102,306 109,043 110,143 116,900 127,433 128,678 4.69%
Germany 56,510 47,733 48,195 49,792 52,959 50,990 -2.04%
Japan 34,416 30,239 33,985 33,065 33,737 34,351 -0.04%
United Kingdom 35,855 34,042 30,749 30,368 32,131 30,814 -2.98%
France 22,720 19,288 19,555 20,277 20,960 20,126 -2.40%
Brazil 27,669 17,921 16,313 18,704 17,000 17,181 -9.09%
Italy 19,808 16,455 16,357 16,677 17,475 16,558 -3.52%
Canada 16,166 14,358 14,206 14,924 15,340 15,476 -0.87%
India 10,716 11,269 11,703 13,069 13,408 13,697 5.03%

Top growth markets within home furnishing

Market sizes of top growth markets within homeware and home furnishing (mUSD)
Country 2014 2015 2016 2017 2018 2019 CAGR
Thailand 3,248 3,230 3,292 3,585 3,964 4,320 5.87%
Indonesia 6,941 6,627 7,274 7,908 8,132 9,013 5.36%
India 10,716 11,269 11,703 13,069 13,408 13,697 5.03%
China 102,306 109,043 110,143 116,900 127,433 128,678 4.69%
United Arab
1,859 1,985 2,085 2,158 2,253 2,319 4.53%
Hong Kong 2,086 2,182 2,266 2,342 2,433 2,531 3.94%
USA 143,916 149,793 153,638 158,500 163,714 168,637 3.22%
Romania 1,673 1,465 1,520 1,628 1,822 1,815 1.64%
Philippines 4,154 4,134 4,070 4,010 4,141 4,474 1.50%
Spain 12,895 11,223 11,682 12,416 13,567 13,404 0.78%

Appendix 2
Market of homeware and
home furnishing
Page 52 CBS Case Competition 2021 GLOBAL � IKEA Page 53
1. Value
Customers are looking to possess less but higher quality
2. Affordability
Customer will not compromise on quality, design or
sustainability for low price.
3. Wastefulness
Customers do not want to be wasteful
4. Convenience
Convenience is the ultimate factor behind customer
behavior and decision making, and is one of the focal points
for acquiring, caring for and passing on products.
5. Citizenship
Despite it not being reflected in every purchase decision,
there is a growing concern about consumption and a wish
for more sustainable solutions.
The Testament of a Furniture Dealer was written in 1976 and is Ingvar
Kamprad’s message to IKEA’s employees. It underlines the importance
of IKEAs purpose and its approach to side with the many. It is built on
the notion that what is good for the customers is also, in the long run,
good for IKEA. The testament describes nine philosophies, rules and
methods that represent the cornerstones of the framework of ideas
that have made and will to continue to make IKEA a unique
1. The product range – our identity
2. The IKEA spirit – a strong and living reality
3. Profit gives us resources
4. Reaching good results with small means
5. Simplicity is a virtue
6. Doing it a different way
7. Concentration – important to our success
8. Taking responsibility – a privilege
9. Most things still remain to be done
– a glorious future!
Appendix 3 Appendix 4
The Testament of a
Furniture Dealer
The five main aspects of
consumer demand for
circular products
Page 54 CBS Case Competition 2021 GLOBAL � IKEA Page 55
Income Statement

EUR Million 2020 2019 2018 2017 2016
Revenue 37,368 39,243 37,093 36,295 35,691
Cost of sales and services 25,643 26,779 24,947 23,730 20,260
Gross Proft 11,725 12,464 12,146 12,565 15,431
Operating Expenses -10,454 -10,642 10,212 9,534 10,932
Other income 160 205 317
Operating income 1,431 2,027 2,251 3,031 4,499
Total fnancial income
and expenses
141 483 -138 283 869
Income before minority
interests and taxes
1,572 2,51 2,113 3,314 5,368
Tax -378 -682 634 825 1,158
Income before minority
1,194 1,828 1,479 2,489 4,21
Minority interests -5 -11 11 16 10
Net income 1,189 1,817 1,468 2,473 4,200

Consolidated Balance Sheet

EUR Million 2020 2019 2018 2017 2016
Group Equity 43,166 42,828 40,822 39,943 38,907
Long-term liabilities 511 529 774 1,010 1,385
Other non-current liabilities 1,890 2,275 1,810 1,767 1,908
Total non-current liabilities 2,401 2,804 2,584 2,777 3,293
Short term liabilities 118 2,711 2,727 3,891 5,126
Other current liabilities 6,521 6,546 6,217 6,329 6,641
Total current liabilities 6,639 9,257 8,944 10,22 11,767
Total equity and liabilities 52,206 54,889 52,350 52,940 53,967
Total fxed assets 27,532 27,857 26,535 25,66 24,988
Inventories 1,945 2,273 2,027 1,924 1,713
Receivables 2,319 2,165 2,544 2,327 4,115
Cash, securities and
short-term deposits
20,41 22,594 21,244 23,029 23,151
Total current assets 24,674 27,032 25,815 27,280 28,979
Total assets 52,206 54,889 52,350 52,940 53,967

Appendix 5
Five-Year Summary
Ingka Group
Page 56 CBS Case Competition 2021 GLOBAL � IKEA Page 57
Financial Ratios

EUR Million 2020 2019 2018 2017 2016
Current ratio 3,72 2,92 2,89 2,67 2,46
Cash ratio 3,07 2,44 2,38 2,25 1,97
Debt ratio 17% 22% 22% 25% 28%
Debt to Equity 21% 28% 28% 33% 39%
Gross margin 31% 32% 33% 35% 43%
Operating margin 4% 5% 6% 8% 13%
Return on assets 2% 3% 3% 5% 8%
Return on equity 3% 4% 4% 6% 11%

Case Writers
Therese Dines Christensen
Rikke Kjær Damgaard
Benjamin Blangstrup Johansen
Special thanks to
IKEA Denmark
Christian Mouroux Pedersen, Country Communication Manager
Sofe Kragh, Project Leader
Johan Laurell, Country Retail Manager and CSO
Monica Keaney, Country Sustainability Manager
Case design
Jonas Edvard Emil Raagaard from Edvard / Emil Grafsk Design
Mette Kristoffersen, Bain & Company
Kristoffer Thygesen, Bain & Company
Case Testers
Laura Hönig
Sebastian Brun Jørgensen
Patrick Staeckmann
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Appendix 6
Key Financial Ratios
Ingka Group
Page 58 CBS Case Competition 2021 GLOBAL � IKEA Page 59
Small change
– big impact
The future of furniture
is circular
© Inter IKEA Systems B.V. 2020