IKEA celebrates a decade in Japan next year with various special events and promotions. Since opening its first store in Chiba in 2006, the iconic Swedish home–furnishings provider has expanded to eight locations across the country. IKEA Japan’s president and CEO Peter List has worked for the firm for 25 years. He talks to EURObiZ about the opportunities for IKEA in this market.
Please tell us the purpose and goal behind launching IKEA in Japan.
Being a global company, we looked at all the countries and their potential. And with such a high GDP and the third-biggest home furnishings market in the world but IKEA not being present, then, of course, there was an opportunity for IKEA to enter Japan. The home furnishings market here is really segmented. There is not really one brand that owns the market. You know, our vision is “to create a better everyday life for the many people”. So with that in mind, we saw a massive opportunity to enter Japan.
What do you feel makes IKEA unique in this market; and, when compared to other firms, what is your strength?
We are absolutely passionate about life at home, so we visit people’s homes all over the world, from Paris, New York, London and Tokyo, to see how people live. What are their needs and frustrations in the home, and then find solutions for that. And what is unique about IKEA is all those ideas, thoughts and needs are basically how we start to develop our products. And, of course, every product needs to be able to meet something we call Democratic Design, which is about form, function, price, sustainability and quality. Only when a product meets those things can they be developed for IKEA. The other advantage that we have is that we form long-term partnerships with suppliers and, together, design our products — often on the factory floor — always striving to do things in a better way.
Can you tell us more about this Democratic Design concept?
We think that design should be for everybody, not for the few. Often, when you talk about design, people say that comes at a very high price. We say not so. Yes, we want to have the lowest price; we want the customer to be able to afford and have good design. But there is more than just form and design; it needs to be a quality product. It needs to be able to last in somebody’s home for many years. So the quality aspect is very important. Then it comes to price. We need to have a low price, and [the product] needs to be sustainable. When we talk about sustainable, it’s about a sustainable life at home — that we have sustainable forestry with the wood that we use. All those elements are Democratic Design.
IKEA is transforming into a multi-channel retailer. Can you tell us what that means?
Our customers today are changing; and people are much more digital, as well as physical, in the way that they shop. They want to shop when they want and how they want. IKEA needs to change with that. So we are doing that. We are very much looking at how can we then be available; when somebody wants a sofa or a phone, they then start their shopping experience. It doesn’t literally mean going to visit a physical store.
The physical store will always be our competitive advantage. A 40,000-square-metre store, being a fun day out with a food offer and a store to wander around in — with furniture and accessories, and areas for the kids to play — will always attract people. But we want to be more than that. So we will have a new web platform — and e-commerce that we will introduce — to make it so you can shop once you see things on the web as well. And we need to become closer to our customers, so we’re going to try new formats — even smaller IKEA locations — to order [products], have them delivered and picked up closer to the customers.
Does IKEA have plans to expand in Japan? If so, where and when?
Today, we have eight stores in four regions of Japan. We have a distribution centre in the Tokai region as well. We will soon open a new store in Nagakute City; we will have the land handed over to us next March. That’s a store we’re really excited about, because it will be the first store in the Tokai region. Actually, 9% of the customers in our Osaka store come from the Tokai region. So we know that Tokai wants IKEA, and we want to be there, too. We’ve developed a very good relationship with the city and will open a 35,000-square-metre store there in a couple of years.
Can you talk about IKEA Japan’s philosophy on people?
It starts from the concept: without people, we can’t grow our business. So when we grow our people, our business grows. And that’s very much our philosophy about linking it back to creating a better everyday life for the many people, which includes our coworkers as well as our customers. So, really, it’s about developing our coworkers and their competence within the company. If you want to do something, it’s not about your education or qualifications; it’s about your passion and your interest in life at home, and your interest to grow and develop. That is what we believe in for all our coworkers.
How does this commitment involve people who work at IKEA?
Last September, we decided that we would do something called “We Believe in People”. Again, this was to create a better everyday life for the many people, and to tackle some of the many challenges in Japan. We believe in a 50/50 diversity and think gender intelligence is very important to the way we meet our customers. Our customers come from all walks of life and different age groups, so we wanted to meet them in that way. But we also saw the challenges, like part–time co–workers are being paid less than full–time co–workers. And if you think that most of those part–timers are women, then there was a real difference in pay. We wanted to say that we would be fair and equal, so we introduced the same pay range, benefits and expectations for jobs for all co-workers.
We also offer diverse benefits and opportunities that meet the needs of the many with social insurance and pensions. Then we improved job security with permanent contracts. Ultimately, we want a long–term relationship with our co–workers; it doesn’t matter how many hours you work, or [what] your life situation [is], you can grow in IKEA.© Japan Today