IKEA Parent Deploys AI in €41.8bn Sustainability Push
The parent company of IKEA, the world's largest furniture retailer, has demonstrated that climate initiatives can coexist with business growth, according to its annual report. Ingka Group, which operates 378 IKEA stores across 31 markets, has reduced its carbon emissions by 30.1% compared to 2016 while expanding its revenue by 23.7%.
The company has integrated AI across its retail operations, implementing new features in the IKEA mobile application that combine in-store and online shopping experiences. These include three-dimensional product visualisation tools, inventory management systems, and back-in-stock notifications, representing a shift towards data-driven retail operations.
The digital transformation extends to checkout processes, with a new scan and pack tool designed to reduce queue times, while wish list functionality enables customers to track potential purchases across both digital and physical channels.
Sustainability meets science-based targets initiative
Ingka Group CEO Jesper Brodin says: “In challenging times, we decided to invest €2.1 billion into lowering the prices on thousands of products to support many more people to fulfil their dreams and needs in life at home, no matter the size of the wallet.”
The company has strengthened its climate targets in line with the Science Based Targets initiative (SBTi), a framework that helps companies set emissions reduction targets in line with climate science. These targets include halving absolute emissions across the value chain by 2030.
Karen Pflug, Chief Sustainability Officer at Ingka Group, says: “By radically collaborating across industries and communities, I am confident we will reach our goals.”
The implementation of zero-emission vehicles for home deliveries has reached 41.1% of all deliveries, representing over 6.3 million individual shipments. This marks an increase from 24.6% in the previous reporting period.
The company’s waste management programmes have shown improvement, with 77.7% of operational waste now being recycled, up from 75.9% in the previous year.
Social impact and market development
Ingka Group has expanded its social impact initiatives, supporting 81,080 people through emergency response programmes. The Skills for Employment programme has provided training to over 3,700 refugees across 26 countries since 2019, with plans to support an additional 3,000 by 2027.
Karen says: “We firmly believe sustainability and affordability must go hand-in-hand, so during this year we launched our Sustainable Living Shops online and continued to scale up our circular services.”
Financial performance and market expansion
Despite market conditions showing a 3.8% decrease in the home furnishing sector, Ingka Group reported revenue of €41.8 billion with a net income of €0.8 billion. The company has expanded its physical presence with new stores in Japan, Norway and Switzerland, alongside 40 new planning and order points.
The company's circular economy initiatives have expanded, with the introduction of IKEA Preowned, a peer-to-peer marketplace for second-hand furniture currently being tested in Oslo and Madrid. The existing buyback service has processed over 495,000 used products.
The food service division has maintained its position as a significant revenue stream, serving 665 million customers during the reporting period. The company has also provided over 8 million free assembly parts to 2.2 million customers as part of its customer service strategy.
As part of its €7.5 billion investment commitment through to 2030, the company has allocated an additional €0.7 billion to renewable energy generation projects. This investment forms part of its commitment to the Paris Agreement and its updated 'Net Zero and Beyond' climate ambition.
Jesper says: “This is the most important decade and by additionally reducing our climate footprint while growing the business, we prove that the business case for investing in climate action works.”
IKEA’s strategic partnership in AI
A member of Partnership on AI (PAI), a consortium of technology companies and non-profit organisations including Apple, Microsoft, Google, Amnesty International and Human Rights Watch, Ingka Group has implemented a digital ethics framework and launched an AI literacy programme for its workforce. These initiatives form part of a broader strategy to integrate machine learning and automation across retail operations.
Parag Parekh, Chief Digital Officer for IKEA Retail (Ingka Group), says: “Our participation in this partnership reflects our belief that AI has the potential to enhance our mission of creating a better everyday life for the many, while helping address some of the most pressing challenges facing society today, from climate change to resource management.”
The AI strategy includes applications for emissions reduction and waste management. Francesco Marzoni, Chief Data & Analytics Officer, says: “We are committed to leveraging AI to cut emissions, reduce waste, and drive a circular business model. This partnership ensures our innovations are aligned with ethical standards, making a lasting positive impact on people and society.”
Explore the latest edition of AI Magazine and be part of the conversation at our global conference series, Tech & AI LIVE.
Discover all our upcoming events and secure your tickets today.
AI Magazine is a BizClik brand
