The Next Economy
Kingfisher, IKEA Talk Evolution Into Circular, Service, Sharing Business Models

DIY retailer Kingfisher and Swedish housewares giant IKEA both recently told edie of the potential to incorporate elements of the sharing economy and servitization, in what they see as a "natural progression" of their business models.

Kingfisher’s Richard Gillies, group sustainability director at Kingfisher — parent company of B&Q, Screwfix and other European home-improvement brands — mentioned the possibility of offering more skills-based solutions combined with tool-rental schemes, following the popularity of a recent instructional video on laying vinyl flooring on B&Q’s website that has received almost 900,000 views:

“It may be that the straight line might not be the direct one,” Gillies added. “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 2015 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 company previously trialed several rental and repair services 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.

Meanwhile IKEA’s UK sustainability director Joanna Yarrow shared details of a new R&D project to trial a behavior-change program with its customers.

"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,” Yarrow told edie. “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.”

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. Yarrow told edie she hopes the three-year project will give IKEA a better understanding of its customers’ sustainability needs.

“This is the natural progression of our business model,” she 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, take-back, 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.”

According to IKEA’s 2014 sustainability report, the company sold more than €1 billion ($1.13 billion) of sustainable products in 2014, a 58 percent increase over the previous year, and aims for a fourfold increase in sales of these products by August of 2020, from the 2013 baseline.

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