The Questions Guiding IKEA's Future

Plus how to thrive despite climate change and uncertainty.

How IKEA is Building the Future

In 2023, Nordstrom, the retailer, closed all of its Canadian stores. I loved shopping at the Vancouver location and was disappointed to see it close down. It was also confusing to me as the Vancouver store—all of its four massive floors—were always busy. 

It turns out that the Vancouver location was one of the best stores in the entire company but the rest of the Canadian stores performed poorly. Nordstrom couldn’t justify staying in one country for just one store.

People started to wonder who will take over such a massive space here in downtown Vancouver. One of the most popular suggestions was IKEA. The space remains empty for now but IKEAs foray into downtowns is full of insights on how to make more innovative decisions.

IKEA started experimenting with small downtown stores back in 2019. The typical IKEA store is huge, full of everything you could want in a house, long routes guiding you through different sections and ample parking. The downtown versions are only around 25% of the original size.

IKEA started by asking the right questions. 

• How can we condense the IKEA experience into a small footprint?

• How is the downtown consumer different from the ones that visit our existing stores?

• What do downtown stores allow us to do differently?

They didn’t always get the right answers. 

They started by creating a completely different style of store. It was full of small items you could carry out by walking and a robust way to order the delivery of bigger items. They removed the classic guided route of bigger stores. 

This model flopped.

They realized that downtown consumers still wanted the guided routes and even medium size items such as coffee tables. They wanted an IKEA experience in a smaller format, not a drastically different format.

The lesson here is that you need to start with the right questions but be flexible in your answers. IKEA has opened and closed many downtown locations until it found the format that worked best. 

I’m not sure if IKEA will take over the spot Nordstrom vacated here in Vancouver. It might, ironically, be too large for their new and improved downtown format.

Question: Are you flexible enough in your answers to great questions?

Turning Climate Change into Opportunity

Climate change is creating all kinds of opportunities. For example, insurance companies are pulling out of certain locations like Florida because the cost of providing insurance is too high. That will create opportunities for companies who figure out different models for helping homeowners insure their properties.

Another example are ski resorts who are now beholden to unusual weather conditions. While winter seasons may be shorter due to a paucity of snow, it also means that their summer seasons could be longer. 

The key in all of these situations is flexibility. Ski resorts may not know what kind of a season is in store on any given year but what matters is how they are able to adjust their marketing, their policies and their staff requirements.

Everyone knows that you need shorter strategies today but you also need the confidence to discard those plans and take advantage of the opportunities right in front of you.

Question: Are you thinking of how last-minute conditions can create opportunities for your business?

Uncertainty Indicators

Uncertainty might be the theme of 2024 for many organizations. It can sometimes feel like things are completely unpredictable and all you can do is hold on for dear life like you’re riding a rollercoaster.

Instead, organizations should be thinking of how to create an uncertainty dashboard, using leading indicators in their industry. 

For example, a company like Chevron would track indicators such as GDP growth in key economies. It is likely that poor GDPR growth will increase the probabilities of attacks on container ships, as the company saw in the summer of 2023 in the Gulf of Oman. Increased political exchanges, such as between the U.S. and Iran, are also likely to contribute to short-term challenges.

Some of these indicators will not be clear cut and will require interpretation. The goal here is to at least have something to guide discussion instead of letting emotions drive decisions.

People have been talking about a U.S. recession for four years now and it has yet to appear. Indicators around unemployment, consumer spending and consumer confidence have been relatively strong and sometimes at odds with how individuals feel or what the news reports.

Uncertainty is by its very nature hard to predict but there’s always ways to at least reduce the fog that can encircle decisions.

Question: Are you expanding the indicators you use for the uncertainty in your industry?

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I’m excited for 2024 and all the ideas we will cover in this newsletter. As always, if you found this newsletter helpful, hit the heart or like icon at the bottom of this email.

Talk next week,

Ruben