Ikea moves forward with their circular business model

Ikea moves forward with their circular business model

One of the leaders in making a furniture company circular.
Furniture Link looks forward to expanding their reuse ideas to go beyond just leasing to the same customers.

What I found surprising is the US statistic that highlights that F-WASTE is not insignificant. Close to ‘Yard Waste’ values in the City of Toronto for instance.

Per the U.S. Environmental Protection Agency (EPA), Americans discarded 9.8 million tons of home furnishings in 2009 — that’s roughly 4.1 percent of all household waste.

Reposted from: https://www.mnn.com/your-home/at-home/blogs/ikea-tests-furniture-leasing-model 

Would you lease an Ikea bookcase?

Company tests furniture leasing in its latest bid to curb waste.

In the last several months, IKEA has begun pivoting to a more e-commerce-focused business model. It is also exploring furniture leasing programs to help extend the lifespan of its products. (Photo: Gabriel Bouys/AFP/Getty Images)
The past several months for Ikea have been marked by transition and upheaval.
In September, Marcus Engman, head of design at the world’s largest home furnishings retailer, announced his departure after a game-changing, six-year run. Then, at the end of November, Ikea revealed plans to slash its global workforce by 7,500 employees as part of a large-scale shift away from the brick-and-mortar retail model that’s long worked well for the company, which operates over 300 stores in 38 countries and territories.
The restructuring, the largest in the privately held Swedish company’s history, will generate a significant number of new jobs and entail the opening of 30 urban-format “Ikea Planning Studio” locations in numerous cities, including an inaugural stateside outpost on the Upper East Side of Manhattan due to open later this year. (Focused on small space living solutions, these stand-alone showrooms will “give customers the opportunity to discover, select and order Ikea products for delivery to their home.” Just don’t go looking for meatballs.) Essentially, Ikea is putting a pause — in the U.S. at least — on erecting hulking big-box stores in the far-flung suburban outskirts of cities so it can better focus on urbanites and online shoppers.
But perhaps the most headline-grabbing news out of Ikea-land came early this month when it announced plans to test a leasing model through “scalable subscription services” in one of its European markets.
Yes, this means that some day you might be able to rent that Billy bookcase or the Hemnes bed frame that you aren’t 100 percent sold on.
Ikea has seen profits plunge as more and more shoppers go online. In response, the big box-y Swedish export is bolstering its e-commerce presence and delivery options. (Photo: Gabriel Bouys/AFP/Getty Images)
“We will work together with partners so you can actually lease your furniture. When that leasing period is over, you hand it back and you might lease something else,” Torbjörn Lööf, chief executive of Inter Ikea, explains to the Financial Times. “And instead of throwing those away, we refurbish them a little and we could sell them, prolonging the lifecycle of the products.”
The exploratory move, which is being piloted in Switzerland and for now only applies to office furnishings, is part of Ikea’s overall transformation into a more urban, delivery-centric retailer. But more than that, it plays into the company’s longstanding commitment to dramatically lower both its own environmental footprint and the collective environmental footprints of its customers.

A quest to keep armchairs and end tables in circulation

By giving shoppers an option to lease — instead of outright buy — home furnishings that will be rehabbed and leased out again, Ikea believes less waste will be generated and sent to landfills. As such, the leasing model envisioned by the company is part of a sharing-based circular economy in which a single piece of furniture can live multiple lives. A man who absolutely abhorred wastefulness, it’s likely that Ikea’s late and (in)famously thrifty founder, Ingvar Kamprad, would no doubt approve of a move to keep Ikea products in circulation for as long as possible.
Per the U.S. Environmental Protection Agency (EPA), Americans discarded 9.8 million tons of home furnishings in 2009 — that’s roughly 4.1 percent of all household waste.
The first ‘Ikea Planning Studio’ opened on London’s Tottenham Court Road in 2018. Another location following the same concept is due to open in Manhattan this spring. (Photo: Ikea)
“We have an ambition to inspire and enable people to play an active role in making the circular economy a reality, which we can support by developing new ways for people to buy, care for and pass on products,” an Ikea spokesperson tells CNBC. “In certain markets, such as Switzerland, we’re exploring and testing potential solutions and have a pilot project to look into the leasing of furniture, but it’s still too early to confirm exactly what this will look like.”
Beyond leasing office furniture, Lööf tells the FT that Ikea is also looking into launching a spare parts business that would allow customers to buy screws, hinges and other lifespan-extending bits and bobs for furniture that’s been phased out from stores. This pivot to championing repair over replacement is major given that it comes from a build-it-yourself Scandinavian furniture emporium with offerings that have long been deemed reasonably priced, on-trend and, well, disposable — not exactly heirloom-quality stuff. (Those who have been watching Ikea over the past several years, however, probably saw this shift coming.)
And depending on how the office furniture leasing pilot pans out in Switzerland where Ikea operates nine stores, Lööf says rented kitchen components could potentially be next up to bat.
“You could say leasing is another way of financing a kitchen. When this circular model is up and running, we have a much bigger interest in not just selling a product but seeing what happens with it and that the consumer takes care of it,” he tells the FT.
From using more recycled materials in the manufacturing process to calling for a zero-emissions delivery fleet, Ikea’s list of environmental goals is long and commendable. (Photo: Spencer Platt/Getty Images)

Buyback scheme a smash in Canada

While firm details surrounding Ikea’s office furniture leasing trial in Switzerland and the potential for it to be unrolled on a wider scale are, as mentioned, sparse, some consumers have already made up their minds … and they’re not too keen on the idea.
“I don’t want to rent everything I have to touch or see with my eyes on a daily basis,” writes Rhik Samadder for The Guardian. “It is the idea of having an ongoing relationship with a company that I kick against. I understand that I have to consume things to live. But I would prefer the transaction to be short, self-contained and an accepted source of shame, like going to the toilet.”
He adds: “If I take home a Tobias or a Fanbyn, I want to buy it, sit on it and be left alone.”
And Samadder, who claims not to have “any particular beef with Ikea,” likely isn’t alone with his sentiments.
But from a customer engagement perspective, such schemes can and do work.
Case in point is another planet-friendly Ikea initiative launched at Canadian stores in November. Dubbed the Sell-Back program, the scheme allows customers to trade in old and unwanted Ikea merchandise for in-store credit. These gently used dressers, dining room tables and whatnot are either donated or sold secondhand at Ikea stores for roughly 30 percent of what they’d sell for in brand-new condition.
In its first two months, 8,000 customers participated in Ikea Canada’s Sell-Back initiative — a surprise success. There is, however, legwork involved.
Outside of the leasing trial in Switzerland, IKEA Canada has launched a sell-back program that allows customers to unload their secondhand furnishings for store credit. (Photo: Spencer Platt/Getty Images)
As the National Post details, Ikea customers wishing to offload used furniture must first submit photos of the furniture in question along with a short online application. Based on the photos and application, their local store can either accept or decline the furniture, which must be in acceptable resale condition — that is, it must be structurally sound and free of any post-purchase modifications. If accepted, the customer must then transport it to Ikea, at which point store credit is given.
Similar buyback/resale programs have also been launched at Ikea stores in Scotland, Spain and Japan, per the World Economic Forum.
It’s admittedly a lot of hoops to jump through just to get store credit. But as Ikea Canada’s head of sustainability Brendan Seale relays, the process is well worth it for many of its customers (especially those who have been inspired by a certain Netflix series to take action) eager to be rewarded for cleaning house.
“At this time of year, we know many of our customers are decluttering their spaces and organizing their goods,” says Seale in a press release. “We are thrilled at the response to the Sell-Back program which enables us to establish a longer-term relationship with these customers, supporting them to live more sustainably, while adding convenience and value for their next shopping trip at Ikea.”
A 344,445-square-foot testament to Ikea’s planet-bettering corporate ethos, this ultra-green new store in London hosts workshops on repairing and upcycling furniture. (Photo: Ikea)
What’s more, Ikea’s newly opened Greenwich outpost in London — touted as its most sustainable store yet — places the company’s closed-loop leanings front and center. In addition to prioritizing public transit and cycling over private car use and boasting a full-on public garden-cum-urban wildlife habitat on its roof, the solar-powered store features a “Learning Lab” where shoppers can attend workshops on how to prolong the life of Ikea products through repair, reuse and creative upcycling.
As for me, loyal Ikea fanboy that I am, at this point I’m not entirely sure if I’d want to lease a piece of Ikea furniture or even haul something back to my local store for resale. As for repair, it’s doubtful that I’d have much luck in that department given my complete ineptitude in putting Ikea furniture together. But that could change.
Ikea is a retailer that has demonstrated remarkable prescience over the years — this is a company perpetuallyahead of the curve, particularly in the realm of corporate sustainability. (For example, it phased out single-use shopping bags long before it was even a thing.) Subscription-based furniture leasing is one trend to keep an eye on as Ikea continues to make strides to becoming a fully circular business by 2030.
By then, absolutely nothing — not a plate of half-eaten Swedish meatballs or a scuffed-up $40 coffee table — will go to waste.
Matt Hickman ( @mattyhick ) writes about design, architecture and the intersection between the natural world and the built environment.


The F-Waste Problem And How Companies Can Solve It

The F-Waste Problem And How Companies Can Solve It

In the U.S. alone, over 17 billion pounds of office furniture and equipment is sent to landfill every year. This waste is typically a result of necessary changes like moving, branch closures or revitalization projects. The furniture needs to be removed or replaced but it is what’s being done with the furniture or, “F”, waste that is the problem.

In the U.S. alone, over 17 billion pounds of office furniture and equipment is sent to landfill every year. This waste is typically a result of necessary changes like moving, branch closures or revitalization projects. The furniture needs to be removed or replaced but it is what’s being done with the furniture or, “F”, waste that is the problem. It is actually a significant problem since the materials should not be going to landfill in the first place.

A typical desk chair is made of dozens of different materials and chemicals and a complete cubicle can produce between 300 – 700 pounds of waste. Since most furniture and equipment is also made of wood, metal and plastic and has a long lifetime, the products can be effectively repurposed. These materials are also considered scarce resources and hazardous if not disposed of properly, meaning recycling or repurposing should be the first option.

As a whole, Canadians like to recycle. According to a recent GfK Roper Green Gauge Global survey, Canadian consumers rank first in recycling out of 25 countries surveyed. However, the habit of recycling household goods has not translated to business waste. Due to increased options, recycling at home has become relatively easy and awareness about how to do it and why is high. A similar approach to office waste needs to be applied — business leaders and executives need to be educated on the scope of the problem and provided with easy and cost effective solutions to address it.

Electronic, or E-waste, is a great example of how this can be achieved for business. Similar to F-waste, the process was originally complicated and businesses were not aware of their options or how big the problem actually was. Due to an increase in public awareness and education, people and businesses are now adopting better solutions. Many organizations, including the Government of Canada, have even implemented targets to reduce E-waste.

The other thing that E and F-waste have in common is that the materials are really not waste at all and can often be repurposed for community/charitable organizations or resale. This idea feeds into the “circular economy”, which aims to reduce waste and pollution by creating products that can be reused, recycled or repaired. The concept has the potential to reshape how things are made, used and reused — it is also becoming popular in places like the UK but Canada has some work to do.

Currently, Canada does not track how much F-waste is being sent to the landfill and this makes understanding the scope of the problem and the potential economic, environmental and social opportunities extremely difficult to identify. A 2014 study from McKinsey & Co, estimated that the circular economy could add $2.6 trillion to the European economy by 2030, potentially boosting GDP by 3.9 per cent. As the circular economy catches on in other parts of the world, there is no reason that Canada cannot benefit but business and policy leaders need to make this type of thinking common place.

General Motors is a great example — the company is reducing the amount of furniture and equipment waste from an office revitalization project by working with the rePurpose Program, a partnership between Herman Miller and Green Standards. The rePurpose Program provides a sustainable, cost-effective approach to managing surplus office furniture, equipment, supplies and materials.

The partnership is projected to divert 2,000 tons of furniture and equipment from the landfill through a combination of resale, recycling and donation channels, and create an estimated $1 million worth of in-kind donation to 100 non-profit organizations. This furthers GM’s landfill-free goals while complementing its ongoing community investment activities.

What GM did differently was incorporate a plan for its existing furniture and equipment into its broader renovations at three main offices in east Michigan. As its renovations unfold, GM and its partners have a process in place for understanding its inventories, engaging buyers, non-profits, and recyclers, and reporting on the outcome. F-waste will be virtually eliminated from the process.

Although GM is a major multi-national business, this is an example that can be replicated throughout businesses of any size. Business need to set F-waste reduction goals, include the time for repurposing into their transition plans and share their successes to increase awareness.

How Companies are Addressing the Issue of F-Waste

How Companies are Addressing the Issue of F-Waste

To combat the estimated 8.5 million ton annual trash problem, companies across the globe are developing innovative programs and initiatives to divert f-waste from landfill.

Mallory Szczepanski | Mar 09, 2017

Furniture waste (f-waste), an estimated 8.5 million ton annual trash problem, is becoming the new e-waste, according to experts. And in an effort to combat this growing waste problem, companies across the globe are developing innovative programs and initiatives for diverting f-waste from landfill.

One of the companies paving the path for the future of f-waste diversion is Herman Miller, a Zeeland, Mich.-based furniture designer and manufacturer. Approximately eight years ago, Herman Miller developed its rePurpose Program, which deals with surplus corporate assets through a combination of resale, recycling and donation. The program, which is managed by environmental firm Green Standards, helps companies meet sustainability goals and while aiding nonprofits by providing them with items they may normally have a hard time getting, such as large amounts of desks and chairs.

“The rePurpose Program is one of the best-kept secrets at Herman Miller. Rather than sending massive amounts of unwanted, usable furniture to landfill, we work with amazing organizations to find other uses for the items. If we cannot donate the items, we run them through a crude shedding operation to separate the metals from the plastics, which is a similar process to recycling cars,” says Herman Miller Director of Safety and Sustainability Gabe Wing. “More than 90 percent of office furniture ends up in landfill, and, as a furniture designer and manufacturer, we felt it was our responsibility to do something about this problem. After talking through different options, we came up with rePurpose as a solution to the f-waste problem.”

Over the years, Herman Miller has ramped up its sustainability efforts by creating products that are considered cradle-to-cradle in terms of the materials they are made with. Additionally, the company has worked to make its products easy to disassemble, ultimately giving the products a longer lifespan.

“Our goal for the rePurpose Program is to divert 125,000 tons of used products from landfill by 2023, which is about half of what we sell on an annual basis,” says Wing. “We’re hovering around 6,000 tons right now and have a long way to go to reach that goal, but our recent partnership with [vehicle manufacturer] General Motors (GM) will help us pick up the pace.”

With the new partnership, GM, Green Standards and Herman Miller will repurpose tens of thousands of pieces of office furniture and equipment from GM’s multi-site campus decommission into $1 million in donations to approximately 100 Michigan-based nonprofits over the next two years.

“By working with GM, an organization at the forefront of waste recovery and the circular economy, more business leaders will recognize the f-waste issue within their own organizations and be better prepared to address it,” says Green Standards Executive General Manager Trevor Langdon. “Every business encounters f-waste, and this partnership shows that there is an exciting, scalable solution to this problem.”

One of the beneficiaries of this initiative is Cody High School in Detroit, which has had a relationship with GM for six years. In addition to obtaining furniture and equipment from GM’s decommission, the school will receive a three-room makeover to enhance the educational learning experience of both students and faculty.

“Last year, we had a record year for landfill-free operations, and this partnership really goes hand-in-hand with our zero waste program and goals,” says General Motors Global Manager of Waste Reduction John Bradburn. “We have a strong relationship with Cody High School, and we have used a lot of materials from our manufacturing locations and office spaces to help make upgrades to the school. For example, we repurposed steel shipping baskets into urban farm gardens near Cody, and we revamped the school’s classrooms with our no-longer-needed dividers, desks, chairs and other materials.”