The ARA recently sat down with IKEA Australia Sustainability Manager, Renea Robson, to understand the secrets behind their wins at the recent ARA Retail Awards, recognising IKEA’s excellence in Sustainability and Diversity, Equality and Inclusion.
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Thanks for your time Renea and congratulations on your double wins on sustainability and diversity for IKEA Australia at the recent ARA Retail Awards.
Q. We’re keen to hear about the key drivers of your success and how other retailers can learn from your success to drive their own sustainability efforts?
IKEA is a values-driven business with a vision to create a better everyday life for the many people. As a leading retailer in home furnishings in Australia, we believe we have a responsibility to play an active role in society advocating for, and promoting, positive change based on our values, which include caring for people and planet.
Our sustainability strategy is our response to challenges in the world around us. Unsustainable consumption, climate crisis and nature loss and rising inequality. The recent awards recognise the focus to both rising inequality and climate change.
We believe that we have a responsibility to lead by example, with sustainability at the core of decision making and advocacy and learning sharing a key enabler of industry change.
We work closely with our stores across Australia to better understand the issues impacting their local communities and how they can engage and provide meaningful support that aligns with our global and national people and planet priorities.
Setting the target of 100% zero emissions home deliveries has been the most effective driver for our transition. It has created a focal point for us, our delivery partners, and their drivers to work towards. Knowing what we are focussing on means that business decisions are made in line with this ambition. Investment in the enabling infrastructure has also fostered a good working relationship with our delivery partners, that see us making a financial contribution to achieving our goals. We remain dedicated to taking a leadership position on this topic to show that transitioning to zero-emission is not only possible but a top priority, even if we don’t yet have all the answers.
Q. Can you give us an example about how these values translate into your product offering and how you engage customers on sustainability?
Our ambition is to inspire and enable people to move towards healthy and sustainable lifestyles, by making healthy and sustainable living a desirable choice that is affordable, attractive and accessible for as many people as possible.
One way we aim to reach this is by developing our products using the IKEA circular product design principles – Democratic Design. This is a method we use to develop products that are more sustainable, beautiful, functional and high quality, at the lowest price possible – good design that’s accessible to the many people. The consequences of decisions made at the design stage determine around 80% of environmental impacts. That is why designing products from the beginning to be reused, refurbished, remanufactured and recycled is essential.
More than 9,500 products ranging from furniture to home furnishing accessories, have been assessed for their circular capabilities so far, and circularity is now firmly embedded in the design process.
Within our operations we have a service called Buy Back.where we buy back and re-sell pre-loved IKEA products, giving these products a second life and offer our customers a chance to save money, as they never pay more than half of the original price on these products.
The Buy Back service is part of our ‘As-is’ hub, and is helping customers enjoy the benefits of buying second-hand products, where they can save money and lighten their load on the planet.
We also offer free spare parts, so customers can keep the IKEA items they love in use for as long as possible and we have a Product Recovery & Quality department within all IKEA stores dedicated to preventing product waste, which in turn generates cost-savings.
And for those items that cannot be resold or repaired, IKEA is working with Good 360 to find a home for discontinued, ex-display or excess products for people who need them.
In total, more than 640,000 products were given a second chance at life last year at IKEA Australia, avoiding landfill, helping consumers to minimise their footprint and supporting great community partners like Good 360.
Q. You mentioned IKEA’s continued investment in measures that reduce emissions from electricity consumption, what advice do you have for other retailers who want to use more renewable energy?
We continue to invest in sustainability initiatives, with a focus on on-site energy generation – investing heavily in onsite solar projects to further increase the solar panels across our stores and distribution centre, taking advantage of the expansive rooftops and carpark spaces.
We began our journey in 2014 with a first round of solar installations and have continued with regular installations, so that today we have over 21,000 solar panels installed on nine of our ten stores and the distribution center.
We consider three key areas when designing and planning our energy projects: cost and return on Investment, our long-term energy requirements including the impact of our ongoing energy efficiency program, and the landscape of the energy market, which is constantly changing.
We are always reassessing based on these on these key considerations to look at how we can improve or add to our onsite energy generation. Our next round of investment will move more into energy storage as we aim to generate and store the maximum amount of power that is feasible onsite.
Q. How can retailers influence and encourage more sustainable behaviour with their customers?
At IKEA, we want to be able to meet the needs of people today without compromising the needs of future generations – Sustainability and affordability must go hand-in-hand – so our customers don’t have to choose between value and their values when shopping with us. This has never been more important than in this cost-of-living crisis.
We see our role in the circular economy as transforming our business through our product range and operations. To inspire others, we are sharing our insights with designers and other retailers through online, easy-to-use interactive tools. To inspire our community, we are working to educate our customers to show Australians how they can make better choices that are easy and affordable, while lightening their load on our shared home – the planet.
We provide information that connects to our customers real life challenges at home; such as cost of living and how more sustainable solutions can also save you money, for example, water saving taps, LED lights. Another example is how to make products last longer through care and repair e.g. washable covers, spare parts.
We openly share our global and national sustainability initiatives, goals and progress. E.g. Our commitment to reducing greenhouse gas emissions, Zero emissions delivery and using 100% renewable energy in our operations. We work with like minded organizations that can support our sustainability ambitions and promote our collaboration.
Q. How can retailers build relationships with suppliers to prioritise sustainability in procurement, and reduce the environmental impact of your supply chain?
IWAY is our Supplier Code of Conduct, and outlines a set of minimum social and environmental requirements that IKEA expects of its suppliers and value chain partners. By setting IWAY as a requirement to do business with IKEA selecting suppliers who align with IKEA’s values becomes a sourcing requirement rather than a nice to have. In addition to IWAY, IKEA are also looking at opportunities to create impact in topics beyond IWAY like scope 3 emissions, social entrepreneurship and DE&I within our value chain.
In terms of reducing the carbon footprint of transportation and logistics, setting clear targets has been the most effective driver for our transition to net-zero, providing a focal point for our entire business to get behind, and our partners, to work towards.
Scope 1 & 2 emissions as the easiest to influence through direct energy procurement strategies and investments but Scope 3 emissions can be more complex, which is why collaboration is a key driver to being able to achieve reductions along the supply chain.
Q. Moving onto Diversity, Equality and Inclusion, how does fostering a diverse workforce in retail contribute to a better understanding of diverse customer needs?
At IKEA, we are committed to reflecting the diversity of society. We want to be as diverse as the world is and as inclusive as it should be. By embracing diversity, we can create a more inclusive environment that not only meets, but exceeds the expectations of our diverse customer base.
Some of the ways we are able to do this include embracing diverse perspectives and experiences, building cultural competence, improving communication and encouraging diversity of thought, which drives innovation and creativity.
While it’s important that we reflect the diversity of the communities we serve, we also know that our commitment to inclusion is a source of pride in our co-worker survey each year. It’s part of the reason co-workers choose to work and stay with IKEA. We also know that happy co-workers are more likely to provide excellent customer service.
Q. What are the potential benefits for retail brands that prioritise DE&I in their marketing strategies and product offerings? How does DE&I impact customer loyalty and overall business performance?
At IKEA we pride ourselves on being for the ‘many people’, to do this in a good way, we need to have representation of the many in our marketing strategies and product offerings – seeing this both as a responsibility and an opportunity.
From research we know that brands with more inclusive advertising practices sell more in the short and longer term, enjoy higher customer loyalty and have higher brand equity. These commercial benefits of more inclusive advertising practices are found regardless of product category or geographic market.
In terms of loyalty, we know that customer retention rates across different demographics are positively influenced by our committed to inclusion and help to keep diverse customers engaged with the brand.
We see this in social media reporting, with positive sentiment from diverse groups as a result of our DE&I initiatives. We also see this in customer surveys, which give us great understanding of how inclusive and accessible our stores, while also providing extremely valuable feedback in things we can improve.
From a business perspective, we measure trust and positive impact perceptions with the public as a routine metric and can see the spikes in these metrics after DE&I and sustainability campaigns, as well as long-term growth.
Q. And finally, what challenges do retail organisations face in implementing inclusive and sustainability practices. How has IKEA overcome those challenges?
There may be natural hesitation around knowing where and how to start strengthening organisational inclusion practices, or concerns about making mistakes. It’s important to recognise there is more to be done than simply relying on good intentions, and that long term success comes from thoughtful planning.
Enlisting the support of an expert partner will help ensure positive experiences and successful outcomes, as we’ve done with our Refugee Workforce Inclusion program, with Community Corporate.
Some other tips include:
- Start small so you can test and learn, and adapt to your organisational context.
- Engage the whole organisation on what you’re doing and why. Communication is key.
- Identify early adopters within the business as ambassadors to drive engagement and momentum.
- Don’t be afraid to make mistakes or forget to celebrate success.
- Reach out to like-minded organisations – we have a collective ambition to drive inclusive action and want to support.
