Global furniture retailer IKEA has long been at the forefront of technology-driven retail innovation. This includes artificial intelligence and augmented reality. These two technologies are successfully used to improve customer experience and service.
Now, we can unlock the power of generative AI to give our customers even more power when designing their dream home. We have also established an Ethical AI Taskforce, made up of experts from across the business, to ensure this highly innovative technology is deployed responsibly.
We are also investing heavily in upskilling our staff so that the entire workforce can effectively use AI to solve problems and improve efficiency.
Parag Parekh, Chief Digital Officer of IKEA Retail (Ingka Group), recently joined my podcast to talk about the company's plans and philosophy, particularly around digital technology and generative AI. So let's take a look at some innovative ways to use it.
Improving customer experience
IKEA has announced a new generative AI chatbot powered by ChatGPT, with the aim of providing every customer with a unique AI design assistant.
Initially rolled out in the U.S. with further expansion planned, the chatbot will be able to answer questions about products and purchases, as well as make personalized design suggestions.
It is intended to be used in conjunction with IKEA Kreativ, an innovative online tool that allows users to visualize and design their living spaces in a mixed reality environment.
Parekh tells me: “If you follow the traditional user journey before the AI era, you would typically go to our website… Decide what you really want in your home, put it in your cart, come to the store and buy it. Confirm, then your purchase will be completed and delivered to your home.
“Now, here comes AI…The customer journey is probably going to be different. You’re probably not looking at a single piece of furniture, you’re thinking about having a piece of furniture that brings life to your home. You can actually scan the room and experience what the furniture will look like.”
Using the power of generative AI, users can erase existing furniture and replace it with new items to get an idea of the look and feel they can achieve.
But that's not the end. Customers will then be able to interact with her AI to provide more information. What style are they looking for: traditional, Scandinavian, or modern? What color schemes do they prefer? What about the lighting? What's your budget? AI generates any number of options and variations for you to browse and choose from. It's like having a professional interior decorator sit down with you and help you create the look you want.
“That's something we're experimenting with. You've already seen some of it in what we've released, but it's something that's currently underway, and we're working with creative and planning services. We're thinking about how we can actually change the customer experience.”
IKEA staff will also benefit from generative AI tools, particularly what Parekh calls the “AI toolbox.”
Built on a custom version of Microsoft's Bing Copilot, you can quickly create content and assets that showcase your products in the right way to your customers.
Parekh gives the example of repurposing marketing materials for different audiences and markets.
“This is a photo of a sofa published on our website. Christmas is just around the corner. We need to make sure our images and content are relevant to our Christmas campaign.”
Traditionally, this would have required all the effort and expense of running a new photoshoot and launch campaign.
“If you want a Christmas decoration, you use the toolbox to generate an image of a Christmas tree behind the couch, and all of a sudden you’re ready.”
AI in operations and supply chain
In addition to these cutting-edge generative AI projects, IKEA is also investing in a number of “traditional” AI operations aimed at increasing efficiency and reducing waste.
This includes optimizing the space used in delivery and supply vehicles and using drones to monitor warehouse inventory at 16 European stores. It also uses demand sensing to predict short-term consumer demand patterns. As an example, IKEA Portugal was able to improve demand forecasting accuracy by 5%.
Autonomous mobile robots are being tested at the company's new 25,000 cubic meter distribution center in Tianjin, near Beijing, China. These are designed to help pick and pack 9,500 products in a way that improves working conditions for warehouse staff and improves sustainability through more efficient use of filler and packaging materials. .
Mr. Parekh highlights the transformational journey evolving from traditional physical retail to omnichannel retail and emphasizes the need for supply chain disruption. He notes that this new retail environment has introduced new costs, including those associated with handling, storage, and shipping. Parekh said: “Here we are looking at how AI can be used to bring affordability back into the supply chain, not just to optimize costs but also for a greener planet. How do we incorporate algorithms to optimize and ensure we ship products from the most available locations? [also] What will be most convenient for your customers? ”
Ethical and responsible AI
IKEA's AI Taskforce was formed to ensure that this world-changing technology is deployed in a way that benefits as many customers as possible while minimizing the potential for harm.
“This is one of the key aspects where organizations need to take a stronger stance,” Parekh said.
At the heart of this is a human-centered approach, and every effort must start by asking what it means for our customers, our staff, and the wider community as a whole.
Mr. Parekh emphasized the need to prioritize human values, whether actions respect human agency and dignity, and whether a human-focused approach is at the heart of all efforts. I ask. He points out that identifying these principles paves the way for a thorough analysis of different use cases. This approach is characterized by a commitment to fairness, non-bias, equity, inclusiveness and respect for privacy. Above all, he emphasizes that transparency is key. This effort began with the introduction of the Data Promise in 2020 and has recently continued through the relaunch of the company's Digital Ethics Policy in 2023.
To ensure staff have the knowledge and understanding needed to implement this, IKEA aims to train 3,000 staff in the basics of ethical and responsible AI in 2024. We have developed an AI literacy program with
Parekh said: “His 60% of our employees believe they need to reskill to do the jobs of tomorrow. And we would rather make sure they embrace that. I want to start now.”
you can click here Read the full conversation with Parag Parekh, IKEA Group CDO. There, we dive deeper into his company's AI efforts and plans for the future of retail.
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