What if buying second-hand felt exactly like buying new? In this episode of the Circular Economy Show, we explore how IKEA is embedding circular principles into its core commercial strategy. Fin is joined by Conor Hill, Global Director for Circular and Sustainable Living at IKEA, who shares how the brand is delivering measurable impact, all while making circularity affordable and accessible for their customers.
What if buying second-hand felt exactly like buying new?
In this episode of the Circular Economy Show, we explore how IKEA is embedding circular principles into its core commercial strategy. Fin is joined by Conor Hill, Global Director for Circular and Sustainable Living at IKEA, who shares how the brand is delivering measurable impact, all while making circularity affordable and accessible for their customers.
Watch the full episode to find out how implementing a Buyback & Resell model has enabled IKEA to:
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[00:00:00.160] - Connor Hill
It's around how do we make home furnishing, home decor affordable, accessible, and sustainable for the many people. Circular fits into that perfectly. When I've spoken to friends, "Why don't you sell things on eBay and Facebook marketplace?" It's like, "Oh, I need to write description, need to measure it, need to make my house look clean in order to take the photo." Our buyback and resale customer is visiting us 1.6 times more than our typical IKEA family member. Those sorts of statistics really help us today; we're on the right track. There's something, some magic that's happening.
[00:00:33.180] - Finley Phillips
Hello and welcome to the Circular Economy Show. I'm your host, Fin, and in today's episode, I'm joined by Connor Hill, Global Director for Circular and Sustainable Living at IKEA. Together we'll explore how IKEA has established themselves as a leading business in the circular economy space and why making their business model simple, accessible and commercially viable is key to their success. We also learned why IKEA is investing in repair and resale specifically, and how services like buyback and resale help keep products in use for longer while making furniture more affordable for consumers. Connor, welcome to the Circular Economy Show.
[00:01:13.080] - Connor Hill
Thank you very much. Great to be here.
[00:01:14.760] - Finley Phillips
We're delighted to have you on, and I'm really looking forward to this episode. Let's just get straight in. I'm going to start by asking why IKEA is investing in circular business models.
[00:01:24.360] - Connor Hill
There are many reasons to this. One, if we look way into the future, but also right here and right now, is we have one planet. We all know this, you know it better than anyone else. We've got limited resources, so we really need to think as a business that's using resources, how do we build that long-term resilience, how do we shift to renewable materials, recycled materials, as much as possible. That's critical for us going forward.
[00:01:47.650] - Connor Hill
Then how do we really make sure that we offer products that are repairable, recyclable, and we offer services to keep them in use for as long as possible. That might be that I own it, then I give it to you, Fin. But we need to make that seamless. If we cannot make that seamless, we'll have a challenge. We need to make that second-hand, all these circular services, as easy as buying new. Then we'll start to evolve these circular business models and make them seamless in the customer journey. Those are some quick reasons why we want to do it. But I'm sure we'll explore many others.
[00:02:17.700] - Finley Phillips
As you say, big resource-saving benefits. Long-term resilience is clearly a key proponent of the circular economy. But what are the benefits for IKEA to be a leading business in this space?
[00:02:27.340] - Connor Hill
For us, it's around how do we help to secure the secondary raw materials that we need as a business. Many people, as you walk in our store, you'll see the big blue box. But we also have a huge investment arm as well and specifically within that we've got a one billion investment portfolio looking at how we can secure these secondary raw materials for our business and society. That's one thing that we really look at here.
[00:02:51.180] - Connor Hill
But including in that or going beyond that, it's around our core values here, and it's around how do we make home furnishing or home decor affordable, accessible, and sustainable for the many people. Circular fits into that perfectly. When we really make our products that last a really long time, they're repairable, and we have second-hand platforms. This is really a strength of ours.
[00:03:13.130] - Connor Hill
There are many… We're early in the journey, but there's a long way still to go on this. We also know that increasingly, the customer is shifting to this model as well, particularly younger people and families, they're shifting to second-hand, and a lot of that's driven by price and affordability. We have to step into this space in order to stay relevant for our customers of today as well as tomorrow.
[00:03:36.190] - Finley Phillips
We're talking about affordability, accessibility, meeting people where they are. We've heard across our marketing series that there is real appetite for circular solutions now that the consumer is more aware of their purchasing experiences. There's so much opportunity, as you say, both from resources perspective, but also the financial perspective. How do you choose the right entry point?
[00:03:59.110] - Connor Hill
Great question. The right entry point is we look at all of the products we're creating, and we have our circular design principles. All of our products have to go through this lens in the design and development phase to really see how we're making them using as much recycled material as possible, how do we make them durable, how do we make them repairable, and then how they have many lives as possible. We talk about that as prolonging the product life. That's one starting point, and that's really cooked into our products from the start.
[00:04:29.650] - Connor Hill
The right entry point for us, it does depend on the consumer, but we have to really think about what are the biggest impact areas and biggest opportunities for us as a business once that product's made. For us, we're really going after the reuse, the second-hand opportunity. We see this as an area that's growing four times faster than traditional retail. We want to see how we can participate in this one and really help our customers prolong the life of the products. Again, connecting back to that affordability and accessibility part we talked about earlier, so second-hand is our key.
[00:05:01.380] - Connor Hill
We've got two main solutions for that. We have our buyback and resale offer. You can come to our store with your IKEA products, and we will give you a price for that. We will then bring it back of house. We've got this amazing workshop area where we clean, repair products, and then we sell them again. That is our most affordable offer we have for our customers. You go home with a voucher in your hand to then buy a new product.
[00:05:28.220] - Connor Hill
What we see is those customers that are bringing back a product, they already know the product they want to buy, and sometimes it's those bigger items which they've been looking to get for a long time. We can really see that the flow here works really symbiotically.
[00:05:42.160] - Connor Hill
The other area within second-hand we're also doing is our new IKEA second-hand marketplace. This is really focused on the pre-owned, and we recognise we have many blue boxes around the world, but we also have many, many IKEA products in people's homes today.
[00:05:57.900] - Connor Hill
We really want to make our IKEA products as accessible to people as possible. Through that, they can sell peer-to-peer, so you and I can sell our products from one to one. One of the key USPs within this, which I love, is you just take a photo of the product, and it will tell you what the product is, the dimensions, the description, all of these things.
[00:06:19.340] - Connor Hill
I know from my past, when I've spoken to friends, why don't you sell things on eBay and Facebook marketplace? It's like, "Oh, I need to write description, need to measure it, need to make my house look cleaned in order take the photo." We take away as many of those… what would you call them, little barriers as possible through the solution because we have the history, the knowledge of those original photos, et cetera, et cetera. Second-hand is our big focus, our in-store solution as well as a peer-to-peer model.
[00:06:45.920] - Finley Phillips
You've made that model sound really simple, really for the consumer. We know that that's a key part of circular solutions. We want them to be as simple, as effective as their linear counterpart. But what's actually needed to sort of operationalise that internally? You're obviously asking your business to do a very different thing really. Is there anything like… What sort of lessons can brands take? What's needed to get these sorts of solutions off the ground?
[00:07:11.820] - Connor Hill
It might sound quite different to traditional business model, but I also want to make it quite simple. Many brands have return flows. Customer buys a product, they return it within 30 days. This is happening, this is bread and butter of retail. Our solutions are really running in parallel to those.
[00:07:31.790] - Connor Hill
If you come back to one of our stores with a product to return it, it's really the same flow as if you're bringing back a product you've had at your home four years or five years or 10 years. It's the same people that will take it into the checkout, with the same people that assess it, and then we take it into our, what we call our recovery and As-Is area.
[00:07:50.590] - Connor Hill
This is really running business for us. You can say, yes, it's maybe mature because we've been running it for a few years. But for me, the key is making this as close to running business as possible. You've got really mature competence and process flows in place already. Don't create something that's like a rocket ship on the side of the business, and it's complicated and really hard to onboard people. You've got to make it operationally efficient.
[00:08:14.130] - Connor Hill
That's where the business model of circularity is so key. This cannot be something that is just a nice-to-have. This has to have commercial value as well as the environmental impact and all the other benefits we have as well. But the commercial part is really, really key for longevity of these services to make sure we keep building on them.
[00:08:31.310] - Connor Hill
Equally, so the muscle of the business really gets behind them as well, the marketing engine, the family loyalty programmes. When we can really demonstrate that value, that's when you get the business really wanting to integrate these solutions, so exciting times.
[00:08:46.350] - Finley Phillips
You just mentioned the marketing team there, and I'm excited to get into that a little bit more later. But as you say, IKEA, they have that mature business where they have a strong track record in standardised products, innovation, design, it's all kind of inherently there. What has helped IKEA move the conversation away from short-term margin to thinking about longer-term value?
[00:09:07.850] - Connor Hill
Absolutely, we are maturing this space. I would still say we're early days in the journey. We're an 80-year-old business, and our circular service have still only been around for a few years. But what we're really being able to demonstrate now is when we look at our overall customer flow into the store, when we look at our IKEA family member, it's a huge percentage of our customer base. Actually our buyback and resale customer is visiting us 1.6 times more than our typical IKEA family member.
[00:09:37.780] - Connor Hill
Those sorts of statistics really help us today; we're on the right track. There's some magic that's happening. People are coming to our store, driving more visitation, and our commercial colleagues love this because that era of our store, there's always something new, it's never the same every single day. We love being able to drive visitation to the store and complement our commercial agenda here as well.
[00:09:59.780] - Connor Hill
What we're also looking at is we want to have the markets to have even more flexibility around how they engage the customer around prolonging product life and our services. In many of our markets, we do these flea markets a couple of times a year. You can imagine the old… The car boot sale, which I went to when I was much younger, and there are amazing ones in London today, in Copenhagen, it's fantastic. But then, what is our take on that? We've got a ginormous car park. How do we really engage people around this?
[00:10:28.530] - Connor Hill
Then you've got people who are thrifting their own products, but also they're inspired to think, "Okay, what's IKEA got inside?" How do we do activations around helping people to repair products? Because that do-say gap is quite often a barrier. How do we help the customers to prolong the life of products through demonstrations and activations as well? We really are starting to think, how do we complement the customer to get on board with this and participate in the circular economy.
[00:10:56.050] - Finley Phillips
We all have a car boot bargain, let's be honest. It's really interesting because we've seen from research we've done recently that perhaps the circular solutions don't look as appealing in a short-term sort of mindset commercially. But actually, when you think longer-term and think about economic resilience, you're future-proofing your business. You've got all these benefits to the circular economy, and you've got the financial benefits. It's just a bit of a mindset shift.
[00:11:23.780] - Finley Phillips
What would you say are the key argument winners from an internal perspective when you're trying to really go for that business case, and make the most of the opportunities that you've mentioned?
[00:11:33.700] - Connor Hill
When we're looking at it overall, and our circular strategy is really touching end to end, all the way at the end, when it's looking at these investment strategies that we talked about before. As a business, we need materials. Are there enough recycled materials out there? Maybe there isn't today. Let's create that help, create that capacity out there. We address that through our investment arm and things like return mattress, so mattress recycling. Then we bring it back up a stage. Let's look at our operational waste in our stores. How much of that are we able to recycle? How much can we actually reduce the totality? How much of it can we reuse?
[00:12:09.240] - Connor Hill
We've got a fantastic commercial case for that. New baling machine might improve our recyclability, recycling and also the cost of the cardboard we get when we pass it on to our contractors. All of these different business cases start to come together to create an overall agenda of, as a business, we need to be much more resilient in the future to ensure that we can drive our business the way we do today. Circularity, raw material sourcing is part of that.
[00:12:37.580] - Connor Hill
Our operations, we know that we can do that more efficiently. Even the way that we're building stores, doing the refit, how can we use recycled aggregate instead of using different materials? We've got many, many business cases internally today, which is really showing that circularity is good, and it can be a low-cost way to grow as well.
[00:12:55.910] - Connor Hill
We talked about some of the circular services before, but a lot of that's also our promise to the customer. We've given out more than 20 million spare parts last year alone, which is a huge, huge number. That's part of our DNA and our promise to our customers that we want to help you to prolong the life of your products. Yes, we've got the right-to-repair legislation coming through, but this has been something we've been doing for years.
[00:13:19.600] - Connor Hill
For us, yes, you can say there's a commercial part to that of building brand love, brand trust. But for me and us, it's around how we really side with the many people to prolong the life of the products they have today. It's not always pure commercial. We have to look at the customer holistically. It's about how you create that long-term brand relationship with them. Many different aspects to that but for me, it's around how you really help them.
[00:13:48.990] - Finley Phillips
You spoke about maintaining a more circular relationship with the consumer, and we know that that's vitally important. We know that we want to make things, as you say, as accessible, as affordable and easy for the consumer. Let's talk a bit about that now. One thing that was really interesting when I spoke to Emily Hill from Kantar, was she mentioned when they were doing the research around the marketing work, the playbook that we've spoken about on the podcast was around this awareness gap.
[00:14:15.670] - Finley Phillips
We can't just assume consumers are ready to embrace the circular economy, and perhaps a lot of people aren't ready to embrace the circular economy. There's a lot of noise out there, we're all competing for space in that way. Let's go into buyback and resale specifically. That was originally positioned as an alternative to Buyback Friday. It was a real sort of opportunity, a real moment. What was the motivation behind that? What can we learn from using a moment like that to really enter the circular economy space?
[00:14:47.810] - Connor Hill
Exactly. This time of the year is all around; how can you find that bargain? How do we, that original piece around, how do we position ourselves, saying that there are plenty of materials out there. We want to help people to look at the circular economy.
[00:15:07.170] - Connor Hill
Our buyback offer, which was quite new at that time, so it was a really great opportunity for us to say, "Hey, everyone, you know we have a buyback offer. We will buy back your products that you have maybe had for a short time or a long time, but we'll buy it back off you." We want to really emphasise making those products available to people during this particular time in the year, throughout the year, but particularly in that time of the year. That was really our start.
[00:15:34.520] - Connor Hill
Quite quickly, we recognised this is incredibly successful, and we thought, let's not make one big noise at one point in the year. This should be always on and gives the markets flexibility for when they want to dial this up. Traditionally, we think about spring-clean, actually, maybe that's the time of the year where people are clearing out their garage, their loft, their whatever it might be. Life is changing, so really, how do we understand those life change moments at different times in the year?
[00:16:04.480] - Connor Hill
It's really our markets that know that best. We give them that flexibility to think, when do they really want to do the bigger push campaigns for initiatives like that. But it was a fantastic success, and now we really trust the markets with that flexibility of how to dial this up and integrate it into their typical marketing, loyalty, emails, et cetera.
[00:16:24.340] - Finley Phillips
When we're talking about the circular economy, we often… typically with a linear business model, it's all about that initial purchase point, short-term sales. But when we're talking about circular economy, you're thinking about long-term growth. We're thinking about moving further than just one purchase and keeping customers in the loop. What's that shift been like for IKEA? How do we keep that circular relationship with the customer?
[00:16:48.110] - Connor Hill
This is one of the spaces where we're developing more and more. If we look at our range, if I think mattresses, for example, how do we really dial up the communication that most people probably have seen as a zip on there, but maybe not everyone. We really start designing products so that they can be washable, so removable covers are really now on many, many of our products.
[00:17:11.900] - Connor Hill
I walk around our internal sort of workshop where we see all the showrooms for the products coming up, and reusable covers really is just the normal for us now. That wasn't the case many years ago. We really want to help the customer to inspire them. We also hide the zip quite cleverly, so people maybe don't want to see the zip. But there's a bit of an educational piece there. People see it as like, "Oh, wow, okay. Maybe I want the white sofa, maybe I want the light coloured cushions." But do they all know that these are actually machine-washable to keep them fresh and prolong the life of them for even longer?
[00:17:43.420] - Connor Hill
There are small examples like that where we're evolving as a brand from a product development side, but also to inspire and engage the customer that, we do make our products to be durable and if they do break at some stage or get a little bit wobbly, we do offer the spare parts as well. It's really thinking about what is that full offer around the circular services that we do today.
[00:18:06.250] - Finley Phillips
As you say, we're sort of tapping into the innate behaviours that people probably don't… They're not massively conscious about, but we're just baking in these little, little changes to the products. It's really interesting. From an internal perspective, we've obviously spoken about the success of this model, and it's obviously now scaled to being a regular part of the IKEA service, in the context of measurement, what kinds of new data and insight have really been able to drive that progress?
[00:18:37.170] - Connor Hill
Affordability is top of mind for everyone at the moment. The space that we're in, we really need to… As part of our strategy and who we are as a business, it's around siding with the many. That again goes back to making our offer affordable, accessible, and sustainable. We need to really side with them. Some of that can be… The circular services are really well-positioned to side with the many in these particular times. Our second-hand offer, it's our most affordable offer. By making that the peer-to-peer more accessible to people so you can buy from your neighbour. Again, it really addresses that as well.
[00:19:16.700] - Connor Hill
This is a really important driver for us. Also, going back to the previous part of, by buying with us, many of our products have a guarantee for multiple years. Some of our kitchens are up to 25-year guarantees. Our mattresses, some of them are up to 10 years. These sorts of promises, how we can help the customer, say, by buying with us, it comes with removable covers, so it looks new for longer. We offer a buyback service, we offer the spare parts, all of these things.
[00:19:45.180] - Connor Hill
Maybe in some circumstances we are a little bit more expensive, but by knowing the product's going to last that bit longer, it's another reason to buy with us. We have this area. What we do also see one of the areas, challenges, data around is the trust in second-hand. Some people who are not participating in it regularly today, there's still that mindset of "Oh, what about the hygiene factor around it?" How do we overcome that?
[00:20:12.610] - Connor Hill
That's one of the areas where when we do the buyback products, I was with a colleague just last week, you go behind the scenes, you see the cleaning, the work that they do. We've got different pilots happening in different countries as well, where we go that extra level, particularly for textiles. It's really innovative. It's really professional cleaning. That is actually really exciting how we get over these hurdles. Our range, more of it can be second-hand as well and have a second life. It's also around that… Again, it's that sort of mindset of the do-say gap, particularly around repair and reuse.
[00:20:48.480] - Connor Hill
How do we really inspire people to say, "Hey, just because you've moved house, and you've lost a screw in that move, it doesn't mean the table is no longer usable." We actually have the spare parts that they can order from really easily. How do we actually make that offer more visible to our customers?
[00:21:07.120] - Connor Hill
Then how do we also inspire them to do the repair, do the fix, re-varnish their worktops? We also see either that there's a gap where we go back to our parents and our grandparents, a lot of this behaviour was just super normal. How do we also help the customer to give them the confidence to give it a go themselves as well?
[00:21:27.540] - Finley Phillips
Connor, you mentioned the geographical context there. In the context of data and measurement, there are lots of different ways you can measure your progress. Is it a one-size-fits-all approach?
[00:21:39.550] - Connor Hill
I would say what we really try to do here at Global is to think about how can we create a menu board, you could say, of different circular services and solutions for our different countries to get after. Some are going to be stronger… two or three might work really well in India, but those same two or three might not be the same for the UK.
[00:22:01.230] - Connor Hill
But if we think more globally, we do an insights and trends report every two years. This is really under understanding where our customer is today, not necessarily specifically our customer. It's 30,000 people in the markets that we sell our products to. Some of the insights that we see from there are changing every two years. These aren't static, they are changing.
[00:22:24.210] - Connor Hill
One of the really interesting ones for us is 38% of people under 35 avoid buying new things altogether. When we think about our business and resilience, if we're only selling new products, then there's actually a huge part of this particular demographic that will not be accessible to us. Again, it's really thinking about our business relevance, resilience, and how we grow with the changing needs of the customer as well.
[00:22:51.870] - Connor Hill
But some of the additional parts to that, which I really loved hearing, was also around 70% of people already try to repair or donate broken and unwanted furniture already. There is maturity here, but how often are they doing it? If we look at the bigger context, great that 70% of people are thinking about how they repair and reuse their products and donate them. But if we look at the circularity gap report, we're still way short of 10% of materials actually being reused, so 70% sounds great, but however, we're still a long way off globally.
[00:23:25.380] - Connor Hill
Maybe just a slightly different angle to this as well,. When we've talked a lot about marketing in this dialogue so far is not every consumer is the same, which sounds really obvious to say, but traditional retail is you have a poster, an email, a campaign, and it's a one-size-fits-all. We see the evolution of how effective marketing goes forward. With all the algorithms we see day in, day out on our social media, what does that also mean for retail as well?
[00:23:55.570] - Connor Hill
We really need to think if I'm trying to persuade someone who is very money-conscious to buy an EV car, the whole messaging is going to be totally different to someone that is around style and ego and how it looks. That will also be a very different message to someone that is really conscious about the planetary challenges we have today.
[00:24:17.630] - Connor Hill
Each of those personas, each of those desires requires different messaging in order to get people to shift if they're buying a new car or whatever the objective is, it all needs to be as much customised to them as possible to lead to the outcome you want. We really need to think about that from a circular point of view.
[00:24:40.340] - Connor Hill
Earlier on we talked around the hygiene factor still being quite a big factor for people. Maybe in those circumstances we should be talking more around the professional cleaning that we do with our products before we sell them on second-hand, or when we have our peer-to-peer model, the insurance offer that we have, that's included in that as well. We really need to think about that evolution to help more people to participate in the circular economy.
[00:25:06.000] - Finley Phillips
We know that sustainability drives innovation. As you say, different consumers provide different perspectives, different challenges for you as a business. You've got the data, you've got the insight, you can then optimise and move forward with the solution that fits for the right context. I think that's a really good place to end, Connor. We've heard a lot about measurement over these past few episodes, and I think that's really key point to end on. Thank you very much for joining us, really enjoyed the conversation. We look forward to hearing from you soon.
[00:25:36.540] - Finley Phillips
Through buyback and resell, IKEA isn't just managing waste, they are keeping their products at the highest value for longer and driving 1.6 more store visits in the process. Be sure to keep your eyes out for more on their circular journey over the next few months. As always, thanks for listening to this episode of the Circular Economy Show. If you enjoyed it, please do share it with a colleague or friend and remember to like and subscribe. We'll see you next time.