Transformation, Circular Economy and Driving Change at Scale

Transformation: Circular Economy and Driving Change

Jonas Engburg@Jonas_EngburgSustainability Manager

IKEA

© Inter IKEA System

s B.V. 2015

Connecting the beginning and the end

CIRCULAR IKEA

Transformation, Circular Economy and Driving Change at Scale

Jonas Engberg, IKEA

1.5

3

A BETTER EVERYDAY LIFE FOR THE MANY PEOPLE

Consumers are increasingly aware of the restraints of our planet.

They tell us quality and durability of our products are important to give products a long life.

Some see our products as throw away products, that is not how we want to be perceived.

CUSTOMERS WANT MORE FROM IKEA

” I once bought a very expensive quality bed thinking that it would last for the rest of my life. Well, it didn't. It fell apart within a couple of years. The mattress, the frame, just everything. Now I have a simple IKEA steel bed and it's just as comfortable as the expensive one, and I can buy replacement parts.”

WHERE ARE WE TODAY?

”There products are not made to last. That is not sustainable.”

”If only IKEA had a pick up recycling service as well.”

” I often see BILLY shelving or LACK side tables on the curb. I am not claiming that these pieces are poorly designed, but people seem to think of them as throwaway.”

”Their prod-ucts have a throw away feel to it, that is what everyone does.”

”Great solutions for waste management, but what about the products.”

THE IKEA NO 1 CHALLENGE IS RESOURCE SCARCITY AND COST TO BE ABLE TO REACH THE MANY PEOPLE WITH THE THIN WALLETS

EXTRACTINGRAW MATERIALS

PARTS SUPPLY

MANUFACT-URING

DISTRIBUTION USER INCINE-RATION & LANDFILL

FROM LINEAR ECONOMY

How we design our products

What we offer our customers

How we sources and produce

TO CIRCULAR IKEA

When we close the circle, big things start to happen

=Huge

opportunities

It is about prolonging life ofproducts and materials and use less resources

The ability to prolong life, maintenance, repair, refurbish, spare parts.

The ability to be part of different stages of life and different home set up’s, to be able to add on.

Utilizing material from 2nd sources when it makes sense. 2nd hand sales, upgrade.

Designing for separation of materials and optimal production.

Designing the full circle beautiful products

DESIGN FOR CIRCULARITY

Example: A KARLSTAD sofa

Current setupIKEA VALUE CREATION

PRODUCT AGE1st life

Sources: Blocket.se, eBay.com, IKEA.com and Resource Chain projectEnd of Life value = scrap price for contained material, Refurbish service = One hour repair and change of legs

Longer product lifecycle improve sustainability performance and IKEA resource independence

IKEA VALUE CREATION

PRODUCT AGE

= EUR 1170

WHAT’S THE OPPORTUNITY?

New sale EUR 600

New sale EUR 600

2nd sale EUR 300

New coverEUR 160

Refurbish service

EUR 100

RecyclingEUR 10

1st life 2nd life 3rd life 4th life End of life

+95%

UK example: million pieces of furniture per year

IN PEOPLE’S HOMES

SECOND HAND MARKET

• No market share

• No focus

• No market share• No focus

Sources: Market analysis tool from “Circular Economy from Customer Perspective” project

5 million

655 million

• High market share• Strong focus

NEW PRODUCTION AND SALES

35 million

WASTE FLOW• Growing focus as source of

materials

36 million 18 xx

WHAT’S THE OPPORTUNITY?

THE WAY WE MEET OUR CUSTOMERS

ENGAGE

CARE & REPAIR RENT & SHARE TAKE BACK & RESELL

PROLONG PRODUCT LIFE-THE BUILDING BLOCKS

THANK YOU!