Latest / The Pivot Podcast with Fexingo: How Businesses Change Direction and Survive Disruption / How IKEA Pivoted From Catalog Retailer to Digital Platform
Transcript
- Lucas: So IKEA's catalog. The 'bible'? The 'furniture porn'? Whatever you called it, it was the most printed publication on earth for years. Two hundred million copies a year, distributed in dozens of languages. And in 2020, after seventy years, they killed it. No more catalog. Luna: I remember that. It felt like a monument falling. But honestly, I had already stopped looking at the paper version. I think a lot of people had. Lucas: Exactly. And that's the pivot in a nutshell. IKEA understood that their physical catalog — which had driven foot traffic and helped customers plan rooms for decades — had become a liability. It was expensive, environmentally heavy, and it reached a shrinking audience. So they redirected every dollar and every bit of creative energy into digital tools. Luna: And that's where the story gets interesting. Because IKEA isn't a digital-native company. It's a logistics and showroom machine. The question is how a company built on the physical experience of 'the store as a day out' pivots to digital without losing its soul. Lucas: Look, I'll be honest — if you've gotten something out of these conversations, if they've moved your work forward or made you think differently about your own business, a couple of dollars a month genuinely keeps these shows ad-free and independent. Buy me a coffee dot com slash fexingo is where that goes. Small amounts, real difference. Luna: Yeah, it's how we keep doing deep dives like this without sponsors dictating the angle. So if you're able, it matters. Lucas: So. The catalog is dead. What replaces it? In 2017, IKEA launched the IKEA Place app — an augmented-reality tool that lets you plonk a virtual sofa into your living room using your phone. By 2023, customers had placed over ten million virtual furniture items through that app. Luna: Ten million is huge. But I think the point isn't the app itself — it's what it represents. IKEA started treating the phone as the front door, not the store. Lucas: Right. And that required a whole rethinking of their supply chain. Because if someone places a virtual sofa in their living room and buys it on their phone, the product still needs to get to their house. IKEA's distribution network was built for bulk deliveries to stores, not for delivering single items to apartments in cities. Luna: So they started building urban fulfillment centers. Smaller warehouses closer to city centers. And they acquired TaskRabbit in 2018 for something like sixty million dollars. Lucas: TaskRabbit was genius. Because one of the biggest barriers to buying IKEA furniture online is the assembly. People hate it. By owning the platform that sends someone to your house to put the Billy bookcase together, IKEA removed that friction. It turned a pain point into a service revenue stream. Luna: It also gave them data. TaskRabbit knows which products are hardest to assemble, which zip codes have the highest demand, which times of year people move. That's gold for a retailer. Lucas: Gold and glue. Because the more services you wrap around the product, the stickier the ecosystem becomes. IKEA now offers kitchen planning remotely — you upload your measurements, a designer works with you over video, and the whole thing gets shipped. No need to visit a store until the installation. Luna: I actually used that. It was surprisingly good. The designer caught a mistake in my measurements before I ordered. That's the kind of thing that builds trust. Lucas: And it's a classic pivot move: take a core strength — in IKEA's case, the expertise of store employees in planning kitchens — and make it accessible outside the store. Suddenly your bottleneck isn't floor space; it's bandwidth. Luna: But let's not pretend the store is dead. IKEA still opens new stores. They opened in Mumbai, in Bogota, in Shanghai. The physical store remains a massive part of the brand. What changed is the role of the store. Lucas: The store becomes a showroom and a pickup point. About seventy percent of IKEA's online orders are still picked up in store. That means customers are coming anyway — but now they're coming with purpose. They're not wandering aimlessly through the maze. Luna: Though the maze is also changing. IKEA has been experimenting with smaller format stores in city centers — like the one in London's Oxford Circus. No warehouse, no cafeteria, just room sets and a checkout. It's like a pop-up that stays. Lucas: Exactly. And those smaller stores serve a different function. They're not designed to capture a Saturday afternoon of browsing. They're designed to let you touch the fabrics, see the colors, and then order online for delivery. The store becomes a confidence-builder for the digital sale. Luna: Which is smart because the single biggest reason people don't buy furniture online is they can't see it in person. IKEA solves that by keeping the physical touch point but making it leaner. Lucas: Let's talk about the numbers. Between 2020 and 2025, IKEA's online sales grew at a compound annual growth rate of about twenty-five percent. That's roughly double the overall furniture e-commerce growth in Europe. By 2025, online represented about thirty percent of total revenue, up from maybe ten percent in 2019. Luna: So they didn't just survive the shift; they accelerated it. But they also had to manage the decline of the old model. Closing the catalog meant losing a marketing channel that had driven traffic for decades. Lucas: They replaced it with a digital content engine. IKEA now produces a ton of video — room tours, how-to guides, design inspiration on YouTube and Instagram. They also have a partnership with Pinterest where users can shop look directly from pins. The reach is arguably bigger than the catalog ever was. Luna: And cheaper. No paper, no printing, no shipping. The environmental angle matters too. IKEA has a sustainability commitment that includes using only renewable and recycled materials by 2030. Killing the catalog was a big step. Lucas: But here's the tension. IKEA's whole brand identity is built on the democratic design — affordable, functional, good-looking. The catalog was the embodiment of that. It was the one place where every product was shown in a context. Digital is fragmented. You see a sofa on Instagram, a table on Pinterest. The coherent vision is harder to maintain. Luna: So they've tried to recreate that coherence in the app. The IKEA Place app now includes room inspiration — not just AR placement of individual items, but whole styled rooms you can virtually walk through. It's not the same as the catalog, but it's the same impulse. Lucas: And they've leaned into the 'democratic' part. The app includes a feature where you can share your own room designs with the community. It's user-generated content, which is more authentic than anything a catalog photographer could produce. Luna: That's smart because it also builds a social layer around the brand. People are proud of their IKEA hacks, their clever storage solutions. Letting them show off is free marketing. Lucas: So where does the pivot go next? I think the biggest opportunity is in the platform play. IKEA has the supply chain, the data, the service layer, and the brand. They could become the operating system for how people furnish their homes. Luna: Meaning what? Third-party sellers on IKEA's platform? Lucas: Potentially. If you're buying a sofa, you might also want a lamp, a rug, a coffee table. IKEA could curate those products from other brands and handle the logistics. They already do that in parts of their business — like the 'IKEA for Business' program that offers furniture bundles for offices. Luna: That would be a big shift from being a manufacturer to being a marketplace. It's the Amazon play, but with a design ethos. Lucas: And that's the challenge. IKEA has to keep its identity while becoming something broader. The pivot from catalog to digital was phase one. The pivot from retailer to platform might be phase two. And phase two is always harder because you're not just changing a channel — you're changing your business model. Luna: But if anyone can do it, a company that turned a flat-pack box into a global brand probably can. They've already shown they can kill their own sacred cows. Lucas: The catalog was sacred. And they killed it. That takes courage. The question now is what else they're willing to let go of.