As part of its commitment to transforming the shopping experience, IKEA has unveiled an artificial intelligence (AI) technology known as demand sensing. The initiative, resulting from a three-year collaboration involving IKEA Retail (Ingka Group), Inter IKEA Systems, Blue Yonder, and other key partners, signifies a crucial step in IKEA's omnichannel strategy.
Demand sensing delves into short-term demand patterns across various channels, incorporating customer insights, market events, pricing, campaigns, localized weather reports, and external economic factors. This AI-driven technology allows IKEA to accurately observe customer preferences over time, supporting coworkers in their daily tasks and enhancing forecast accuracy by adapting to shifting variables. The success of the initiative heavily relies on the quality of the data provided by IKEA coworkers.
The initiative has already equipped coworkers with improved planning tools, ensuring product availability at specific locations and times, thereby enhancing overall operational effectiveness. This, in turn, enables coworkers to dedicate more time to strategic decision-making and collaboration with stakeholders. Notably, IKEA Portugal stands out as a market success, experiencing a 5% improvement in forecast accuracy. Parag Parekh, Global Chief Digital Officer (CDO) for IKEA Retail (Ingka Group), emphasized the transformative role of AI, stating, "AI has been a game-changer for us, making our routine tasks easier with the use of smart models. However, the tool is only as good as the data it's provided. The real heroes here are our coworkers, as they bring invaluable insights and always ensure the quality of data is there."
The initiative's initial pilot, launched in Norway in 2020, showcased significant improvements in predicting customer demand accurately, leading to more reliable forecasts for each product and store. The unique approach sets itself apart through collaboration between the company, its partners, and coworkers, contributing to a successful outcome. Jonas Nordquist, Supply Integration Leader at IKEA Retail (Ingka Group), praised the commitment of all parties involved, stating, "All parties embraced the initiative, even during challenging periods, demonstrating their commitment by giving it not just a second but a third try, and more, until all objectives were met. We look back on how our coworkers have made the forward-looking project a success."
