IKEA’s chief digital officer on how it’s using AI to personalize online shopping, working with influencers

Since 2016, omnichannel commerce has grown from just 2% of its business to 25%, according to Parag Parekh, co-chief digital officer and chief technology officer of IKEA Retail. Meanwhile, IKEA says it’s now seeing more than 40,000 active designs, more than 10,000 room scans each month. Around 20% of customers save one or more designs to re-visit later. And the average user spends more than 30 minutes on their design.

Last week, at the Web Summit tech conference in Lisbon, Portugal, Parekh spoke with Digiday about how the company is using augmented reality, artificial intelligence and other digital tools to personalize online shopping and let users better curate their options beyond IKEA’s walls.

This interview has been edited for brevity and clarity.

The shopping experience online isn’t the same as it is in-person. How are you trying to change that by investing in AI-driven retail?

Today, if you look at a physical experience, you look at our showrooms and inspirations of “here is how it looks like as a bedroom set, a room set.” Then you take inspiration from there and you get a feel of how it looks and you decide if that’s interesting for you to buy or not. If you go to the online world, it’s a very two-dimensional view of “here is a list of all our beds and a list of all our [products].” How do we bring this experience of IKEA uniqueness online? So you will see scenarios in IKEA Kreative. One is predefined sets and showrooms available on our website and in-app, where you can then see how it could look online. But more importantly, you might have your own space, which is set with different furniture.

What’s next when it comes to using data and training AI for recommendations?

Our next journey within the traditional business and online is — with the full consent from the customers — how do we start collecting those data bits which tell us more about what [a customer] is looking for. Where are they engaging? And based on that, ideally, help you look through catalogs that are much are much more interesting than browsing. If you take the physical catalogs IKEA had in the past, right now I would say online to an extent is the physical catalog but digitally, what are the possibilities around that without being too invasive, and making sure we have full consent while we start using some of the data where we can bring value back to you?

The ongoing economic uncertainty is having an impact on marketers’ plans. How has IKEA been thinking about people wanting to spend less or thinking differently about what they buy?

I think we are going into [a] winter that’s going to be difficult. At IKEA, we are about affordable prices. A lot of our customers [are] probably with thin wallets which are going to get thinner, but that doesn’t mean they give up on their dreams. One of the responsibilities we have towards our customer base is how do we bring more products with the right affordable price ranges — either from a price in the store or how to make it affordable from an end-to-end perspective. Not necessarily only from price, but affordable from service, getting it to their house, getting that setup to really drive low price and affordability at the heart, and designing products that can help from that price bracket perspective. Affordability is something that we are continuing to focus on.

Beyond IKEA’s website and app, what does your digital marketing mix look like across other platforms like TikTok, Pinterest, etc.?

We are in the early parts of the journey. So if I look at marketplaces, we are now working with WeChat in China or Tmall in China. We are looking at where else can we engage from a marketplace perspective.

What about influencers?

We are now into online live-selling where we are experimenting in Finland, in France. How do we engage with influencers, allow them space sometimes in our stores to come and experience and speak to their audiences … It’s new from an IKEA perspective for a company that has traditionally been retailing in that space to step into this, but we are making space for this. We have a new global head of marketing, who’s bringing in what’s happening in that space. And you will see a lot of moments happening in the years to come.