IKEA has launched an artificial intelligence (AI) driven demand sensing technology, marking a significant move towards transforming its customers’ shopping experience.
According to Ingka Group, the largest IKEA store operator, this demand sensing tool has been developed as part of a three-year long partnership between IKEA Systems, IKEA Retail (Ingka Group), Blue Yonder and key stakeholders.
Demand sensing technology, which is a key part of IKEA’S omnichannel strategy, is designed to examine short-term patterns in the demand of the retailer’s products.
These patterns cover various channels such as market events, pricing, customer insights, localised weather reports, campaigns, and other external economic factors.
Using this tool, IKEA can precisely help monitor customer preferences over time.
It adapts to changing variables to enhance forecast accuracy and help co-workers in their day-to-day tasks.
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Ingka Group said that the success of the initiative heavily relies on the quality of the data provided by co-workers.
Until now, the use of this technology has provided better planning tools to co-workers and has further ensured the availability of products for specific locations.
According to the company, the tool has also allowed co-workers to invest more time in making strategic decisions and better manage their work with stakeholders.
This technology has showed a 5% improvement in the overall forecast accuracy at IKEA Portugal.
IKEA Retail (Ingka Group) Global chief digital officer Parag Parekh said: “AI has been a game-changer for us, making our routine tasks easier with use smart models. However, the tool is only as good as data its provided.
“The real heroes here are our co-workers, as they bring invaluable insights and always ensure quality of data is there.”
Ingka Group said that the initial pilot of this initiative was conducted in Norway in 2020, showcasing ‘noticeable improvement’ in precise customer demand prediction.
IKEA Retail (Ingka Group) supply integration leader Jonas Nordquist added: “All parties embraced 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.”