On the Road to Circular Home Furnishing With IKEA Germany

IKEA, a global leader in the home furnishing retail market aims to become circular by 2030. Together with the CSCP, IKEA Germany took a deeper look at the national market for circular business.

What has begun decades ago as a pioneer journey based on the idea of using and reusing resources as often, in as many ways, and for as long as possible, has grown into a leading vision of production and consumption: the Circular Economy. The EU Commission is pushing for more circularity through comprehensive policy packages like the Circular Economy Action Plan and by setting incentives for investors to promote circular businesses through new financial frameworks like the EU Taxonomy. The “Right to Repair” is currently one of the most discussed European policy topics and since January 2021, France is the first country in Europe to have implemented a repairability index for electronic devices. Consumers and civil society actors are welcoming such development, signalling their readiness to experiment with new business models. Still, many important questions are to be answered: is the Circular Economy sustainable by default? How can supply chain actors that stretch across continents be aligned on the circularity journey? What about social aspects related to the Circular Economy?

Taking the home furnishing branch as an example, our analysis revealed that the German market contributes by far the most to the furniture waste in Europe. In 2017, the European Environmental Bureau estimated that 2,2 million tons of waste are generated annually in Germany alone, with France ranking second with around 1,5 million tons. This is why the role of large players in the field, like IKEA, is essential in leading the way toward home furniture retail that creates more value and less waste.

In Germany, IKEA is currently developing its business so that it can meet changing consumer demands in order to prolong product lifespans and accelerate the transition to zero waste in stores and other customer meeting points. With this goal in mind, IKEA Germany approached the CSCP for support in carrying out a situational analysis of the German Circular Economy market. Key questions we intended to answer in the analysis included: What are the most recent but also long-term macro developments in politics and society? What specific trends can be identified in the German market itself with regard to retail and home furnishing? What can be learned from the respective findings with regard to IKEA’s Circular Economy strategy?

The analysis reveals that there is growing political momentum to push forward on Circular Economy solutions both on a European as well as German level and that there is an equally increasing pressure from civil society actors not only to accelerate the transition but also pay attention to aspects such as transparency, fairness, and inclusion in the supply chain. With regard to consumers, results of the analysis show that consumers expect to not only be inspired to turn around their consumption habits, but also be empowered and enabled to endorse circular products and services.

By making a clear commitment to become circular by 2030, IKEA is sending a clear message and leading the way for other companies in the home furnishing branch to follow. Mainstreaming the Circular Economy is not a task for one actor; rather it is about each actor taking responsibility and engaging with others in the sector and in the value chain to employ circular solutions for more sustainability.

For further questions, please contact Rosa Strube.

Photo by Nathan Fertig on Unsplash.