Ikea Improves Forecast Accuracy with AI-Powered Demand Sensing

Thanks to the power of artificial intelligence, Ikea has been able to improve forecast accuracy, employee productivity and customer experience in stores.
Photo credit: Ikea

Ikea Retail (Ingka Group) has seen “game-changing” results since employing artificial intelligence-powered demand sensing technology. Over the past three years, the retailer has worked closely with Inter Ikea Group (a group of companies that work to connect Ikea franchisees with appropriate suppliers) as well as Blue Yonder to support the implementation and scale-up of this technology.

The AI-powered demand sensing technology is designed to examine short-term demand patterns across various channels using customer insights, market events, pricing, campaigns, localized weather reports, external economic factors and other critical data points to better understand and predict consumer preferences over time. Internal team members (who Ikea Retail call “coworkers”) also provide data to further fuel the AI engine and ensure forecasts adapt to shifting variables.

AI Helps Improve Productivity and Performance

After a successful pilot in Norway in 2020, where the retailer saw a marked improvement in forecast development for each article and store, Ikea Retail implemented the technology more broadly. Since then, employee productivity and forecast accuracy have significantly improved.

Not only do employees have access to more accurate and robust planning tools, but Ikea Retail also has been able to improve product availability in key locations and enhance operational effectiveness, so team members can focus on more strategic and collaborative work. In Ikea Portugal alone, forecast accuracy has improved overall by 5%.

“AI has been a game-changer for us, making our routine tasks easier with the use smart models,” explained Parag Parekh, Global Chief Digital Office (CDO) for Ikea Retail (Ingka Group) in a statement. “However, the tool is only as good as the data its provided. The real heroes here are our coworkers, as they bring invaluable insights and always ensure the quality of data is there.”    


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