Ikea’s New System for Customer Recommendations: A Game-Changer in Retail Strategy

Ikea, the Swedish retail giant known for its flat-pack furniture, has recently revamped its customer recommendation system with the help of Google Cloud’s AI-powered tool. This new system has already shown significant improvements in customer engagement and sales for the company.

In a recent interview with Tech Monitor, Albert Bertilsson, Ikea’s head of engineering for edge computing, shared insights into how this new system has impacted the company’s customer experience (CX) strategy. With over 420 outlets worldwide, Ikea has always focused on providing a seamless in-store experience for its customers. However, with the rise of online shopping, especially during the pandemic, the company realized the importance of enhancing its digital presence.

Ikea’s existing recommendation systems were based on past purchase behavior, but the company wanted to be more predictive and personalized in its approach. By integrating Google Recommendations AI, Ikea was able to gain deeper insights into individual customer behavior and preferences. This new system allowed Ikea to offer more relevant product recommendations to its customers, leading to a 400% increase in relevant recommendations being displayed.

The AI system features different models such as ‘recommended for you’, ‘frequently bought together’, and ‘others you may like’, which can be customized and controlled from a central console. By experimenting with different combinations, Ikea was able to deliver personalized recommendations at different points in the customer journey, leading to a 30% increase in click-throughs to recommended products and a 2% rise in average order value.

Bertilsson emphasized the importance of a hybrid approach, combining history-based and predictive algorithms, to deliver the best customer experience. He believes that even small improvements in the quality of recommendations can make a significant difference for large organizations like Ikea.

Overall, Ikea’s new customer recommendation system has proven to be a game-changer for the company, showcasing the power of AI in enhancing the customer experience and driving sales. As more companies embrace AI technology, we can expect to see further innovations in personalized recommendations and customer engagement strategies in the future.