Irene Gutlow * grew up in retail. She learned the furniture industry in Leipzig and has been working for the Swedish company Ikea for over 20 years. “When I started, I couldn’t believe my luck. A great employer, fair salary, wonderful colleagues, ”says Gutlow.
The Ikea employee receives 13 monthly salaries, wages above the collective bargaining agreement, additional benefits in addition to her pension and, until recently, also annual bonus payments if Ikea Germany had achieved the goals set. These are working conditions that are a rarity in the industry – and which the Ikea management is now also questioning.
“Since Ikea patriarch Ingvar Kamprad died, a lot has changed in the company – not for the better. The Kamprad sons turn the group on profit, profit and even more profit, ”says Gutlow. “We employees are afraid. We fear losing our jobs. And don’t recognize our Ikea – it looks like a wolf in sheep’s clothing today. “
Generation change at Ikea
Ikea founder Ingvar Kamprad could not leave his furniture company until old age. Long-standing employees of the company still describe Kamprad with warm words and wish the patriarchs back. At the age of 86, however, the founder finally decided to leave the management of the company to his son Mathias and in 2013 initiated the generation change in the company. Mathias Kamprad, the then 44-year-old son of the billionaire, took over the fortunes of the furniture empire, which operates more than 400 furniture stores in over 50 countries around the world. After his father’s death in 2018, Mathias began to reinvent the furniture dynasty for the age of online retail.
Gutlow’s fear is not unfounded. This year Ikea terminated the general operating agreement in Germany, the so-called “multi-channel agreement”. This enables the company management to issue redundancies for operational reasons.
Gutlow’s fear of losing a job is shared by 86 percent of all Ikea employees in Germany. This is the result of a representative survey carried out by the Verdi union and the works councils in all German Ikea stores. The survey is exclusive to NewsABC.net. A total of around 2,600 employees took part in the survey, which lasted throughout October.
The results of the survey raise a number of questions: How could the Ikea management gamble away the trust of the workforce, who otherwise speak so appreciatively of their company? How does the company management react to a workforce whose nerves seem to be on edge? And how is the furniture giant actually changing its business?
NewsABC.net spoke to numerous Ikea employees at various hierarchical levels. It quickly became clear that the furniture company was preparing fundamental changes in its business – and that this would probably mean a large number of job cuts. The corporate management does not inform the workforce, but they can feel what is happening.
One of them is Laura Kohler *, who has been working for an Ikea furniture store in southern Germany for many years. “The management works and tests in many corners and ends in the company. We can feel it. Our knowledge of the management’s plans is incomplete. Ikea only informs little by little. It’s a calculation, ”says Kohler.
The Ikea employee is frustrated: “The big furniture tanker is maneuvering itself into the digital age – and is planning to cut analogue jobs.” The change for the workforce is creeping through the “salami tactics” of the management, so she has hardly noticed so far what is growing. “Ikea makes it smart. And the employees – that is also part of the truth – stick to the motto: As long as it doesn’t affect me directly, everything is fine, ”says Kohler.
Ikea is turning its business upside down to digital for good reason: There is by far the highest growth in online retail – and not just since Corona. This is shown by the business figures from last year. Online sales grew by 33.2 percent and contributed 494 million euros to the approximately 5.28 billion euros in total sales. The proceeds from the online business thus made up around ten percent of total sales. The growth rate is likely to have risen sharply in the Corona period. The Germany boss of Ikea, Dennis Balslev, was extremely satisfied with this development when presenting the figures from 2019: “This shows that our strategy of concentrating on the expansion of the online business and the seamless connection of all channels, has been well received by our customers. “
The Ikea furniture stores will change fundamentally
Customers first, that seems to be the management’s strategy. Thanks to the homepage and Ikea apps, customers are often better informed about new products than the salespeople on the market, says Kohler. The “click and collect” principle, in which customers order furniture online and then collect it from the store, is more popular than ever before. And “Click and Deliver”, online ordering including delivery, is becoming more and more important. At the same time, the relevance of the huge Ikea areas in the city’s bacon belts is falling.
The management has long since anticipated this development. She is planning completely new store formats and wants to set up small Ikea showrooms in downtown locations in German metropolises and in the vicinity of residential areas. It should be shopping locations where people want to spend time, come together, shop, and also do yoga, according to corporate circles. In this way, the stores are more like hipster stores from Berlin-Mitte than the traditional Ikea furniture stores. So it’s no wonder that Ikea is currently testing this concept in Berlin.
When asked by NewsABC.net, the company said that Ikea’s strength lies in the interplay between furniture stores and e-commerce. “Our goal is to meet customers wherever they want to meet us: It can be in the furniture store, but it can also be the catalog or the smartphone,” says a company spokeswoman. In the meantime, many customers would use the special offers that the furniture store offers – for example personal advice, inspiration, try-out, the restaurant – but later order online from home, the spokeswoman continued.
Of course, this interplay of e-commerce and analogue presence does not need the huge furniture stores on the outskirts, the showrooms in the city center serve exactly the same purpose.
There is therefore much to suggest that these small Ikea showrooms, which meet the current zeitgeist, will prevail in the “analog world”. Works councils and the trade union expect that Ikea will therefore largely convert sales areas in the large furniture stores in the outskirts of the city into logistics halls. The company needs more and more storage space in order to meet the demand from the online world. Two thirds of the furniture stores would become warehouses and one third showrooms. In trade union circles, it is assumed that between 10,000 and 100,000 cubic meters per year in the Ikea stores could become logistics space.
Apps and terminals take over the work of salespeople and cashiers
But it is not just the area that is to be reduced in sales at Ikea. Work itself is also becoming increasingly automated.
NewsABC.net learned from numerous employees that the management plans to introduce so-called “Hitta” terminals across the board in Ikea furniture stores. Customers can use these digital terminals to assemble their goods themselves and see whether they fit in their room with the dimensions. Many employees complain that the work of the sales person is increasingly being replaced. In the future, advisory services for employees should primarily take place “remotely”, in other words by telephone or via the Ikea chat from home, according to numerous employees at NewsABC.net.
Ikea sees the remote offers as a success. “We see that customers are very interested in the remote and live planning services, especially in times of pandemic. In our opinion, this offer also represents a contemporary component of our multichannel strategy, ”said a company spokeswoman when asked by NewsABC.net.
The model is called Amazon
Employees, works councils and unions complain that Ikea has chosen a controversial role model for its own transformation: the US company Amazon. If you want to play at the forefront in the digital arena, you should look to the online giant. The Ikea employees, however, also know about the working conditions of the employees at Amazon, and they dread that, says Kohler.
In the representative Verdi survey, 92 percent of employees said that it is important to them not to earn less by introducing new technology. 84 percent stated that it is important to them that attention is paid to the ergonomics and health of employees when new technology is introduced. Both are problem areas for the employees at Amazon.
It is not as if the Ikea workforce would block themselves to new technology: 86 percent would like them to be well qualified and prepared to use the technology. 61 percent of employees are dissatisfied with the introduction and training that has taken place at Ikea so far.
The group management at Ikea is meanwhile openly testing technologies that are also used at Amazon – and which would cost thousands of jobs if introduced across the board. “We know that there are a lot of tests with cash-free shops – in which you pay with your mobile phone, like with Amazon GO,” says Kohler. The result: the cashier at Ikea will become obsolete in the long term. “We are assuming that most jobs in this area and with the salespeople will disappear in the medium and long term,” said Kohler. In the short term, the cashiers will have less and less work. A development that has been emerging for a long time in stationary retail across all industries. “The Ikea management doesn’t contradict that either. She tries to reassure us by arguing that we would then have more free time, ”says Kohler.
That sounds similar to “free time”, but it triggers different emotions in the employees. “Not free time in the sense of relaxation, but rather from dismissal,” adds the Ikea employee.
Logistics is king
The works councils and the Verdi union share these fears and assessments. They assume that at Ikea, the employees from the checkout area and sales will largely move to logistics because this division is growing rapidly and manpower will be needed in the short and medium term. And that worries employees and employee representatives a lot.
“Today, Ikea only employs a third of the workforce full-time. More and more temporary employment agencies and work contracts are used in logistics. We’re worried that Ikea will cut even more full-time jobs and will outsource significantly more work in the future, ”says Kohler.
The Ikea employees NewsABC.net spoke to don’t want to switch to logistics. “Will I still be a salesperson or a parcel hauler in a year or two?” Says Irene Gutlow. “We employees work out millions and billions for the company.” We like to do it, the company has been good to us. But that is all changing now. ”You and your colleagues would understand that the company has to develop further. “But not on our back,” says Gutlow. “We are now to be ordered to haul packages. That will not do.”
Many employees do not feel physically up to the task. The Verdi union criticizes the fact that logistics employees are actually exposed to enormous physical strain. The cashiers and salespeople would be employed in logistics below their qualifications and at significantly lower wages.
On request, however, Ikea paints a completely different picture of the situation. “We see that our customers prefer to come to the furniture store because they value the direct and personal advice from our employees. For this reason, we are not planning to reduce consulting skills in the furniture store or to deploy employees differently, ”a group spokeswoman told NewsABC.net.
But reality seems to look different from what Ikea portrays it. NewsABC.net learned from corporate circles that since the beginning of November the Ikea management has started in almost all markets in Germany to offer employees from sales and the checkout area to switch to logistics.
In truth, however, logistics is not a reliable job port for Ikea employees either. Because the group is busy automating and digitizing there too. Ikea, for example, is expanding the use of automated high-bay warehouses that are primarily controlled by robots. The robots, Ikea admits at the request of NewsABC.net, could also be used in all other areas of logistics. The reason: You could “provide an ergonomic remedy”, says a spokeswoman for the company.
Ikea is currently testing the robots in logistics in Montreal, Canada. “The fact that we are currently testing the use of such a technology in Montreal does not necessarily mean a global rollout – just an initial development step on which future solutions are based,” the spokeswoman continues.
Ikea is also currently testing self-driving vehicles in the transport sector in logistics, for example with forklifts – “because of a shortage of labor,” as NewsABC.net asked. “Driverless systems are undoubtedly a solution, but up to a potential and final use, both the technical and the legal requirements must be met. At the moment we are already using driverless forklifts very successfully for certain processes ”.
The furniture retailer’s increasing digital focus is also supported by the latest Ikea investment in the AI startup Nyris, whose software algorithms will be able to recognize objects via a camera in the future and thus digitize many processes in the warehouse and logistics. Ikea explained this to NewsABC.net in an earlier conversation.
The concern about control by technology
NewsABC.net learned that Ikea would like to rely on so-called store operation apps and co-worker apps in the future. With the help of these applications, team leaders can digitally transmit task lists to their employees every day and the teams can communicate securely with one another in real time via their mobile phones. When the systems are more fully developed, an algorithm would send the employees their tasks to their end devices – completely automated. Today, Ikea employees in sales and advice write down their daily work on a piece of paper.
However, these digital systems also have their downsides. The team leaders and the management could see in real time the time in which the employees complete their tasks. The performance data can be used to aggregate employee performance curves for the day, for a month, for a whole year. And also evaluate the sales performance of the seller. The same applies to employees in logistics. Ikea would create the glass employee. That is the fear of the works councils and the trade unions.
Ikea left a request for this unanswered.
The responsible Verdi union secretary, Maren Ulbrich, calls on Ikea to finally clear the table with employees. “The company management must finally disclose its digitization strategy. IKEA is increasingly digitizing the work processes in the company without involving the employees. They are the experts and must be informed about the changes, qualified and involved in processes. The results of the survey show how important it is to rate the digitization processes at IKEA – with the participation of the employees. “
Ikea employee Irene Gutlow is less worried about herself, she doesn’t have many years of work ahead of her. “I’m something like the department mother for us.” She worries about the young employees who have their whole professional life ahead of them. “It makes me sad that they weren’t as lucky today as I was then. You are starting into an uncertain future at Ikea. “
* The names of the Ikea employees have been changed for their protection.