The new unit, IKEA GreenTech, is channeling its efforts in five directions: solar
light sources, product materials, energy efficiency, and water saving and
purification. The unit will only invest in startups the can guarantee
delivery of a product within a four to five year window, as IKEA's ultimate
intention is not purely altruism, but rather primarily to sell greentech.
Johan Stenebo, managing director of IKEA GreenTech states, "We're already
talking to companies."
He hopes to have his unit placing its first investments by the end of the
year. He states, "That's certainly our aim to make happen."
Mr. Stenebo says the products will have to meet IKEA's high standards. He
explains, "Really low prices, and they should be of very good quality.
That's the only thing we look at, we would never look at anything else, we
would discard anything else that doesn't fall into those boundaries, whether
it's home furnishings or it's greentech products."
IKEA hopes to form partnerships with five to ten companies, with 5 or 6 of the
partnerships being formed over the next 2 years. It believes that it will
have its first products on the market within 3 to 4 years. IKEA wants to
keep its portfolio small so it can guarantee quality and that products make
Mr. Stenebo adds, "We will be very active on the boards of these
companies. I think we can contribute somewhat in terms of commercializing
the product they are developing, and then, obviously, distributing the product
Distribution power is definitely something IKEA brings to the table. It
has 270 stores in 35 countries, and half a billion customers per year.
The company not only creates its own furniture, it also invented flat packing
of furniture to reduce costs. It works with 1,300 suppliers in more than
50 countries. Since its 1943 birth
in Sweden, IKEA has blossomed to have more than 118,000 employees.
The GreenTech unit is various small in comparison with the company as a whole,
but has big responsibilities. Formed eight months ago and headquartered
in Lund, in southern Sweden, the unit currently only has four employees.
Mr. Stenebo adds in, "Within one or two years I think we'll be between
eight and 10."
One potential opportunity for green sales from IKEA outside the store is in its
housing business. IKEA manufactures entire homes, starting in Sweden in
the 1990s. IKEA now sells homes in the U.K. -- pre-fab homes with plots of land
-- to low income buyers. The homes are already ecologically friendly,
with renewable materials in the construction, and solar and geothermal for
power and heat. However production from the startups could yield lower
costs or more advanced designs.
The first priority for IKEA is getting the products to market though. Mr.
Stenebo has already considered that some products might be better suited for
different markets. He explains, "It's quite natural that, for
instance, solar panels are more interesting to Spaniards and Californians and
so forth than they would be to Swedes."
He concludes by outlining where the investments will be made and the outline
for the future of the project, stating, "Initially, we will be looking
more in Europe than anywhere else, but we do not have any geographical
restrictions for our investments. Once a company is up and running in
five or seven years or something like that, and if we exit from that company,
the money that we've earned in that investment will stay within the IKEA