Cash is no longer king at Ikea.
IKEA has taken the first baby steps to building a digital payments platform for its retail stores. The innovation has the clear and explicit goal of removing cash as a means of payment from the furniture chain’s entire retail system, which, at 313 stores in 38 countries/territories, is the largest in the world. The company’s first cash-free pilot-project store opened in Valbo, Sweden. The game plan is to push the cash-free model to all stores worldwide within five years.
Sweden is a friendly operating zone for digital payments actors. The automated clearing house Bankgirot began operation in the 1960s. Today, the use of checks as a form of payment is virtually unknown in Sweden; in 2017, just 2% of the total value of transactions there consisted of cash and by 2020 that figure is expected to fall to less than 0.5%. Whole businesses, including the Mastercard-sponsored ABBA Museum in Stockholm, have gone completely digital and no longer accept cash. The sense of a digital payments revolution is also powered by a government proposal to make Sweden the world’s first cash-free nation by 2030.
“We are seeing a significant shift in customer behavior and needs, and these are constantly changing,” says Peter Nilsson, customer experience manager at IKEA Sweden. “IKEA wants to surpass expectations and make payments an easier part of the process.”
The transition to an entirely digital payments platform affords the company a number of important cost-reduction dividends. It will enhance transaction efficiency at point of sale and improve overall store security while eliminating cash management costs. Whether going cashless will hold the same appeal for consumers in other countries as it does for Swedes remains an open question.
The roll-out at Valbo isn’t IKEA’s first foray into the digital zone, having launched TRÅDFRI, its first digital furnishing product, last year. The TRÅDFRI app allows users to control home-lighting units from a smartphone or tablet.