Ikea uses AI to forecast demand

Ikea is now working with demand sensing. This is a technology based on artificial intelligence (AI) that is used to determine the respective needs of customers and align the product range accordingly.

Demand sensing examines short-term demand patterns across various channels, including customer behaviour, market events, pricing, campaigns, local weather reports and external economic factors. The technology monitors customer preferences over time and is intended not only to support employees in their daily work, but also to increase forecasting accuracy by adapting precisely to shifting variables. However, the quality of the data provided by the employees is crucial for success, according to a press release from the furniture retail group.

Ikea initially tested the new tool in Norway in 2020. From Portugal, the company reports a 5 per cent improvement in forecasting accuracy. This refers to forecasting which items will be in demand at which location and to what extent.

The new tool for recognising demand is the result of a three-year collaboration between Ikea Retail (Ingka Group), Inter Ikea Systems, Blue Yonder and other stakeholders, according to the company.