Swedish furniture giant Ikea is piloting a leasing service for kitchens and furniture as part of its focus on championing a circular economy and eliminating waste.
The pilot project in Switzerland is looking at ways for customers to ‘buy, care for and pass on products’ as part of its aim to become a fully circular business by 2030.
An IKEA spokesperson said: “We have an ambition to inspire and enable people to play an active role in making the circular economy a reality.
“This can only be achieved through collaboration. In addition to working with customers to find appealing and accessible solutions that enable them to live more sustainably, we are also partnering with stakeholders to work together and share experiences.”
The company said it was too early to confirm how the leasing service will operate. Currently it offers customers loans and interest-free credit services as a credit broker for Ikano Bank.
Ikea has already introduced several programmes to reduce waste, such as services to take back old beds or sofas, which it then donates to charity.
It employs recovery teams in every store, who repair and re-package products that have been damaged in transit, so that they can be sold and not go to waste.
In 2018, Ikea also handled more than 1 million orders for spare parts to help repair products for a longer life.
Last year, its UK operations sent zero waste to landfill for the third year in a row and it recovered 12,240 sofas, beds and appliances for reuse and recycling.
Its new Greenwich store will feature a Learning Lab, a global first for IKEA, offering a dedicated space for customers, partners and the local community to explore how to prolong the life of products.
Torbjorn Loof, chief executive of Inter Ikea, told the Financial Times: "We will work together with partners so you can actually lease your furniture. When that leasing period is over, you hand it back and might lease something else.
"And instead of throwing those away, we refurbish them a little and we could sell them, prolonging the lifecycle of the product".
Leasing services can sit at the heart of the circular economy because customers return products at the end of their hire period, so they can be refurbished and given a second life.
At the International Asset Finance Network conference last year, industry experts argued that the linear economy is dying, ending the cycle of production, individual consumption and waste that has underpinned business development for centuries.
Instead, the rise of the sharing economy will see much more intensive use of assets by multiple clients, enabled through innovations in software.
Carmen Ene, CEO of 3 Step IT, which provides sustainable IT lifecycle management, said: “It is an enormous opportunity for the leasing industry to portray itself as the enabler of the circular economy, as the ones that make all these things possible on an underlying financing contract.”
Duncan Hullis, country manager UK of De Lage Landen, added: “We will have to get even more sophisticated about how we remarket equipment when the ownership model finally dies.”