Buy-backs as a key to long-term customer loyalty
Electronic devices, books, furniture: trade-ins have traditionally been common practice in many retail sectors. The principle behind it is as simple as it is functional: a used article is accepted by a retailer in part payment for another. Buy-backs go one step further. Rebuying goods not only retains customers in the long term, but is also a step towards a circular economy.
From linear to circular: buy-backs help companies bring their processes in line with the principles of the circular economy. (Photo: Kelly Sikkema on Unsplash)
Natural raw materials form the basis for the economy
Nature is a major supplier of raw materials. From sand to wood to natural stone: the economy is dependent on natural raw materials. Unsurprisingly, they are often used to produce new goods. But cracks have appeared in this foundation over recent years. Nature can no longer meet the increasingly intense demand for materials. This has resulted in shortages. It all boils down to the fact that our economy is still far too linear in many sectors. Resources are taken from nature, processed, used and then disposed of. Such large quantities are being consumed worldwide that we would need 1.75 earths to meet this demand.
The catastrophic effects of this “one-way” economy are making themselves apparent in the form of environmental disasters, climate change and scarcity of resources, so the world is crying out for the economy to be transformed. Companies and consumers must make radical changes to their thinking, eschewing the traditional model for a circular one .
Achieving circularity through buy-backs
The main problem many companies have with used items they accept in part exchange for new ones lies in the question of what should be done with used mobile phones, sofas and the suchlike. IKEA has taken a step in the right direction by creating an innovative and potentially revolutionary system with its “Buy Back Friday”. This concept goes far beyond simply buying back used items. Rather, it means that customers keep on coming back. So, how does this work?
IKEA originally created Buy Back Friday as a countermovement to Black Friday, one of the days of the year with the highest sales. For 24 hours, companies discount their products by up to 40%, or sometimes even more, to encourage customers to make more purchases. This is a very effective tactic, but unfortunately leads to excessive, sometimes ill-considered consumption. Black Friday is a prime example of linear consumption – which IKEA is now countering with Buy Back Friday, a concept designed to make customers think about their buying habits.
Instead of encouraging customers to make more purchases with discount campaigns, the Swedish furniture giant buys back used IKEA furniture from customers, giving these items a second life with its “Circular Hub”. The campaign is part of the “Second chance at life” programme, which was introduced in all IKEA stores back in 2019. With Buy Back Friday, IKEA is now making this scheme even more attractive by increasing the regular buy-back price by another 20%. IKEA is taking these measures to support its efforts in achieving its sustainability goals: by 2030, the company wants to design all its products according to the principles of the circular economy – only using renewable or recycled materials.
This campaign from the Swedish furniture giant proves that ecological and economic goals can go hand in hand. As well as helping the environment, there is an additional benefit to the buy-back principle: customers are bound to the company in the long term.
Goods in exchange for commitment: offering customers the option of returning used furnishings in exchange for a voucher ensures they stay loyal in the long term. (Photo: Chris Liverani on Unsplash)
The future of customer loyalty in the retail sector
Imagine the following scenario: a customer buys a piece of furniture – after a few years it is worn out and needs to be replaced. In most cases, customers only have the option of reselling the piece of furniture privately or disposing of it. How can companies ensure that customers return to them to make another purchase? The answer is simple: by rebuying the used furniture. Buy-backs are far more convenient and financially attractive for customers than sending their used furniture items to landfill or reselling them privately. By issuing a voucher in exchange for the used pieces, manufacturers ensure that customers reinvest the money in their business.
This cycle ensures customer loyalty in the long term. An additional plus point: customers are happy to recommend companies that provide an exceptional service. This, in turn, attracts new customers: clearly a win-win situation for companies and consumers.
Recycling furniture with buy-backs
In addition to gaining loyal customers, manufacturers can also reduce their reliance on raw materials. By designing modular pieces from the outset which, having reached the end of their useful life, can be easily disassembled into individual parts, they can upcycle these materials by using them in new pieces of furniture – without the need for new resources. By reusing their own products, companies can therefore counteract the scarcity of resources, and at the same time, save on material costs, thus creating a cycle that addresses both economic and ecological considerations.
The impact of achieving this goal should not be underestimated. Studies show that consumers are increasingly turning towards companies that have sustainable production processes in place. And they are paying more attention to whether a company’s actions are environmentally friendly when buying new products. Buy-backs can therefore help manufacturers and retailers achieve sustainable success on many levels.
Buy-backs: an investment that pays off
There’s no doubt that buy-back schemes demand a lot from companies, especially in terms of the set-up. From having available space to store used furniture, to being able to repair slightly damaged pieces, to managing the financial process for repayments. This may act as an initial deterrent for those wanting to branch out into buy-back schemes. In the long run, however, buying back used furniture is an investment that just keeps on giving.
Find out which other trends and business models are shaping the future of the interior design industry in our magazine by imm cologne newsletter .