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IKEA considering fulfilment options

Furniture giant Ikea is investing heavily in fulfilment and improving convenience to reflect consumers’ changing lifestyles, including falling car ownership in cities.

The world’s biggest furniture retailer will introduce click-and-collect trials next year, at unnamed locations, as it shifts its model away from its traditional cash and carry offer to meet growing customer expectations.

Ikea is also investing in improving its home delivery offer to cope with high demand for its picking and delivery service. In August of this year 30% of orders were delivered to home as demand increases in response to declining car ownership in the UK.

Ikea country retail manager Gillian Drakeford told Retail Week: “We know that car ownership is dropping especially in cities and we know we need to offer more services in order to get customers’ goods home.

“We are trying to figure out what should be the best set up – I can’t commit to whether we are bringing delivery in house or not but we are working to ensure we give the customers the best customer experience.”

UK’s experimentations with its multi-channel offer are being used as the pilot for the global Ikea organisation and will be rolled out internationally.

The retailer is in the process of reviewing different pricing models for delivery services and will be introducing a new pricing structure in the new year.

Drakeford declined to say how much Ikea was investing in fulfilment, but did say the retailer is ploughing as much money into delivery options as it is placing in range presentation and store revamps.

Ikea invested £4m into its children’s and living room departments in 2013 and a further £8m in a new kitchen concept in February 2014, which included rebuilding kitchen departments in-store and training staff.

Ikea’s existing stores give it just 64% coverage of the UK, based on a 40 minute drive, and Ikea is seeking to increase its reach because Drakeford recognises “people don’t want to invest so much time and energy in shopping”.

Ikea is maintaining its focus on stores despite online sales in the UK now accounting for 10% of total sales after surging 26.8% during the year ending August 31.

Drakeford said: “We do not see us focusing all investments online because the store is our biggest asset and also our competitive advantage – it is the one place where we can provide inspiration.”

Sales are increasing across the entire Ikea store estate with all 18 shops growing by almost 10%.

Ikea increased annual sales by 11.3% to £1.41bn for the year ending August 31.

Source : Matthew Chapman – Retail Week 

05 November 2014

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