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IKEA France expected to focus on online over store openings

IKEA sign angled

IKEA, the world’s biggest furniture retailer, may slow the pace of planned new store openings in France as it increasingly looks to e-commerce and click & collect services to drive sales.

"The speed of the expansion plan may not be what was announced... We are reviewing the best solutions so that we can be as near our clients as possible," new IKEA's Chief Executive for France Olivier Baraille told a news conference.

The Swedish group, known for its low-priced but distinctive furniture and its sprawling out-of-town stores, will spend 160 million euros (120 million pounds) on a new store in Orleans, central France, in fiscal year 2015/2016 and renovate two of its existing stores near Paris.

IKEA France spent 181 million euros in the last fiscal year to Aug. 31 to open one store in Mulhouse in the east and one in Bayonne in the southwest, lifting the total number of stores in France to 32.

It also plans to open one new store in Nice on the French Riviera and one in Venissieux near Lyon by 2019.

Baraille would not say if IKEA's longer-term ambition to lift the number of its stores in France, the euro zone's second-largest economy, to 40 by 2020, was still valid.

IKEA is still considering opening a shop in central Paris and setting up pick-up points for the collection of goods ordered online to respond to changing shopping habits.

It is also boosting its kitchen offering and spending 3 million euros to revamp 15 of its restaurants over two years.

France, which accounts for around 10 percent of group sales, is IKEA’s third-largest market after Germany and the United States.

IKEA, which employs 9,740 people in France, is the country's top furniture retailer, with a stable market share of 17.75 percent in the year ended Aug. 31, 2015.

Sales rose a reported 1 percent to 2.408 billion euros in fiscal 2014/15, with store renovations weighing on its first-half growth.

The second half benefited from an upturn in the overall French furniture market as the economic climate improved.

The overall French furniture market rose 2 percent during the first eight months of 2015, according to the FNAEM furniture retail federation.

French consumer confidence jumped to its highest level since October 2007 in September, suggesting the traditional driver of growth is beginning to see a timid recovery.

Source : Dominique Vidalon & Andrew Callus – Reuters

15 October 2015

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