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Ikea to invest 1m per UK store to help lift sales further

It’s been a truly dreadful Christmas for most retailers, with Britain tightening its belt even further and store bosses gritting their teeth for a tough 2013. But not Carole Reddish.

The Swedish chain’s UK chief is extremely relaxed about the coming year and she has the numbers to back her up. In the year to August sales were up 6.3%, the biggest rise for six years. Sales over the festive period have apparently continued in a similarly positive vein.

Now, to help lift sales further, the group is embarking on a refurbishment of its popular Market Hall areas – the maze of hundreds of home accessories from pot plants to cushions that customers weave through before they reach the tills.

Close to £20million will be invested, £1million in each of the stores, to guide customers through in a more efficient way. Reddish – who is acting country manager while Ian Duffy is on an extended leave due to illness – says such tweaks can help companies to beat stagnant markets.

‘It’s all the difference between making level sales and a 3% increase,’ she says. ‘The idea is to change how it is laid out, but also to make it more relevant to what is going on in the home seasonally.’

New textile and fabric ranges have been introduced to better suit British tastes and the room sets are designed for customers moving in to smaller homes, or sharing with friends or family.

Reddish, the first female boss of the UK business, says that the slump, the sluggish housing market and a huge switch to internet shopping are all grist to her mill.

‘Ikea is about getting value for money. But if you want to get the best price from us, there is an element of doing the work,’ she says.

Total sales have reached £1.23billion, making Ikea one of Britain’s biggest retailers, just over 25 years since it first came to these shores. Ikea says it has bucked the shrinking home and furniture market to increase market share 0.4% to 6.8%.

‘The volumes we’re seeing on certain products suggest that brand snobbery is less prevalent,’ she says. ‘My interpretation is that people are trading down. We are seeing customers coming to us that perhaps haven’t been here since the Nineties.’

Ikea is also wearing down the obsession with brands. She says: ‘It’s no longer about saying, “Look what brand I’ve bought.” It’s about saying, “I have so much income left and I need to buy a new bed or a new sofa”.’

Ikea’s fledgling online operation, with customers expected to pay for delivery, is also attracting those who would prefer to avoid the stores, or who simply don’t have the time.

‘Life is busy,’ says Reddish, who previously worked at The Body Shop and in electrical retailing. ‘People don’t necessarily have the time, but we are seeing new customers who have that in mind but are still attracted by our value. They’re prepared to spend a little more and have it all delivered.’

The lion’s share of sales is still from stores. But internet sales have rocketed, and the coming weeks will see Ikea increase the number of products available online by almost a quarter to 7,200.

Reddish estimates that there could, in a few years, be as many as 30 British Ikea stores – up from 18 today. There are problems over giant stores gaining planning permission, but smaller and multi-level stores have been tested.

Source : Neil Craven –

30 December 2012
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