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Online expansion helps IKEA boost sales by 3.1%

Retailer's sales rose to £1.27bn for financial year to August, while its home furnishings market share increased to 6.4%.

Ikea has consolidated its flatpacked grip on British households with increased sales and market share, bolted on by its expanding online shopping, the Swedish group has announced.

Sales rose 3.1% to £1.27bn for the financial year to August, with a 29% leap in online sales, which allowed the world's biggest home furnishings store to reach new demographics. Last year IKEA increased to around 80% the extent of its product range available online, and spread its home deliveries to cover most regions of Britain.

In its 25th anniversary year in the UK, Ikea increased its leading market share in home furnishings by 0.2% to 6.4%. The sales figures reflect similar rises across the global group, where revenues reached €27.9bn across 26 countries.

Gillian Drakeford, Ikea's UK retail manager, said: "With the continued uncertainty around the recovery from the recession, we have continued to invest across our online and in-store shopping channels to create a simpler, more convenient and enjoyable experience and it's very humbling that our efforts have resulted in another year of growth."

Outdoor furniture saw the biggest leap in sales, up 58%, with stores now making the product range available throughout the year despite Britain's uncertain seasons. Sales in lighting also rose due to a push towards LED bulbs.

The company, established 70 years ago in Sweden, reached Britain in 1987 with its first store in Warrington. It now has 18 mammoth stores across the UK, its semi-warehouse model effecting a mass conversion of the country to DIY home furnishing and Scandinavian interior design at relatively cheap prices.

Profits for the year have not yet been disclosed and will be published in Ikea's annual report in January. Last year, profits dipped to just under £20m in Britain, which was its worst results for three years.

However, Drakeford said the market outlook in the medium term and Ikea's investment "to improve the shopping experience" should see it double its turnover and total market share by 2020.

Ikea UK is planning to focus in the coming year on selling more kitchens, by investing £8m in rebuilding its showrooms and improving delivery and installation services.

The firm will also be investing in energy-saving products and other environmental initiatives, including ranges designed to help customers save water, cut waste and save money. Solar panels will be sold in all stores by the end of this year and schemes promoted to encourage customers to recycle furniture at the store.

Drakeford said her team had put a renewed focus on trying to understand how their customers live and shop, as well as "their needs, dreams and wants in the home". This involved making more than 500 visits to customers' homes to see how they lived.

The picture is happier for Ikea this side of the Channel than in France, where three of its senior management team are being investigated by police over more unorthodox methods of research. Executives, including the chief executive of Ikea France, are accused of employing private detectives to snoop on staff and customers, with union activists and job applicants among those targeted.

Source: Gwyn Topham - The Guardian

22 November 2013
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