Ikea chief signals slower expansion

Ikea’s new chief executive has rowed back on his predecessor’s pledge to double the pace of store openings, underlining a power shift at the world’s largest furniture retailer.

In his first interview as chief executive, Peter Agnefjäll (42) told the Financial Times he was hoping to increase the number of annual store openings from five this year, a figure he called a "record low".

Asked about his predecessor Mikael Ohlsson’s repeated pledge to open 20-25 stores a year, Mr Agnefjäll said: “I don’t recognise that, really.”

The shift is significant because the rapid pace of the expansion had been opposed by Ingvar Kamprad, Ikea's mercurial 87-year-old founder, who favoured more investment in existing stores.

Mr Agnefjäll, who unlike Mr Ohlsson is a former assistant of Mr Kamprad’s, said he would put the emphasis on improving the company’s existing shops.

He hoped Ikea could increase its sales by 10 per cent a year and thereby double its annual revenues to about €50 billion by 2020.

Both current and former Ikea executives worry the retailer's strong corporate culture – which comes from its roots in rural southern Sweden where thriftiness is a virtue, and Mr Kamprad's emphasis on shared moral values among employees – could be damaged by too quick an expansion into countries such as India and China.

Previous big pushes into Japan and the US in the 1970s and 1980s had to be halted after difficulties.

Scandals
Mr Ohlsson's time in charge from 2009 was also tarnished by scandals in various parts of Ikea's empire, including a bribery case in Russia and allegations of spying on customers and workers in France.

Mr Agnefjäll said: “I would say we can, of course, never grow faster than we can secure the culture and the vision, and that [is] what we are working with. I think that is a big challenge for us.”

Ikea’s ability to open new stores has been held back by planning delays in several countries. – Copyright The Financial Times Limited 2013