Ikea goes online and into smaller stores to increase sales to nearly €40bn

Furniture giant adapting to changing customer behaviour with focus on new store formats

Ikea is looking at using its out-of-town stores increasingly as distribution centres for home delivery of online purchases. Photograph: Reuters

Ikea is looking at using its out-of-town stores increasingly as distribution centres for home delivery of online purchases. Photograph: Reuters

 

Ikea overcame what it called “a challenging and changing retail environment” to post an increase in full-year sales of 4.5 per cent to €38.8 billion, helped by a big push online, smaller store formats, and expansion into India.

The world’s largest furniture retailer is adapting to changing customer behaviour by exploring city-centre shops and offering services such as home delivery and assembly as it changes its decade-long business model of forcing shoppers to drive to out-of-town stores. Online sales increased by 31 per cent and accounted for 5 per cent of total revenues.

“We are in the middle of a big transformation. We had growth in comparable stores, we had growth from expansion, and we had growth in online,” said Torbjörn Lööf, chief executive of Inter Ikea, the company that owns the brand and concept.

Ikea is still opening new stores – including its first shop in India – but is increasingly focusing on new formats such as city-centre showrooms dedicated to the kitchen or bathroom as well as smaller spaces that hold less stock. It has reportedly expressed interest in the former Clerys department store building on O’Connell Street in Dublin.

Outskirts

Mr Lööf said Ikea was looking at using its out-of-town stores increasingly as distribution centres for home delivery of online purchases. “We can use existing assets much more efficiently. The stores are often located in outskirts of the cities so it makes them good for distribution,” he added.

Ikea only releases its sales figures now, with its profitability and balance sheet following later in the year. Inter Ikea said there had been 2.5 billion visits to its websites last year with its augmented reality app Ikea Place the second most-downloaded AR app, allowing customers to place furniture virtually in their home.

– Copyright The Financial Times Limited 2018