E-commerce, new overseas stores boost Ikea's full-year sales

Ms Barbara Martin Coppola, chief digital officer at Ikea Group, at a store in Madrid, Spain, on Wednesday. Ikea is now investing in e-commerce, city-centre showrooms and more home delivery and assembly services.
Ms Barbara Martin Coppola, chief digital officer at Ikea Group, at a store in Madrid, Spain, on Wednesday. Ikea is now investing in e-commerce, city-centre showrooms and more home delivery and assembly services.PHOTO: REUTERS

MADRID/STOCKHOLM • Ikea is known for its flat packs, but sales are far from flat.

The Swedish chain reported a 5 per cent rise in annual sales on Wednesday, as strong online growth and new stores in India and several other countries helped the world's biggest furniture retailer cope with mounting competition.

The company enjoyed decades of rapid growth as shoppers flocked to its out-of-town warehouses to pick up cheap furniture to assemble at home.

But with the rise of online rivals such as Amazon and made.com, amid signs of waning enthusiasm for do-it-yourself home improvements, Ikea is now investing in e-commerce, city-centre showrooms and more home delivery and assembly services.

Ms Barbara Martin Coppola, chief digital officer at Ikea Group, the owner of most Ikea stores, said tests under way ranged from connecting staff with customers via video to artificial intelligence tools to help people furnish their homes.

"It's fantastic to see human interaction through technology when the consumer might need help or advice on where to place furniture," she told Reuters at a new Ikea city-centre store in Madrid dedicated to living room furniture.

Ikea sold €38.8 billion (S$62 billion) of goods and services in the 12 months through August, up 5 per cent in local currencies, brand owner Inter Ikea said.

HIGH-TECH HELP

It's fantastic to see human interaction through technology when the consumer might need help or advice on where to place furniture.

MS BARBARA MARTIN COPPOLA, chief digital officer at Ikea Group, on the firm's various tech tools that help customers.

The growth rate was roughly the same as the year before.

Ikea, whose stores are owned by 11 franchisees, opened 19 new outlets, taking the total to 422 in more than 50 markets.

The largest franchisee is the Ikea Group, with 367 stores.

Inter Ikea chief executive Torbjorn Loof told Reuters that online sales at the brand jumped 31 per cent to account for 5 per cent of total turnover, in line with the year before.

On a comparable store basis, retail sales were up just 1 per cent in local currencies.

"We see that we have flattened out a bit on sales in existing stores, while we have strong growth through expansion and online," Mr Loof said.

Ikea, which makes most of its sales in Europe, opened its first store in India this year and announced plans to enter Latin America, starting with Chile in 2020, followed by Colombia and Peru.

Mr Loof said many self-service areas in out-of-town stores will transform into distribution centres as customers increasingly shop online and want home delivery.

REUTERS

A version of this article appeared in the print edition of The Straits Times on October 12, 2018, with the headline 'E-commerce, new overseas stores boost Ikea's full-year sales'. Print Edition | Subscribe