IKEA Group reported record annual sales on Tuesday, including a 30 percent leap in online revenues after the Swedish budget furniture retailer belatedly embraced e-commerce.
For years, IKEA has relied on shoppers to travel to its huge out-of-town stores and carry goods home themselves.
But it is investing in online shopping and now also experimenting with pick-up points and smaller shops, aiming to head off competition from online retailers such as Amazon and home24, as well as more traditional rivals including Britain's Argos and France's Conforama.
IKEA Group, which owns most IKEA stores worldwide, said sales in the 12 months through August rose 7 percent from the year before to 34.2 billion euros ($38.4 billion). Comparable store sales were up 5 percent.
Peter Agnefjall, chief executive since 2013, told Reuters that despite launching no new online markets during the year, e-commerce sales jumped 30 percent to 1.4 billion euros.
IKEA Group currently has 340 stores in 28 countries with e-commerce operations in 14 of them. More online markets could be added this year, Agnefjall said, though the focus was currently on the imminent roll-out and testing in Britain of a new online platform aimed eventually at all markets.
IKEA, known mostly for its self-assembly furniture, is also experimenting with smaller outlets that are mainly pick-up and order points, with 22 now open compared with three a year ago.
"This is part of making IKEA more accessible and making it easier for online shoppers to pick stuff up near to where they live," Agnefjall said. "We see these 22 as tests to see which formats and locations work best.
MARKETS
IKEA Group, which is targeting 50 billion euros in sales for 2020 and does most of its business in Europe, sees good growth opportunities in emerging markets, and plans to enter India in late 2017.
It opened 19 new stores in 2015/16.
Agnefjall said Germany remained the company's single biggest market, generating 4.75 billion euros in sales, although the United States nearly caught up.
In China, sales were still up by a double-digit percentage, helped by the opening of three new stores. Agnefjall said that, unlike many other retailers in China, IKEA was not seeing a slowdown in demand and was planning to step up the pace of expansion in the country over the coming years.
He added growth was also strong in some eastern European countries, with Poland overtaking China as the company's fastest-growing market.
IKEA Group is a franchisee of brand owner Inter IKEA Group. Besides the stores, it owns 41 indoor shopping malls and 25 outdoor retail spaces, the latter of which are up for sale.
IKEA Group and Inter IKEA Group are controlled by Netherlands and Liechtenstein-based foundations. (Reuters)
Source: www.businessworld.ie
