Ikea bucks retail trend

Ikea sales are booming in the UK as price cuts, cheaper home deliveries and a bigger online product range helped the world's largest furniture retailer grab a larger market share.

The Swedish company said a £30m investment in its 18 UK stores and website had paid off, with like-for-like sales in the UK and Ireland climbing 6.3% to £1.2bn in the year to 31 August - the biggest increase in six years. It bounced back from a 3% drop in sales the year before when hard-up households put home makeovers on the back burner. Some 41 million people came through its doors in the past year, including more affluent shoppers looking for affordable furniture.

Ikea bucked the trend of falling big-ticket sales – the UK market as a whole was down 2.2% – and increased market share by 0.4% to 6.8%. Online like-for-like sales leapt 25% after a further 1,500 products were made available, taking the total on its website to 6,000 (out of Ikea's 9,500-strong product range).

Carole Reddish, acting manager for the UK and Ireland, said the company had done more than 500 home visits in the past year and redesigned its shop floor displays, in particular bedrooms, to reflect people's changing living situation. More grown-up children are coming back home after backpacking or university to live with their parents because they cannot afford to rent or buy their own home.

"You need a grown-up space rather than the teenage space that you left," said Reddish. "Families are staying together longer or moving back together. More people are taking care of their [elderly] parents. We're also living in very small spaces. We have a lot of stuff and don't know where to put it."

Like-for-like sales of bedrooms climbed 16.7%, after Ikea lowered the price of its most popular bedroom storage range, Pax. Prices were reduced by 0.6% overall, following a 5% reduction the year before. Ikea invested £4.7m in slashing the cost of home deliveries from an average of £35 to £15-£25. New in-store "pick and delivery" and "furniture take back" services were also launched.

As it celebrates its 25th anniversary in the UK, the company has sought to brighten up its functional stores by introducing workshops on how to personalise furniture and accessories, canapé-making classes ahead of Christmas and sampling from its Swedish food market.

Reddish said it was about "bringing theatre to the shopping experience". The retailer also plans to introduce Wi-Fi.

Ikea has won planning permission from West Berkshire Council to build its 19th UK store in Reading – and aims to double the current number of outlets. It has revamped its Warrington store with a £1m new market hall, where smaller items are sold, and will roll out the new market halls to Manchester, London and the rest of its UK shops. The company did not release profit figures.

Source : Julia Kollewe - guardian.co.uk
www.guardian.co.uk/business/2012/nov/02/ikea-bucks-retail-trend