IKEA to test online store in Australia

It has been reported by the Australian press that IKEA is to finally begin testing of an online retail store in the country by the end of the year, prior to launching a worldwide, online shopping service by 2018.

The Sydney Morning Herald has reported that the IKEA Australia is to start working on an online portal within the next six months. Urban locations will be used to test the fulfilment process and will include a smaller format IKEA pickup store, an unbranded pick up point and a third party depot. 

IKEA Australia's managing director David Hood advised that an online store would become IKEA's largest Australian outlet, as it is in the UK. Australia's country's sales are expected to exceed $1bn this year - a 20% rise year-on-year.

Mr Hood told Fairfax Media:  "It's a huge growth engine in the UK but it's not taking away from stores."

 "We have various templates we could use but we haven't decided which way to go," adding, "Hopefully by October we could clarify something and then by April have something open."

Mr Hood believes that the opening of five large-format stores, six to eight smaller former stores and several online pick-up points will push Australia's East Coast sales to c. $1.9bn by 2020. He said: "I do believe that sort of figure is more than achievable, especially now we see the online possibilities coming,"

Currently, IKEA has an online presence in 13 of the 28 countries in which it operates. Online sales were in the region of  €1 billion/3% of global sales last year and IKEA's global CEO Peter Agnefjaell is looking for online sales to account for 10% of total sales revenue by 2020. 

Mr Hood advised that latent demand will help boost sales. He cited the new Canberra store as an example, explaining that some shoppers from the NSW South Coast, Albury and Wagga areas are prepared to drive for several hours to reach the store.

New, small-format stores will be around a tenth of the size of large-format stores, at around 3,000 sqm, and will showcase a selection of popular products as well as serving as a collection point for orders placed online.

A key element of the plan will be the construction of a 70,000 sqm, solar-powered distribution and logistics centre in Marsden Park, Sydney. The $155 m development is expected to open in March or April of 2017.

The DC has a 100,000 pallet capacity and will allow the retailer to increase the number of product skus from 1,300 to 9000, as well as reducing store delivery times and online order fulfilment.  It is estimated that over $500 million has been invested in Australian business operations since 2008, and Mr Hood advised that more is to follow.

Source : Insight DIY

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