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Retail Viewpoint – Ikea

IKEA’s irresistible march continues as it achieves its sixth consecutive year of sales growth, reaching £1.8bn for the 12 months to 31 August 2017. Online drove this growth, where sales were up 10%. This followed a website relaunch in August 2016, which optimised the site for different platforms, and in May 2017, the launch of click & collect to IKEA Order and Collection Points. Given the importance of stores in the pre-purchase stage for furniture and the rise of the online channel, creating a more omnichannel offer is the right approach for IKEA to take.

IKEA has done especially well in areas where the sector leaders have struggled. Living room seating grew 11%, despite the tough start to 2017 experienced by DFS and ScS among others, while the 4% increase in kitchens has helped it gain ground on B&Q and Homebase/ Bunnings. While the retailer’s low prices and IKEA Reading store drove living room seating, the refresh of all living room departments as part of its ‘Make Room for Life’ campaign supported this category. Cooking and mattresses also built on its strong 2015/16 performance, with cooking up 10% on a 17.9% comparative while mattresses grew by 9% on 18.8%.

IKEA is set to continue this exceptional performance, as the retailer’s strong value credentials appeal to cautious shoppers. The home retailer will also benefit from its new Sheffield store, which opened in September 2017, and two new stores which will open by the end of 2018 (one in Greenwich and the other Exeter), with the aim of doubling its home market share to 15% by 2027. This will be a challenging goal, considering the rapid expansion of value retailers, such as B&M and The Range, and pureplays like Wayfair. To achieve this, IKEA must continue to develop online, especially in homewares with accelerating the roll out of click & collect to all stores or working with a pick up, drop-off partner, such as Collect +, two available options. IKEA must also reiterate its greater value through superior quality and better design.

Source: GlobalData 14 Nov 2017

November 2017

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