Wednesday , September 28 2022

Fewer dumplings sold – but Ikea is delivering


According to Swedish executive Lena Herder, visitor ceilings for 500 people in stores sized for thousands of customers, strict restrictions in restaurants and closed borders were still difficult for the furniture giant. The previous fiscal year, which ended on August 31, was the first full year marked by the pandemic.

“Of course it has had a huge impact on Ikea and negatively impacted our sales,” he says.

Indoor restaurants

At the same time, Ikea Sweden achieved sales of SEK 18 billion, the same as the previous year. One explanation, according to Lena Herder, is that more people spend a lot more time at home and focus more on interior design. Sales of home furniture, especially kitchen, home office, bedroom, wardrobe and home textiles, increased.

– The fact that we sold more home furnishings compensated for the loss in restaurants and, for example, the lost border trade between Haparanda and Finland, where the borders were closed during the fiscal year, says Lena Herder.

For Ikea Haparanda, cross-border trade normally accounts for 50 percent of sales. And in a normal year, sales at all of Ikea’s restaurants account for 4-5 percent of total sales.

– There were times when we were completely closed in restaurants now, there were times when there was only one person per table with a distance of two meters, so it had a huge impact. It was almost like keeping restaurants closed, says Lena Herder.

increasing online

When visits to department stores were limited, customers found the network instead. Online visits increased from 128 million a year ago to 145 million. Like others, Ikea had to rapidly expand the capacity of existing solutions and develop new services to reach customers.

Visits to Ikea’s website increased sharply during the fiscal year, and online sales were up 68 percent.

– Online sales now account for 20 percent of the total. This is a share that has already increased 40 percent in the previous year. Reza Shomali, head of development at Ikea Sweden, says there has been really strong growth in growth.

Global bottlenecks

But Ikea, like many others, is grappling with transportation problems, raw material prices and rising prices, as well as global bottlenecks that are disrupting its supply chains.

The supply of goods is often not as stable as it is, and customers in department stores occasionally meet in some places more or less empty shelves. To fix the disruptions, Ikea built new warehouses, bought containers, chartered ships and reorganized some of the production, among other things.

– We are doing everything we can to mitigate its effects. It is not a product area that we have a problem with, but it is quite common and varies over time. However, we have more than 10,000 products in our range, and although there are shortcomings in some areas, we have a lot in total, says Lena Herder.

Currently, it does not see that Ikea will need to raise the price of any goods as a result of the problems.

– We haven’t needed any price increase yet. On the contrary, we have an ongoing price reduction. We’ll see how it develops over time.

Ikea’s sales development 2021

In the most recent fiscal year (September 1, 2020 – August 31, 2021), Ikea Sweden achieved sales of SEK 18 billion. So just like the previous year.

The pandemic meant a real slowdown in the company’s growth rate. In fiscal year 18/19, Ikea Sweden increased its sales by 6 percent year on year to SEK 17.8 billion. On 19/20, as the last six months were marked by a pandemic, sales were up 1 percent.

Globally, Ikea increased its sales within the Ingka Group by 6.3 percent in the most recent fiscal year to €37.4 billion. It also means an increase in sales compared to 2018/19, when sales were €36.7 billion, ie pre-pandemic.

Source: Ikea Sweden, Ingka Group

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