Ikea's UK sales fall 10% but online surges
Swedish company Ikea, known for its budget, flat-packed furniture, said total sales in the UK fell by 10.2% to £1.9bn ($2.7bn) for the financial year ending 31 August 2020 as a result of the pandemic, but online sales were a bright spot.
It said that while sales were down because its many of its stores were closed for up to three months of the financial year, online sales surged 31% year-on-year. They now represent 27% of its total UK sales, compared to 10% in the previous year.
Ikea UK, owned by Ingka Group, noted that it was quick to respond to the challenges posed by COVID-19.
For instance, it included Click and Collect across all its stores and also used them as local fulfilment and distribution centres to increase capacity and reduce delivery lead times.
It launched remote kitchen, wardrobe and living room storage planning appointments, and introduced a new tiered pricing structure for orders, based on size and speed of delivery, starting from £2.
Ikea UK is also planning to launch its "buy back" scheme after retail stores are allowed to reopen. The company said the scheme will give consumers the chance to return used items against an Ikea refund card. Customers will be asked to bring their assembled Ikea furniture to a nearby store where it will be assessed for a refund card value. The furniture then will be resold via Ikea's bargain counter.
The start of the buy back scheme was postponed in November due to the pandemic.
Peter Jelkeby, country retail manager at Ikea UK and Ireland, noted that "2020 was the year that changed everything… changes made over the past year will be vital for securing the future success of our business."
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Ikea also said that despite stores being closed it continued to to pay 100% of salaries and launched a ‘COVID-19 Emergency Fund’ for staff.
It also transformed its of car parks in Wembley and Gateshead into drive through test centres so NHS staff could be tested for the virus.
In December, Ikea was the latest firm to be hit by chaos at British ports, as angry customers complained of late or cancelled orders on social media.
A perfect storm of economies reopening after lockdown, Brexit stockpiling and the rush to buy Christmas presents presented a logjam for the homeware giant as it also dealt with a surge of customers adapting to home working in recent months.
The retail sector has had to adapt to survive in the times of a surge in online shopping, a trend that had already begun before the pandemic.
Early last year, Ikea confirmed plans to shut one of its large UK stores in Coventry for the first time in its 33-year history in the country because it was too expensive to keep operating and had lost customers to retail parks and online shopping.
“The changing behaviour of customers in the area who prefer to shop in retail parks and online has resulted in visitor numbers being substantially lower than expected and continuing to decrease over time," it had said at the time.
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