As the coronavirus pandemic continues to affect consumer behavior, Ikea is seeing a boost in sales due to an increased focus on improving homes. The world’s largest furniture retailer believes this change in consumer sentiment will continue, prompting the company to shift its strategy towards e-commerce and smaller inner-city stores.

Inter IKEA, the brand owner and franchisor of Ikea, plans to open around 50 new stores this year, including test formats. This is a significant increase compared to the approximately 30 stores that opened last year. The majority of these new stores will be located in inner-city areas, reflecting the evolving shopping habits of consumers.

In the year through August, Ikea’s retail sales, including both in-store and online sales, decreased by 4% to 39.6 billion euros ($36 billion). However, comparable sales remained unchanged when temporary store closures were excluded. The CEO of Inter IKEA, Jon Abrahamsson Ring, revealed that full-year sales exceeded expectations during the height of the crisis and he predicts a return to growth in the current year. He believes that the increased interest in improving one’s home will be a lasting trend.

During the pandemic, demand for Ikea’s lowest-priced ranges surged, accounting for 60% of sales from May to August, compared to the usual 45%. The uncertain times caused by the pandemic have made low prices more relevant to consumers. E-commerce sales also saw significant growth, surging by 45% and accounting for 15% of total retail sales. Even after stores reopened following temporary closures, online sales remained strong.

Ingka Group, the main Ikea franchisee, reported a 4% decrease in sales to 35.2 billion euros ($40.9 billion) across its 378 stores. However, online sales performed exceptionally well with a 60% increase, making up 18% of total turnover. The CEO of Ingka, Jesper Brodin, noted that recent sales have been up 7-8% year-on-year. He acknowledged that the pandemic has significantly influenced interest in life at home, surpassing their initial expectations. While the initial demand was primarily focused on office and cooking products, interest has now expanded across the entire range of Ikea’s offerings.

Overall, the Covid-19 pandemic has sparked a renewed interest in improving living spaces and creating a better home environment. Ikea has successfully adapted to this trend by expanding its e-commerce capabilities and focusing on smaller-format stores in urban areas. With the expectation that this newfound interest in home improvement will persist, Ikea is well-positioned to capitalize on this shift in consumer behavior and continue to experience growth in sales in the coming years.

Useful links:
1. Ikea Official Website
2. Statista – Furniture Retail