IKEA to make further UK investment as it continues growth strategy

Ingka Group has announced their share of IKEA retail sales of EUR 41.7 billion for the financial year 2023, an increase of 5.7% compared to last year (EUR 39.5 billion in FY22).

Despite external factors such as the pandemic, economic and geopolitical instabilities, Ingka Group remained committed to the IKEA vision of creating a better everyday life for the many people.

Bringing more home furnishing inspiration and accelerating investments into digital and new and existing stores has led to a 7% increase in store visitation and online share to 26% (25% in FY22). Across the fiscal year and in recent weeks, the company has continued to invest in decreasing prices wherever possible and will keep doing so for many products across markets in the coming months.

“Life at home has never been more important and fulfilling people’s needs and dreams will forever be our purpose. Through the year we have continued to invest in the future of our businesses as well in actions to reduce absolute carbon emissions to protect the home we all share, the planet. I’m deeply impressed with how the IKEA colleagues have responded and strengthened the relationship with customer – aiming to deliver to our vision and be a true partner in life at home. I’m optimistic about the future – while preparing for that the journey ahead will continue to be bumpy,” said Jesper Brodin, CEO, Ingka Group.

As IKEA celebrates its 80th birthday, the company is set to create a better IKEA, transforming stores to increase their fulfilment capacities while creating an omnichannel retailer that customers can interact with whenever, however, and wherever they want. Ingka Group opened 60 new locations across the world, with new stores in Copenhagen, Madrid, Rome and San Francisco, as well as plan and order points in Australia, Serbia and Switzerland, to mention a few.

The company also announced that it is accelerating its investment in some of its biggest markets, where more than EUR 4.5 billion will be invested in the US, UK, France, and Spain alone, improving customer experience and delivery services. Earlier this year, Ingka Group also announced the acquisition of Made4net, the next generation leader in retail fulfilment to increase the capacity needed for a successful end-to-end customer experience.

Continued UK Investment  

IKEA UK has announced continued growth, with sales up by 11.9% for the 2023 financial year compared to FY22, generating a turnover of £2.46bn.

Following investment in both physical channels and digital access, the retailer’s omnichannel journey has continued.  In FY23, 38.5% of total sales were made online (35.8% in FY22). As the popularity of online shopping continues to grow, IKEA UK opened a multi-million-pound distribution centre in Dartford, with the capacity to deliver one million orders annually. Enabling faster and more sustainable home deliveries to customers in London and the southeast, the new centre is operated by 100% renewable energy and operates a fleet of electric vehicles to fulfil orders, driving a significant reduction in CO2 emissions. Long-running environmental sustainability initiatives were also the focus of investment, including £4.5 million in EV charging infrastructure to enable 100% zero emissions deliveries by 2025.  

In the northwest, three Plan & Order Points (smaller stores dedicated to kitchen, bedroom, and living room planning) in Aintree, Stockport and Preston have improved access to free planning support for millions. Increasing the retailer’s physical access to its customers continues to remain a priority, with the ambition for further locations in the northwest and beyond set to open in FY24 – in addition to the opening of a new city store on Oxford Street. In all, FY23 saw 1m new visits to IKEA UK stores – an uplift of 2.2%.     

To meet customers in new, more locally accessible ways, a range of new services were also introduced including 15 new external locker pick-up points in collaboration with Shift (bringing the total to 24), and the trial of 12 mobile pick-up points across the UK in collaboration with Tesco.   

In the digital space, IKEA has increased capacity and capabilities to meet its customers remotely. Be that online or over the phone, customers can access the same home furnishing expertise available instore, which has resulted in a 24% year-on-year growth in remote sales.  

Peter Jelkeby, CEO and Chief Sustainability Officer, IKEA UK & Ireland, said: “Over the past 80 years, we have developed our offering, value chain and sales channels, supporting our vision to create a better everyday life for the many people. As we look back on the last year and forward to the next 80, we constantly ask ourselves, how what we do today can be done better tomorrow. Over the past year, we have made significant investments on this journey to create a more accessible, affordable and sustainable IKEA, to meet the evolving needs of UK households.” 

With discretionary spend challenged and people spending more time at home, a look back at the products most in demand tells an interesting story of priorities within it. 

With many customers continuing to work remotely, demand for a more organised life was clear. Sales of IKEA’s highly adaptable PAX and KOMPLEMENT wardrobe systems increased by 49% and 39% respectively, with sales of the modular and customisable BESTÅ storage system growing by 25%.    

In an acknowledgement of their ability to help save money and create a more sustainable life at home, IKEA’s ‘People and Planet Positive’ range also performed well. In FY23, sales of PPP products increased by 42% on the previous year, representing almost a third (31.8%) of overall sales for FY23, compared to a 24.6% share in FY22. Food waste was a key priority for customers, with sales of IKEA’s 365+ food containers increasing by 41%, as KORKEN storage jars and reusable bottle purchases grew by 23%.  

As customers look to enhance their quality of life at home, health and wellness trends also impacted purchases. The last 12 months saw the sales of air purifiers almost double (+88%) compared to the previous year. The UPPÄTVIND air purifier, which came onto the market in October 2022, priced at £29 was the clear bestseller.   

Jelkeby continues: “Despite economic and geopolitical instabilities, we remain committed to making a positive difference in our customers’ lives; especially for those with the thinnest wallets. Knowing that our customers continue to navigate a cost-of-living crisis, we absorbed significant cost increases to mitigate price rises as much as possible, investing in promotions, special offers, and, for the first time, an Easter Sale. As we see supply chain costs start to ease, we have a clear commitment to lowering prices accordingly – ensuring we remain firmly on the side of the many people.”  

IKEA UK also continued its commitment to support employees during the cost-of-living crisis. A £12m support package was rolled out across the financial year, and salaries were up 6% on average in January 2023 in a move that matched new Living Wage Foundation rates. Co-worker incentives such as travel season ticket discounts and free food options continued throughout the year and co-workers’ discount rate doubled (from 15% to 30%) across a range of more than 2,000 People & Planet Positive items.  

Jelkeby concludes: “As we look back on a strong, though challenging year, I’m incredibly proud of our co-workers’ dedication and efforts. With our strong culture and performance mindset, we have a clear road ahead of us – to assemble a better future, together, by continuing to adapt, innovate and transform; meeting the needs of both people and the planet in the years to come.”  

In addition, the company is rolling out new features on IKEA Kreativ, an AI and computer vision technology that helps customers visualize their home furnishing and dreams in 3D. The company is implementing sustainable shops and circular hubs in each of its stores to support the many to live a more sustainable life at home by using less energy and water, reducing waste and single use, as well as inspire more people to repair, resell, recycle, and care for products with both take-back, second hand and the selling of spare parts.

“More people than ever before have access to IKEA products and services, and we will keep working closer with our customers to reach the many people in both physical and digital meeting points. At the same time, we continue to innovate our retail offer by closely listening to our customers feedback and making sure that they get what they want the most – convenient shopping experience, good value for money, and long-lasting quality products to have a more pleasant and sustainable life at home. This remains our way forward,” said Tolga Öncü, Ingka Retail Manager, Ingka Group.

While Ingka Group continues to grow and perform, the constant pace of retail transformation will continue and is impacting the business. “This requires that we constantly look into how we can strengthen our businesses and secure we are financially fit for generations to come,” continues Jesper Brodin, CEO, Ingka Group.

Ingka Group also continued its investments into sustainability and contribute to the IKEA goal of becoming climate positive by reducing more greenhouse gas emissions than the total value chain emits by 2030, while growing the IKEA business. Across the years the company has committed to invest EUR 6.5 billion into renewable energy where close to EUR 4 billion have already been invested. At the same time, the company is expanding its EV fleet and allowing for a quarter of all home deliveries to be now done with zero emission vehicles.

The company also committed to offer plant-based food at the same or lower price than the meat-based alternatives in all its markets, making more sustainable options available and further supporting the transition to net-zero.

Inter IKEA Systems B.V., which is the owner of the IKEA concept and the worldwide IKEA franchisor, today announced total IKEA retail sales of EUR 47.6 billion across all 12 groups of franchisees, where Ingka Group represents close to 90% of the total sales.

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