Executive Briefings

Ikea Discovers the Internet - Forges Ahead Into Age of E-commerce

Long a laggard in online sales, the Swedish retailer Ikea, which is privately held, has finally recognized the need for a more robust e-commerce presence.

Ikea Discovers the Internet – Forges Ahead Into Age of E-commerce

After weak earnings growth in its last fiscal year, the world's largest furniture retailer wants to make 90 percent of its products available online, up from its current 70 percent. Ikea has 315 stores in 27 countries, and 40 in the United States, and has made its annual catalog and its mammoth stores the focus of its marketing rather than the Web.

"We weren't one of the early adapters, but we've matured in our thinking about it," Peter Agnefjall, Ikea's CEO told The New York Times. "We realized this is not a trend, it's a megashift."

While sales grew 5.9 percent in 2014 over the prior year overall, and U.S. same-store sales growth was up 4.2 percent, e-commerce sales rose 35 percent. Ikea is investing in its shipment services, and made 40 percent more home deliveries in the U.S. last year, according to the retailer.

Meanwhile net profit rose 0.4 percent, down from 3 percent in 2013 and 8 percent in 2012. The results were affected by higher wage costs, price reductions and new employee programs, according to the Times.

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After weak earnings growth in its last fiscal year, the world's largest furniture retailer wants to make 90 percent of its products available online, up from its current 70 percent. Ikea has 315 stores in 27 countries, and 40 in the United States, and has made its annual catalog and its mammoth stores the focus of its marketing rather than the Web.

"We weren't one of the early adapters, but we've matured in our thinking about it," Peter Agnefjall, Ikea's CEO told The New York Times. "We realized this is not a trend, it's a megashift."

While sales grew 5.9 percent in 2014 over the prior year overall, and U.S. same-store sales growth was up 4.2 percent, e-commerce sales rose 35 percent. Ikea is investing in its shipment services, and made 40 percent more home deliveries in the U.S. last year, according to the retailer.

Meanwhile net profit rose 0.4 percent, down from 3 percent in 2013 and 8 percent in 2012. The results were affected by higher wage costs, price reductions and new employee programs, according to the Times.

Read Full Article

Ikea Discovers the Internet – Forges Ahead Into Age of E-commerce