IKEA UK announces annual sales of £1.41bn and plans to invest £27m in lowering prices

Home furnishing retailer IKEA has announced total sales of £1.41bn in the UK for the financial year ending 31 August 2014, an increase of 11.3% on the previous year.

Following an ambitious pledge last year by UK country retail manager, Gillian Drakeford, to double turnover and market share by 2020, this year’s double-digit growth shows strong movement towards this reality, with market share also growing by 0.5% to 7.1%, the retailer reports.

Commenting on the results Drakeford said: “We are delighted to report such positive growth here in the UK for the third year running. What is really encouraging is that this growth has come from our existing business, not relying on a bricks and mortar expansion programme. Over the past year we have been focused on really understanding how our customers live at home here in the UK, and presenting our unique product range in a relevant and inspiring way in each of our stores. We have continued to invest in making it easier for our customers to shop with us and are thrilled that these investments have resulted in another year of fantastic growth.”

Investing in the in-store shopping experience

Over the last three years, a number of investments have been made to improve the in-store shopping experience for customers and to make IKEA’s home furnishing offer more relevant to local customers.

Following a £4m investment in 2013, the children’s and living room departments continued to see growth in 2014, with sales rising by 17% and 11% respectively.

In February 2014, IKEA launched a new kitchen system, METOD, a modular system claimed to offer unlimited design options. An £8m investment was made to introduce the new kitchen concept, including rebuilding kitchen departments in all stores and training co-workers to deliver a new, more convenient service to customers.

Over the past year bedrooms and bathroom departments have been refreshed, in preparation for a key focus in these areas this financial year. This investment includes the addition of UK standard bed, mattress and linen sizes to the existing bedroom range. An immediate increase of 21% for bathrooms and 10% for bedrooms has already been seen, in comparison to financial year 2013, said IKEA.

A further 250 visits were made to customers’ homes in the areas around our stores to understand how people are living in their homes, their challenges, needs and dreams. The knowledge gained in these home visits was used to redesign the display room-sets in the kitchen, bedroom and bathrooms departments, showcasing the IKEA range with local customer relevance.

Online growth continues

IKEA said it continues to see strong growth in online sales, with a 26.8% sales uplift in 2014, following double digit growth the previous year.

“Our online business continues to be a driver of growth here in the UK and now makes up 10% of our overall sales. We are excited to see that this is not at the expense of our stores, in which we had a 5% increase in visitors over the past year,” said Drakeford.

Helping customers live more sustainably – and save money

A focus over the past year has been enabling British households to live a more sustainable life at home. An investment into the promotion of a range of 300 products designed to help customers save energy, reduce and sort waste, use less water and importantly, save money, saw a 29% uplift in sales of these products over the year.

In September 2013, IKEA launched its affordable residential solar offer in partnership with global solar company Hanergy, which was rolled to all UK stores over the past year. A home solar system can save the average household up to 50% off their energy bills and remains one of the best investments homeowners can make today. To date, IKEA has helped more than 1,300 households save money on their electricity bills by harnessing the power of the sun. Following this successful UK pilot, the residential solar offer will be rolled out to a further eight IKEA markets, including the Netherlands and Switzerland this year.

Looking forward

Drakeford said: “In the next year and beyond, we want to be more accessible to many more people, and better known for what we do well. I believe this will really help us to grow our business further.

“We want to simplify and improve the shopping experience and offer convenience and value for time to our customers. I recognise we have a lot of work to do here, to evolve our business to meet the expectations of all UK consumers, and over the coming year we will be making a number of updates on our way to creating a truly multichannel shopping experience at IKEA.

“Meanwhile, we are continuing to explore expansion opportunities in the UK as we believe our physical stores will be just as important as our digital channels in the future. Today we have secured locations in Reading, Greenwich, Exeter and Sheffield, and additional sites are being considered as part of our plans to be more accessible for our customers.

“We want to be known as a brand that inspires our customers in their everyday lives at home. We all spend a great deal of time and money planning a two week holiday, but pay little attention to the things we do in the other 50 weeks of the year. This is what we’re curious about at IKEA, everyday problems people face at home. We find that it is often the little things that can make a big difference, like getting the kids out of the house on time in the morning. This is what we stand for, this is what sets us apart, and this is the thinking behind our new ‘Wonderful Everyday’ brand campaigns.

“Finally, but not least importantly, this year we will invest £27m to lower prices across our range, the largest investment into lowering prices we’ve ever made in a single year, as we continually look to provide home furnishings to as many people as possible, no matter how much money they have.”