IKEA's Strategy For Growth Proves Effective

By Kara Murphy, contributing writer, Integrated Solutions For Retailers

Stockholm company will continue to focus on superstores, despite uptick in website visits

Visits to ikea.com increased by about 20 percent in fiscal year 2013 and visits to its famous superstores were slightly down. Even so, IKEA’s officials expect its brick-and-mortar stores to remain the cornerstone of the company’s ambitious growth plan, which calls for reaching sales of $68.4 billion by 2020. Fiscal year 2013 saw sales of $38.6 billion, a 3.2 percent increase over the previous year.

While any increase is a success — given that other key markets like Europe have stagnated — the company will need to keep its focus on building new stores in order to meet its 2020 goal.

The company plans to do that, despite the increased customer interest in ikea.com.

“I think that in 2020 the absolute majority of sales will still be in our stores,” said Peter Agnefjäll, the company’s new chief executive, in an interview with the Wall Street Journal. “We see that Internet and e-commerce is growing, but at the same time, when buying a new bed, a lot of people want to try it first, and if you buy a sofa you may want to touch the fabric.”

The company’s store count has almost doubled since 2004 as the company has expanded into North America and other emerging markets. It has plans to add an additional 10 stores in fiscal 2014.

Even despite its growth, the company has said it doesn’t feel a need to compete online with the same focus as companies such as Wal-Mart, which is looking to take on Amazon. “For us, it is not about maximizing growth in a short period of time, but about growing in a way that includes the entire value chain.”

IKEA’s slower approach appears to be working. In the 2013 fiscal year the company increased market share in almost every market that it exists.

In addition the Wall Street Journal reported, IKEA, which has retail operations in 26 countries:

• Recorded a 3.1 percent rise in net profit;
• Reduced prices by 0.2 percent, despite inflation;
• Added three countries to its e-commerce, taking its total to 13;
• Built five new stores, including two in China.

During the same time period, IKEA recorded 1.3 billion visits to its website, and its catalog app was downloaded almost 10 million times.

But visits to physical stores declined by 1 percent, despite the five new stores.

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