Ikea Planning To Close Its Coventry City Centre Store, Over 350 Jobs At Stake

Ikea has announced its plan to close Coventry city centre store in summer of the year 2020. Since entering in British market thirty-three years back, this is the first time this Swedish retail chain company, will be shutting down one of its big United Kingdom sites. The Coventry city centre store had cost around £35 million for building and was opened in the year 2007, not only that it is among one of the twenty-two “big-box stores” of the company in the United Kingdom.

According to the company, it is planning to close the west midlands store, which is now a loss-making site for the company mainly due to the high-level operating expenditures and repeatedly changing shopping habits of the consumers, which had forced the company to close the shop bringing around three-fifty jobs at risk. The company further stated that it was becoming expensive to operate a 7-story Coventry store, which had largely been ignored by consumers, who chose more conventional retail park Ikeas or online purchasing. The visitor numbers had gone down significantly at the store, creating continuous losses from the shop.

The property consultants Altus Group has reportedly said that closing of Ikea store could knock a hole in the city’s finances because the store is its 11th largest business rates payer and fetching over nearly £1 million in a year.

The IKEA closure is the most recent setback to the UK’s retail sector and high streets. Recently, the Centre for Retail Research reported that over 140,000 jobs in the retail industry were lost in the year 2019 and over 10,000 jobs have been cut since the beginning of the new year. The retailers in the country have been struck by many reasons ranging from more significant expenditures, involving minimum wages & business rates, and a substantial change to online purchasing. The toy shop chain Hawkin’s Bazaar and department store group Beales are the most recent to have gone into administration, leading to thousands of job losses.

Ikea stated that it would be consulting the Coventry city-centre store’s little over 350 staffs who would be impacted by the closure. The company also made it clear that they want to retain employees as many as possible in the company and would also try to support Coventry workforce with “finding a future” at its stores near about areas of north-west Nottingham and Birmingham.

The company, which is renowned for its vast, out of town furniture stores where customers can purchase inexpensive ready to pick-up flatpack furniture, has said that it remains optimistic to growth in the UK.

For innovation, Ikea had spent a lot of money in its online store and launched smaller, inner-city stores which help the customers to preview the range and take away the orders on the same day. Ikea stated that it would establish a fresh online collection centre for customers in Coventry. In the first month of 2020, the company had purchased the Kings Mall, a shopping centre at Hammersmith in west London. The company is planning to redevelop the mall and is reportedly looking for other malls in the United Kingdom. The group owns around 44 self-built across the globe. Towards the end of the last year, the company stated that it had boosted its United Kingdom property team to harness the advantages of bargain prices in UK’s crisis-hit retail property.

Overview of Ikea

IKEA was founded by Ingvar Kamprad in the year 1943, as a small Swedish mail-orders collection business. The company has now become an international furnishing brand. It is one of the world’s leading retailer in the home improvement products, as well as in the furniture division. The company is in the business of production & designing furniture and household products and sells entire products via its own stores, or franchisee stores throughout the world.

The company has various type of products in its different segments such as Kitchenware & tableware, Carpets, Beds & mattresses, Bathroom Products, Baby & Children, Mats & flooring, Decoration, Food & beverages, Furniture, Home electronics, Home improvement, Pots & Plants, Kitchen & appliances, Laundry & cleaning, Leisure & Travel, Lighting, Outdoor products, Seasonal products, storage & organisation, Safety products, textiles as well as winter holiday products. The company also helps the customers to offers room decoration ideas, in which it delivers essential services like living room and bedroom enhancements and home interior design ideas.

The company started its journey in the United Kingdom in the year 1987 with a store in Warrington, Cheshire. It started representing the increasing affluence of UK’s middle classes in the late 1980s and initial part of 1990s.

Ikea Financial Performance For The Year Ending 31st August 2019

On 08th November 2019, the company announced its financial performance for the year ending 31st August 2019.

The financial year 2019 has been a successful year for the company, where its retail sales revenue increased by 6.5 per cent to €41.3 billion as compared to the previous year. It includes sales of food, services and products for the company customers.

The Retail sales growth signifies optimistic results for the overall Group, which comprises the IKEA range development, franchisor, certain industrial activities and supply. Inter IKEA Group achieved a net revenue of €1.5 billion and total sales revenues of €25.3 billion in the financial year 2019.

Inter IKEA Group CFO Martin Van Dam stated that in the year 2019, the company invested over €175 million for the development of the material, product and retail innovations to improve IKEA growth in the years to come. One of such new launches was IKEA Home Smart range. The other launches during the financial year include speakers remote, controls, smart blinds and outlets. As per the company report, IKEA shoppers purchased over 5 million Home smart products in the financial year 2019. The Group’s performance remained steady in the financial year 2019, despite the pressure on the investments, gross margin on product range and in the customer experience.

The company further stated that the additional investments were used to develop more sustainable materials and products during the year 2019, which includes low-impact glue gum that can help to decrease the total IKEA climate footprint by nearly 6 per cent. The other introduction was the expansion in the range of plant-based food options. The customers consumed over 10 million veggie hotdogs in the financial year 2019. However, in February 2020, some of the company selected markets will launch a new product no-meat protein, i.e. “meat” ball.

To make shopping more hassle-free and to IKEA products more affordable, the Inter IKEA Group has worked very closely and efficiently with franchisees. The retail sales of e-commerce increased by 43 per cent in the financial year 2019 as compared to the financial year 2018, albeit with an additional expenditure for logistics and packaging.