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Summary
- Ikea reported its UK arm’s total annual sales fell by 10.2 per cent touching £1.9 billion (US $2.7 billion) for the financial year ending in August 2020 due to the pandemic.
- The company’s pre-tax losses increased to £33 million in FY 2020 from £2.5 million in FY 2019.
- Its online sales jumped by almost 31 per cent on a year-on-year basis and accounted for 27 per cent of the total UK sales mix.
Sweden-based furniture retail giant Ikea reported a dip in its total UK annual sales by 10.2 per cent due to the pandemic-related uncertainties. The company’s UK sales touched £1.9 billion (US $2.7 billion) for the financial year ending 31 August 2020 due to the pandemic, while its online sales experienced a significant jump of almost 31 per cent from the previous year.
Want to know more? Do read: What Does Ikea Have In Store For The United Kingdom Market?
The retail company’s UK arm, owned by the Ingka Group, reported losses to almost £33 million in FY 2020 compared to £2.5 million in the previous year due to its physical stores being shut for three months. The company’s investment in setting up home delivery infrastructure also contributed to the losses.
Adaptation measures
The retail company’s UK business reported online sales now accounted for about 27 per cent of its total sales in the region, comprising of a larger chunk from 10 per cent in 2019. Although, online retail shopping has been on an uptrend within the retail sector for some time, it forced physical stores to adapt faster in the face of the Covid-19 crisis.
Ikea had announced its plans of shutting down its full range Coventry store and two smaller trial London stores in the UK. The stores were shut due to high operating costs and the rise in online stores and retail parks. However, it is currently investing in stores to increase customer appeal to prepare for the re-opening due in April. Ikea also plans to open a store in Hammersmith, West London in autumn this year.
Want to know more? Do read: Ikea Planning To Close Its Coventry City Centre Store, Over 350 Jobs At Stake
Ikea UK incorporated Click-and-Collect options across all stores, and also utilised stores as in-house fulfilment and distribution centres to streamline delivery processes.
On the business process and service offerings front, the company launched several initiatives to adapt to changing consumer behaviour, such as, remote kitchen services, introduction of a tier-based order pricing mechanism, starting from £2, pricing was based on factors such as delivery speed and size, and appointment-based closet furniture and living room storage planning
In addition to business process changes, the company launched a COVID-19 Emergency Fund for its employees and paid its workers 100 per cent of their salaries even while stores were shut. It had also converted its Wembley and Gateshead stores’ car parks into drive through testing centres.
