Price reductions help Ikea to assemble big growth in sales

SWEDISH retail giant Ikea said it has achieved its “biggest growth” in sales in six years, after boosting its online offering and reducing prices.

The business recorded a turnover of £1.23bn in the UK in the year to the end of August 2012, a 6.3 per cent like-for-like increase.

Ikea, which has a store in Leeds, said that market share grew by 0.4 per cent to 6.8 per cent in what has been a tough environment for retail. Total sales in the UK home furnishing sector dropped 2.2 per cent.

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A spokeswoman from Ikea declined to comment on profitability.

Ikea said it invested a total of £30m over the course of the year to improve its stores, as well as spending £4.7m on lowering the cost of in-store home delivery.

Carole Reddish, IKEA UK and Ireland acting country manager, said: “In these challenging times it is very humbling that our efforts to give customers the best value for money home furnishings and inspiring solutions for their life at home has resulted in such strong growth.”

In May, the Yorkshire Post reported that Ikea was understood to be considering a site close to the Meadowhall shopping centre in Sheffield for a new store.

A spokesman for the company said at the time: “Ikea has been identifying sites around the country for potential stores including Sheffield.” Yesterday, an Ikea spokesman said: “There is no further update. We are still actively looking for sites up and down the country.”

As well as having a store in Leeds, the retailer has a distribution site in Doncaster, which is run by external service provider BLG.

Meanwhile, Ikea’s year end results showed that online like-for-like sales increased by 24.9 per cent in the year, which it attributed to the introduction of an extra 1,500 products to its online offering.

The year also marked the launch of a mobile friendly website and the development of mobile apps.

Ikea said it performed well in the bedrooms product category, with an increase in like-for-like sales of 16.7 per cent. It said this came after a £2.5m investment to redesign the bedroom showrooms in all UK stores and a £15m investment to reduce the price of what it dubs its “most popular” bedroom storage range, PAX.

Ikea said it increased its bedroom category market share by 0.8 per cent, achieving a total share of 8.3 per cent. And the firm said it reduced prices by a total of 0.6 per cent of total turnover, which it said continues “a long tradition of making home furnishings more affordable to consumers, particularly in a period when family’s disposable income budgets were decreasing”.

Ms Reddish said: “Despite 2012 being a tough year for retail, we listened carefully to what our customers were telling us and invested heavily in improvements to the shopping experience.

“We know that we still have a lot of work ahead to ensure that all who shop with Ikea, both in-store and online, have a great shopping experience.

“In the coming year we have an ambition to revitalise our brand identity in the UK.

“We will continue to show customers that we understand the challenges they face everyday in their homes, connecting our value for money offer with their needs and their dreams.

“We will also provide thousands of practical ideas, solutions and points of inspiration that will give loyal customers something new on every visit and will encourage new customers to consider Ikea for the first time.”

The retailer said in 2012 it invested a total of £3.3m installing 38,000 solar PV panels on the roofs of its stores up and down the country. In October, Ikea announced its intention to convert all lighting in its range to energy-saving LED by 2016.

The story of IKEA began in 1943 in the small village of Agunnaryd, Sweden, when Ingvar Kamprad, the founder, was just 17. Since then, the IKEA Group has grown into a global retail brand with 131,000 employees in 41 countries. Ikea has been granted planning consent from West Berkshire Council to build its 19th store in the UK.