IKEA Canada reports revenue drop as e-commerce sales surge 42%
BURLINGTON, Ontario – IKEA Canada solidified its position as this country’s second largest furniture store chain, announcing revenue for its most recent fiscal year was $2.32 billion. While this was an 8.7% drop from the prior year, the retailer noted online sales saw a significant lift, jumping 41.9% to $370.7 million.
A subsidiary of the global home furnishings retailer based in the Netherlands; IKEA Canada’s last fiscal year ended 31 August 2020. The details of its performance were released in its 2020 Summary Report.
The e-commerce share of total revenue climbed to 16.0% for the 2020 fiscal year from prior year’s 10.3% – an uptick not uncommon among the larger merchants in Canada’s furniture and home furnishings store segment.
The retailer also noted visits to its web site – IKEA.ca – and the IKEA app increased 52% to 178.5 million. Indeed, the company claimed the app has been downloaded more than 700,000 times since its was launched.
The publicly Leon’s Furniture Limited (LFL) remains the largest furniture store retailer in the country with annual sales in 2019 of $2.73 billion and a national market share of 21.5%, based on data published by Statistics Canada. IKEA’s national market share fell slightly to 21.1%, although it operates considerably fewer brick-and-mortar stores across the country.
“At IKEA, we are driven by a simple, yet powerful vision to create a better everyday life at home for the many and this has never been more meaningful than it is today,” IKEA Canada chief executive officer Michael Ward said in a statement “As we close one of the most extraordinary years in recent history, I am proud to reflect on the resilience of our business, how we led from our purpose and the togetherness, entrepreneurship and leadership of our co-workers across the country.”
He noted that at the peak of the pandemic, all 14 IKEA Canada stores were closed for nearly three months, prompting a shift to online selling. To adapt, Ward said IKEA Canada stores were transformed into fulfillment hubs, leveraging each one’s logistics capabilities to fulfill local orders, thereby increasing capacities, reducing lead times and lowering its delivery carbon footprint.
They also introduced contactless curbside order pick-up, enhanced its remote planning and design service and introduced a new number of affordable pick-up points in both Toronto and Montreal.
Ward, who also serves as the company’s chief sustainability officer, said the retailer was proud it maintained the employment of its entire 7,900-member workforce throughout the pandemic’s temporary store closures. It was also able to commit $2.3 million in emergency relief for the communities it lives in, including donating $350,000 in food for to food banks and some 240,000 N95 masks to healthcare facilities.
As it is essentially a privately held company, the retailer doesn’t provide insight into its furniture sales mix, however, IKEA spokesperson Kristin Newbigging told Home Goods Online there was one product category that stood out.
“Unsurprisingly to many Canadians who are now newly working from home, we saw significant increases in both sales and demand for our home office category, seeing lifts from 5% to nearly 50% across categories including home office desks, chairs and accessories,” she said. “There are now 631,800 more desks in Canadians’ homes, including 45,000 sit-stand solutions, which help support a healthy and sustainable workspace solution.”
Despite this, she acknowledged IKEA suffered setbacks during the first wave of the pandemic, in line with the experiences of other retailers.
“Across the board, we saw a drop in larger big ticket purchases during the peak of the pandemic, with a focus instead on affordable home accessories and specific categories like home office, which reflected the trends we saw in life at home,” she told HGO. “We’ve seen this pick up in fiscal year 2021, with many Canadians now looking to take on home projects or renovations during their extended time at home.”
In a typical year, IKEA Canada launches four new furniture collections. During the most recent fiscal year, it debuted eight unique collections, including its collaboration with Virgil Abloh – called MARKERAD – which sold out in less than a week last November. Newbigging said IKEA has about 1,000 home furnishing suppliers in 50 markets around the globe. The top supplier countries are China, Poland, Italy, Lithuania, Sweden and Germany. The company doesn’t currently source any of its upholstery offerings from Canada.
Looking ahead, Ward said IKEA is working to become faster and more agile to meet the needs of its customers. “We will transform our business to be ever more accessible to our customers no matter how they choose to shop with us, we will become more affordable across our total offer including services and we will take a leap when it comes to enabling even more Canadians to live a more sustainable life at home.”
In the coming year, IKEA will accelerate efforts in Canada to become fully circular and climate positive by 2030. It plans to extend the life of second-hand furniture through its sell-back program and to complement the growth of its online business IKEA will aim for 100% of home deliveries across Canada to be made by EV or other zero-emission transportation over the next five years.
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