IKEA Canada sales up 8%
BURLINGTON, Ontario – IKEA Canada said sales for its fiscal year ending 31 August 2018 were $2.39 billion, an increase of 8% over its previous year. About 10% of revenue was generated by its e-commerce activities as its web site hosted 104 million visitors.
A private company that is wholly-owned by the IKEA Group – which is headquartered in the Netherlands and believed to be the world’s largest furniture and home furnishings retailer - it offers a snapshot into its performance each year with the publication of its Summary Report. For 2018, the report was published digitally.
In a statement, IKEA Canada said e-commerce sales were $241.5 million, an uptick of 18.8% over its 2017 fiscal year. Food sales grew 13% to $102 million, accounting for about 4.4% of total revenue.
E-commerce accounted for 10.1% of total revenues – substantially higher than the average for both furniture stores and home furnishings stores in this country that currently hovers in the 2.5% range.
Other than food, it didn’t break down sales by product category although Statistics Canada has classified IKEA Canada as a furniture store, which means at least 51% of its annual revenue are from sales of furniture and mattresses. Statistics Canada figures show furniture store sales for the trailing 12 months ending 31 August 2018 were $11.6 billion, giving IKEA a market share of roughly 20.6% – a little higher than the 19% it recorded for its 2017 year.
IKEA remains a solid second behind Leon’s Furniture Limited – the Toronto-based parent of Leon’s and The Brick – whose market share is estimated at 23% based on system-wide revenue of $2.64 billion for the 2017 calendar year – up from 22.8% for the prior year.
“We’ve accomplished a lot in one year at IKEA Canada. We opened two new stores in Halifax and Quebec City, grew to 6,500 dedicated co-workers, introduced new ways to shop and strengthened our commitments to sustainability and diversity and inclusion,” IKEA Canada president Marsha Smith said. “We are proud of our growth this year, but we know the retail landscape is changing faster than ever. As we look toward the future, we’ll transform our business to create a more accessible and convenient shopping experience for our customers.”
During this fiscal year, IKEA’s store count grew to 14 with the opening of two full-size stores in Halifax and Quebec City. The company also reported it hosted some 30 million people in store, an increase of 6.9%.
Smith said amid a rapidly-changing retail landscape, IKEA is transforming its business model, exploring new formats, optimising its distribution networks and enhancing its digital tools and service offering. Earlier this year, it opened its first distribution facility in Western Canada.
The company also invested in new ways to shop – including four new collection points in Ontario and Quebec – and expanded its service offer with the launch of TaskRabbit in-home assembly. To create a more flexible shopping experience, IKEA introduced a new 365-day return policy.
However, the company has backed away from plans to open a full-size store in London, Ontario in 2019. It was part of the expansion plan announced in 2015 whose goal was to double IKEA’s sales and store count over a ten-year period ending in 2025. Smith told the Financial Post the plan needs to be re-evaluated within the current retail climate.
“I think it would be very irresponsible that we just continue with that plan without constantly re-evaluating,” she said. “Life in retail is changing all around us. Consumer expectation is changing. It certainly was not anything to do with the area. It’s more about what the consumers want.”
In keeping with it’s environmentally-friendly policy initiatives, the company recently committed to phasing out all single-use plastics from its range and food services by 2020. The retailer also announced its ambition to become a fully circular business by 2030, introducing new programs to help customers extend the life of IKEA products.
Advancing its renewable energy program, IKEA installed solar panels at Edmonton and Calgary stores. Today, IKEA Canada produces approximately four times as much power as it consumes through two windfarms in Alberta, solar installations and geothermal energy sources.
With the goal to be one of Canada’s top employers, the company implemented guaranteed hours and four-week scheduling, so co-workers can better plan their lives. Diversity continued to be a focus, with a strong emphasis on gender balance – 52% of co-workers and 51% of managers are women.
To support a more gender-equal world, IKEA partnered with the Canadian Women’s Foundation to provide needed home furnishings to women’s organizations and joined a private-sector gender equality leadership coalition. The company also launched a national refugee employment initiative, helping refugees join the workforce, develop new skills and integrate into local communities. With the belief that equality is at the heart of human rights, IKEA raised the Pride flag at stores across Canada in honour of IDAHOT and saw co-workers walk in Pride celebrations nationwide.
“With increasing urbanization, new technology and digitalisation, these are exciting times of change for IKEA,” said Smith. “As we build the IKEA of tomorrow, the driving vision of our late founder Ingvar Kamprad – to create a better everyday life for the many people – will continue to live on in everything we do.”