Ikea brushes off ‘challenging’ market to notch up UK sales hike

Soaring demand for products that save energy and cut down on waste has helped flat pack furniture giant Ikea brush off a “challenging” retail market to report a hike in annual sales.

The Swedish retailer – which has 22 stores and employs 11,181 staff in the UK – said British sales jumped 8% to reach £2.1 billion in the year to August 31.

It saw its share of the home furnishings market rise to 9%, up from 8.4% a year earlier, as the group’s products resonated with consumers keen to slash waste and one-use disposable plastic.

Ikea said sales of lunchboxes for preserving leftovers surged by 127%, with a 55% hike for reusable water bottles and 15% increase for recycling bins.

The group also said its annual sales performance was boosted by a surge in online sales, with 224 million visits to its website over the year and e-commerce now accounting for 19% of all sales.

Peter Jelkeby, Ikea country retail manager for the UK and Ireland, said: “Despite a challenging retail environment, Ikea has seen another year of strong sales growth as we continue the transformation of our business.

“We know that people’s shopping habits and expectations are changing, so continued investments in our shopping experience, our people and in adapting our operations to ensure we become a fully circular business by 2030, will be vital to secure the success of our business in the future.”

Online sales were helped by moves to improve the offering for customers, including a vitual reality app, which helps customers to visualise what Ikea furniture will look like in their homes, as well as an in-store app designed to improve the physical shopping experience.

Ikea has also been investing in its home delivery service, opening two new customer delivery centres in London amid aims to offer 24-hour delivery in the capital and within two days across the rest of the UK by the end of 2019.

Its sustainability drive saw the chain also take action to help cut back on waste internally by axing single-use plastic straws from its restaurants and ensuring 98% of its packaging is now renewable, recyclable or recycled.

And it opened its first sustainable store in Greenwich, London, with technologies including solar power, LED lighting, rainwater harvesting and a geothermal system providing 80% of the heating and hot water.

The UK sales hike outstripped the wider performance of the Ikea group, which saw retail sales increase 5% in the year to August 31.

The uplift came despite upheaval as part of its revamp under which the group is slashing 7,500 jobs globally, including 350 in the UK.

But it is also creating 11,500 new jobs this year and next through new openings and investment in delivery and digital operations.

This included 500 new jobs at its new Greenwich store.