Ikea Canada eyes ‘huge growth area’ in mattress, appliance categories
Industry fears about the TORONTO future of store-based retail might be assuaged by the scene outside Ikea’s store opening in Nova Scotia in September.
Crowds began lining up outside the Dartmouth Crossing location at 4 p.m. on the day before the Swedish furniture giant debuted its first store in Atlantic Canada.
“It was just incredible — I’ve never before seen a response like that,” said Ikea Canada president Marsha Smith, who began running the Canadian unit in February after leading its expansion in Ireland. “We had over 4,000 people there at the opening, which is quite a number. The (sales) numbers so far are well above expectations for the store.”
Ikea, with 13 large stores across the country, announced a bullish expansion plan in 2015 that banks on a strong future for bricks and mortar, and plans to have 24 locations across the country by 2025. In addition to its stores, Ikea has six small locations where consumers can pick up online orders and has announced pending store openings in Quebec City and London, Ont.
While the demise of Sears Canada has exacerbated concerns about the direction of retail, Ikea stands to benefit after the department store chain’s liquidation sales end in January.
Despite its failing financial performance for more than a decade, Sears Canada’s exit is good news for retailers that sell home furnishings, mattresses and appliances.
“Sears Canada was strongest in white goods such as appliances and at one time their market share was 40 per cent,” said Carl Boutet, a retail strategist with the Montrealbased advisory firm StudioRX. While Ikea’s appliance line of dishwashers, microwaves, refrigerators and ranges bear typically quirky Ikea product names such as Nutid, Betrodd and Frostig, they are manufactured and have their warranties with Whirlpool.
“We see that as being a huge growth area,” said Smith, who notes Ikea sells an average of 17 kitchens per day in Canada, offering everything from cabinets to kitchen sinks and major appliances. “Customers see how seamlessly the appliances integrate with our kitchens, and we have a strong focus on energy-efficient appliances. I think that is something you will see more and more of.”
In addition, Ikea began selling a broader range of mattresses a decade ago, and now has a six-per-cent share of the market in Canada — a figure that stands to grow with the exit of Sears.
“Mattresses are a really important part of the business now, and we have seen really good growth there,” Smith added.
On Tuesday, the retailer announced total sales of $2.17 billion in Canada for the fiscal year ending Aug. 31, up 5.9 per cent from 2016.
Though online sales now account for nine per cent of the business, traffic in Ikea’s stores remained steady and the retailer’s overall sales have surged 33.5 per cent in the last three years.