Gen­er­a­tion Rent gives Ikea sixth year of UK growth

Daily Mail - - City & Finance - By Vic­to­ria Ibitoye

BOOM­ING de­mand for rent­friendly fur­ni­ture has helped boost sales at Ikea.

The home fur­nish­ing re­tailer toasted its sixth year of growth in the UK, af­ter cap­i­tal­is­ing on the de­mands of Gen­er­a­tion Rent.

Like ri­val John Lewis, Ikea has man­aged to broaden its cus­tomer base by mak­ing fur­ni­ture for those liv­ing in smaller spa­ces or renters who are con­stantly on the go.

It launched Ikea PS 2017, a trans­form­ing col­lec­tion of fur­nish­ings for renters in Fe­bru­ary.

Items in­clude a fold­ing sofa that can hang on a wall, a pil­low that turns into a quilt and a self-wa­ter­ing flow­er­pot that keeps unat­tended plants alive for two weeks.

It sells a two-seater white sofa bed for £345 and a room di­vider for £45.

Ikea said it has also made its prod­uct range more rel­e­vant to the mod­ern home, by in­tro­duc­ing smart light­ing and in­door gar­den­ing kits which al­low cus­tomers to grow food at home.

The changes have sparked a sales bo­nanza for the firm, which saw its sales in­creased 5.8pc to £1.8bn in the year to Au­gust 2017 – while its mar­ket share grew by 0.5pc to 8.1pc. It hopes to in­crease its mar­ket share to 15pc by 2027.

Liv­ing room seat­ing sales grew 11pc, cook­ing equip­ment sales were up 10pc and home tex­tiles, which in­clude cush­ions and bed­ding, were up 10pc.

Ikea, which is cel­e­brat­ing its 30th year in the UK, saw more than 57.2m peo­ple visit its stores and 175.8m visit the Ikea web­site.

The firm has boosted sales de­spite the chal­leng­ing re­tail en­vi­ron­ment, which has seen other home­ware com­pa­nies is­sue profit warn­ings.

In Oc­to­ber DFS re­ported a 22.3pc plunge in full- year prof­its af­ter ad­mit­ting the chal­leng­ing fur­ni­ture mar­ket had hit its bot­tom line. That same month, Topps Tiles said it ex­pected its full-year earn­ings to come in at the lower end of ex­pec­ta­tions af­ter weak con­sumer con­fi­dence dragged down sales.

Dunelm warned in Septem­ber that Bri­tish con­sumers were fac­ing a spend­ing squeeze af­ter post­ing a 2.4pc slump in full year sales and a 15.2pc drop in prof­its to £109.3m.

Ikea does not dis­close its UK prof­its but ad­mit­ted it had been forced to ab­sorb the in­creased costs fol­low­ing the fall of the pound, in order to avoid de­ter­ring cus­tomers.

Gil­lian Drake­ford, re­tail man­ager of Ikea UK & Ire­land said: ‘De­spite a level of eco­nomic un­cer­tainty our brand is even more rel­e­vant and we con­tinue our ef­forts to bring af­ford­able well- de­signed home fur­nish­ing so­lu­tions to the UK.’

She added that the post-Brexit fall in the pound had pushed up the busi­ness’s costs by 13.7pc as it re­lies heav­ily on im­ports. How­ever, Ikea only in­creased prices for shop­pers by 3.6pc.

‘The Brexit vote has been on every­one’s lips and the de­val­u­a­tion of the pound has been a chal­lenge for many busi­nesses,’ she said.

The firm said it has low­ered prices on some of its most pop­u­lar ranges, such as the Stock­sund sofa, which has been cut to £399 from £425.

Ikea was founded in Swe­den in 1943 and has been the world’s big­gest fur­ni­ture store since 2008.

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