Despite sales growth and increased traffic to its stores, Ikea Canada is still looking at major changes, exploring new store concepts that don’t require an afternoon spent wandering through its maze-like showrooms.
Chief executive officer Marsha Smith said Wednesday the furniture giant is trying to stay ahead of massive shifts in consumer preference.
And that labyrinth showroom, she said, “isn’t for everyone.”
“We are exploring new concepts,” she said, pointing to the new Ikea Planning Studio project in the U.K., which skips the large showroom in favour of in-store consultations between customers and staff.
“I mean, we had 30 million visitors last year. So, happy we’re doing something right. But of course, you can’t stay the same.”
The retailer is also looking at starting a program to let customers bring in their old Ikea furniture to trade for a gift card, if staff deems it to be in good enough condition. The sell-back program — which would essentially turn Ikea’s As-Is section into a second-hand store — is a main part of Ikea’s attempt at extending the lifespan of its furniture and eliminate waste.
Ikea saw eight per cent growth in Canada with $2.39 billion in sales in 2018, according to an annual report released Thursday. Among the report’s highlights: a 10 per cent jump in online visitors to 104 million, $241.57 million in online sales and 2.2 million meat ball plates.
“Of course, we are in a rapidly changing retail environment. So we’re very proud that we managed to have a year where we had eight per cent growth,” Smith said.
The Canadian furniture retail market has seen the expansion of such online retailers as Wayfair, and especially Amazon, which is upending consumer expectations across the retail industry.
“I think the biggest challenge, in a word, is Amazon,” said Maureen Atkinson, a consultant at Toronto-based retail consulting firm J.C. Williams Group, adding that the expansion of the online e-commerce behemoth is “one key driver that is keeping retailers awake at night.”
“It’s very hard for retailers to keep up with them, never mind try to outwit them.”
I think the biggest challenge, in a word, is Amazon. (It’s the) one key driver that is keeping retailers awake at night
In 2018, Ikea opened stores in Halifax and Quebec City, but backed away from plans to open a store in London, Ont. The London store was part of a years-old expansion plan that now needs to be re-evaluated within the current retail climate, Smith said.
“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.”
What many consumers don’t want is the kind of do-it-yourself project that is at Ikea’s core. “We are moving a bit towards a ‘do-it-for-me’ society,” Smith said. Ikea has responded by partnering with the online platform TaskRabbit to connect Ikea customers with freelancers who can assemble their purchases. The project launched in Toronto last month, with plans to expand to Vancouver later this month.
“Having just 14 stores (in Canada) but still managing to be the market leader is something that we’re really proud of,” Smith said. “But, that said, I think it’s important that we do still continue to explore new formats.”