IKEA UK announces sales growth of 11.9 percent during challenging times

IKEA UK announces sales growth of 11.9 percent during challenging times

• IKEA UK growth underscored by a global sales increase of 5.7 percent, announced by Ingka Group
• FY23 marked by significant investment into sales channels, digital solutions and logistical operations, including the opening of a multi-million-pound customer distribution centre and three Plan and Order Points* in the northwest
• Sales of ‘People and Planet Positive’ products rose by over 40 percent, reflecting clear consumer demand to reduce costs and minimise waste across the home
• As supply chain costs begin to lower, IKEA UK announces clear intention to reduce prices in FY24
• To support co-workers, IKEA UK invested more than £12m in living-wage increases and additional benefits

IKEA UK has announced continued growth, with sales up by 11.9 percent for the 2023 financial year compared to FY22, generating a turnover of £2.46bn.

This strong UK performance during IKEA’s 80^th anniversary year comes as the wider Ingka Group announces global retail sales of EUR 41.7 billion, an increase of 5.7 percent on EUR 39.5 billion in FY22, and significant investment across its biggest markets, including more than EUR 4.5 billion in the US, UK, France and Spain alone.

Continued UK Investment 

Following investment in both physical channels and digital access, the retailer’s omnichannel journey has continued.

In FY23, 38.5 percent of total sales were made online (35.8% in FY22). As the popularity of online shopping continues to grow, IKEA UK opened a multi-million-pound distribution centre in Dartford, with the capacity to deliver one million orders annually. Enabling faster and more sustainable home deliveries to customers in London and the southeast, the new centre is operated by 100 percent renewable energy and operates a fleet of electric vehicles to fulfil orders, driving a significant reduction in CO2 emissions. Long-running environmental sustainability initiatives were also the focus of investment, including £4.5 million in EV charging infrastructure to enable 100 percent zero emissions deliveries by 2025.

In the northwest, three Plan & Order Points (smaller stores dedicated to kitchen, bedroom, and living room planning) in Aintree, Stockport and Preston have improved access to free planning support for millions. Increasing the retailer’s physical access to its customers continues to remain a priority, with the ambition for further locations in the northwest and beyond set to open in FY24 – in addition to the opening of our new city store on Oxford Street. In all, FY23 saw 1m new visits to IKEA UK stores – an uplift of 2.2 percent.

To meet customers in new, more locally accessible ways, a range of new services were also introduced including 15 new external locker pick-up points in collaboration with Shift (bringing the total to 24), and the trial of 12 mobile pick-up points across the UK in collaboration with Tesco.

In the digital space, IKEA has increased capacity and capabilities to meet its customers remotely. Be that online or over the phone, customers can access the same home furnishing expertise available instore, which has resulted in a 24 percent year-on-year growth in remote sales.

Peter Jelkeby, CEO and Chief Sustainability Officer, IKEA UK & Ireland, said: “Over the past 80 years, we have developed our offering, value chain and sales channels, supporting our vision to create a better everyday life for the many people. As we look back on the last year and forward to the next 80, we constantly ask ourselves, how what we do today can be done better tomorrow. Over the past year, we have made significant investments on this journey to create a more accessible, affordable and sustainable IKEA, to meet the evolving needs of UK households.”

Life at Home in a Cost-of-Living Crisis

With discretionary spend challenged and people spending more time at home, a look back at the products most in demand, tells an interesting story of priorities within it.

With many customers continuing to work remotely, demand for a more organised life was clear. Sales of IKEA’s highly adaptable PAX and KOMPLEMENT wardrobe systems increased by 49 percent and 39 percent respectively, with sales of the modular and customisable BESTÅ storage system growing by 25 percent.

In an acknowledgement of their ability to help save money and create a more sustainable life at home, IKEA’s ‘People and Planet Positive’ range also performed well. In FY23, sales of PPP products increased by 42 percent on the previous year, representing almost a third (31.8 percent) of overall sales for FY23, compared to a 24.6 percent share in FY22. Food waste was a key priority for customers, with sales of IKEA’s 365+ food containers increasing by 41 percent, as KORKEN storage jars and reusable bottle purchases grew by 23 percent.

As customers look to enhance their quality of life at home, health and wellness trends also impacted purchases. The last 12 months saw the sales of air purifiers almost double (+88 percent) compared to the previous year. The UPPÄTVIND air purifier, which came onto the market in October 2022, priced at £29 was the clear bestseller.

Jelkeby continues: “Despite economic and geopolitical instabilities, we remain committed to making a positive difference in our customers’ lives; especially for those with the thinnest wallets. Knowing that our customers continue to navigate a cost-of-living crisis, we absorbed significant cost increases to mitigate price rises as much as possible, investing in promotions, special offers, and, for the first time, an Easter Sale. As we see supply chain costs start to ease, we have a clear commitment to lowering prices accordingly – ensuring we remain firmly on the side of the many people.”

People

IKEA UK also continued its commitment to support employees during the cost-of-living crisis.

A £12m support package was rolled out across the financial year, and salaries were up 6 percent on average in January 2023 in a move that matched new Living Wage Foundation rates. Co-worker incentives such as travel season ticket discounts and free food options continued throughout the year and co-workers’ discount rate doubled (from 15 percent to 30 percent) across a range of more than 2,000 People & Planet Positive items.

Jelkeby concludes: “As we look back on a strong, though challenging year, I’m incredibly proud of our co-workers’ dedication and efforts. With our strong culture and performance mindset, we have a clear road ahead of us – to assemble a better future, together, by continuing to adapt, innovate and transform; meeting the needs of both people and the planet in the years to come.”

*IKEA Plan and Order Points are smaller stores dedicated to kitchen, bedroom, and living room planning where customers can seek home furnishing advice and expertise to help design their ideal space.