Ikea Switzerland is doing well, but admits supply problems

Ikea Switzerland is doing well, but admits supply problems
Ikea Switzerland is doing well, but admits supply problems

Ikea Switzerland managed to accelerate its growth in its staggered 2020/21 financial year, despite the difficulties linked to the health crisis. While stationary sales have stagnated, those made online have once again surged and now represent nearly a quarter of the revenues of the subsidiary of the Swedish furniture giant. Between September 2020 and the end of August 2021, the company generated a turnover of 1.23 billion francs, or 7% better than in the 2019/20 financial year. This growth – the pace of which has increased tenfold over one year – is primarily due to online sales, which contributed 23.3% to revenue, against 14.7% a year earlier and 9.1%. % before the crisis.

“After having responded to the request with difficulty in 2020 after the first confinement, we have better controlled the situation in 2021”, assured the general manager Jessica Anderen, quoted in a press release. This was manifested in particular by the stabilization of delivery times at 3-4 days, against nearly 30 days during the spring 2020 lockdown. The enthusiasm for online sales and the change in behavior to which it testifies encouraged Ikea to strengthen its service offering, notably by inaugurating a Home Service Point at Zurich Central Station in August, allowing customers to plan and order products. The new Ikea Shopping application, launched last March, has already been downloaded more than 250,000 times.

Read also: Ikea wants to get closer to city centers

Ikea Food in trouble

Hard hit by the closure imposed on public establishments as part of the fight against the pandemic, Ikea Food saw its sales fall by 19.8%. “Business remains difficult in this segment, especially since the introduction of the obligation to present the Covid certificate,” explained Jessica Anderen. Building on its performance, Ikea Switzerland, which has already raised its minimum salary to 4,000 francs during the year, intends to reward its employees by paying them in addition to their 13th salary a bonus more or less equivalent to a monthly salary.

The furniture giant is also reporting growing interest in its offer of second-hand products, available in all of its outlets in Switzerland. On the occasion of its “Buy Back Friday” action, all the items brought back to the store by customers have found takers, a spokesperson for Ikea Switzerland assured. “Our products are resold up to five times,” said Jessica Anderen, without going into details on the commission received by the company from the sale of second-hand items, only to mention the “huge volumes ”traded. The furniture rental project, an activity for which Switzerland had been one of the five pilot markets selected by the group, was however suspended. “This is still a very important theme for us, but due to the many projects already underway, it is no longer on the agenda for the moment,” said Jessica Anderen.

Avoid price increases

The supply difficulties, however, do not spare Ikea Switzerland, which recently indicated that some 1,500 products were missing from its assortment. And depending on the development of the situation, price increases are not excluded. “We are very well positioned, because we are connected to our entire value chain,” said Managing Director Jessica Anderen in an interview with AWP on the sidelines of the presentation of the figures. “Thanks to the commitments made with suppliers, we want to mitigate cost inflation as much as possible and not pass them on to selling prices”, she continued, insisting on the group’s vocation to offer products ” affordable and sustainable ”.

Currently, 70% of the products available at Ikea Switzerland come from suppliers based in Europe. “We have even reduced our prices on a large number of products over the past two years,” the Swede noted, stressing the strategic importance of passing on the price to customers the gains made in the value chain: “the market can change, not our principles ”.

Also read: Controversy around Ikea wood

Three out of ten carbon-free packages

Asked about her commitment to completely eliminate emissions related to deliveries by 2025, the boss of Ikea Switzerland stressed that thanks to the partnership started in August with Quickpac, 30% of parcel shipments are already carbon-free. The problem is that the Saint-Welsh start-up, a subsidiary of the postal service provider Quickmail, only covers a limited geographical area (Basel-City, Aargau, Zurich and eastern Switzerland). The leader says she is “looking for new partners in order to be able to extend this offer to the whole country”.

Over the last fiscal year, Ikea hired some 200 new hires, bringing its workforce to around 3,300 at the end of August. Despite the imposed closure of restaurants from the end of December to the end of May – which resulted in a loss of nearly a fifth of the Food segment – the company did not resort to short-time work. Affected employees have been reassigned to new internal tasks, in particular to support the strong growth of online activities, whose share of revenue has fallen in two years from less than a tenth to almost a quarter. . “They learned new skills and participated in training programs, which gave them a new perspective on customer relationships,” said Jessica Anderen.

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