Ikea sales fall flat

Poor old Ikea. The slowdown in the housing market has stopped us stocking up on flat-pack wardrobes...

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Last Updated: 06 Nov 2012

Ikea chief executive Anders Dahlvig told the World Retail Congress that his company is enduring a sales slump in many of its biggest markets, thanks to the pernicious effects of the credit crunch. Apparently the UK, the US, Germany, Spain, and Italy are all suffering – and he expects other European markets to follow.

The problem for Ikea is that if fewer people are moving house, fewer people need to redecorate – either to spruce their place up for a sale, or to rescue it from the dubious taste of the previous owner. And not surprisingly, given that we’re paying more for our mortgages, more for our food bills and more for our transport, those of us who are staying put are cutting down on large non-essential purchases like furniture. Clearly people are starting to ask themselves: ‘do I really need that new nest of tables?’

As the biggest furniture retailer in the country (there are now 17 of its ‘big blue box’ stores around the UK, making us one of the company’s biggest markets), Ikea was always going to feel the pain from the spending slowdown. And of course it’s by no means alone. Most of the delegates at the conference were similarly gloomy, while only this morning, Dixons owner DSG International issued another profit warning – again, we’re unlikely to be splashing out on a new fridge or computer in the current climate.

In fact as far as Dahlvig is concerned, this appears to be the one positive about the present situation. If he’s feeling the squeeze from the credit crunch, his competitors will be too – and that gives Ikea an opportunity. Not many other retailers can boast Ikea’s purchasing power or value proposition, so it might be a good chance for the company to pick up customers from its more expensive rivals. And it hasn’t given up on its expansion plans – if only it could persuade the UK government to relax the planning regulations and allow it to open more of its giant out-of-town stores.

So let’s not write Ikea off just yet. After all, when times are tough, we’re probably more likely to opt for a retailer that allows you to redecorate your entire house for about £12.50...

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