Ikea will "invest billions" to stay ahead of Amazon & co

In the next few years, Ikea aims to spend billions to “be as close as possible to the consumer” and to stay ahead of pure players like Amazon, according to new Chief Financial Officer Juvencio Maeztu.

3.1 billion euro investment in 2016/17

Ikea will need to adjust if it wants to maintain its lead, not only on Amazon which launched two furniture brands in November: other competitors include Flipkart (India) and Otto and Home24 (Germany). That is what Maeztu told Reuters in his first interview as Ikea Group’s CFO. Since Ikea Group owns 363 of the 413 Ikea locations, it is by far Inter Ikea’s most important franchisee.

“What is more relevant than ever is to be as close as possible to the consumer – it has much more power than before.” That is why Maeztu wants to invest in smaller urban showrooms to “reach the younger generations” and at the same time, he wants to expand the web shops in order to “be able to compete with the internet giants”.

The Spaniard did warn that that will cost a lot of money and will also impact profitability. In its past fiscal year, 2016/17, Ikea Group invested more than three billion euro into its stores, distribution centers and shopping centers. “And we will invest that same amount or even more in the next three years”, Maetzu said. The CFO wants to use those billions to expand the chain’s “city-center formats”, its digital services and its distribution centers for e-commerce.