Ikea focuses on emerging countries, cuts back in mature markets

Swedish Ikea wants to start in another dozen new markets in the coming years. In mature markets, like Belgium, the Swedish chain will cut back on its activities.

A dozen new countries

Ikea is starting the conquest of South America: the chain will open its first store in Santiago in Chile in 2020, after which the capitals of Peru and Colombia may follow. The chain also wants to open its first stores in Estonia, Luxembourg, Macau, Mexico, Oman, the Philippines, Puerto Rico and Ukraine in the coming decade. We aim to reach three billion people by 2025, says CEO Torbjörn Lööf, and will do so by changing tactics: in addition to the well-known mega stores, the retailer wants to focus on smaller stores and services, such as e-commerce and city shops.

The home improvement chain is even looking into the possibilities of joining forces with online marketplaces such as Amazon, which could start next year. The Swedes realise that large shops in the outskirts of the city are becoming less popular and that the company has to go to where the customer is. In mature markets like Belgium, for example, the chain announced that it will no longer open new large stores. Last year, the number of visitors in Belgium fell by 2.6%.

Shops become warehouses

Existing large stores will even be reduced in size: parts of some stores will become distribution centres for online orders and will thus be transformed into warehouses. After all, online is a strong growth area: despite the decline in visitors to their physical stores, Ikea recorded 1.2 % more turnover in Belgium last year, after the opening of its local web shop last year. At the moment, the chain sells online in 35 of the 50 countries it is active in.

Worldwide Ikea recorded a 4.5 % increase in turnover in its financial year ending in August, to 38.8 billion euro. China was one of the strongest growers. Nineteen new stores opened that year, some of them in two new markets: India and Latvia. A total of 957 million visitors found their way to  the chain’s stores.