Ikea Group Is Open to More Acquisitions Like TaskRabbitBy
Furniture giant has set up new business development portfolio
New CEO focusing on online sales, expanding company’s reach
Ikea Group will consider further acquisitions to add services and technologies and expand its reach following the purchase of TaskRabbit Inc. last month.
The home-furnishings giant has created a new business development portfolio that will focus on acquisitions, partnerships and advancing digital technologies organically through recruitment, Chief Executive Officer Jesper Brodin said in an interview at Ikea’s new kitchen concept store in downtown Stockholm.
Ikea has historically shied away from acquisitions, focusing instead on organic growth through its expansive retail-store network. But the advance of e-commerce and increased urbanization has forced the retailer to rethink that model and shift investments to new sales channels, both online and in new inner-city concept stores. Ikea Group is also adding warehouses closer to cities to be able to offer same-day or next-day deliveries of goods ordered online.
“This is the next step for Ikea -- Ikea 2.0," said Brodin, who took over the helm as CEO of Ikea Group from Peter Agnefjall earlier this year. “We will be a fantastic retail business but we’ll also have a greater development structure and organization than we’ve had in a long time."
TaskRabbit, a San Francisco-based startup that will assemble furniture for Ikea customers, is an example of the type of company Ikea is looking for, Brodin said.
"There are two things that could lead us toward an acquisition and that is that there’s a competence we’re interested in and the other thing is speed,” Brodin said. “We will steer the portfolio toward the needs we see and challenges we want to solve," he said, adding that in some cases that may be through a partnership or an acquisition.
Online sales currently account for 5 percent of Ikea Group’s total sales and that percentage is likely to rise as the company rolls out e-commerce to all its 29 markets. It plans to have done so before the end of its next fiscal year, which runs through August 2018, Brodin said. The company doesn’t rule out using third-party vendors for sales and is currently evaluating that opportunity, he said.
Ikea earlier Tuesday reported a 3.6 percent increase in retail sales to 34.1 billion euros ($40.2 billion) in the 12 months through Aug. 31. The strongest growth was seen in China, Germany, Canada and Poland, while Russia and Switzerland had a weaker development, due to currency effects, Brodin said.
While Ikea Group has for long had a target of reaching sales of 50 billion euros by 2020, Brodin said that goal has lost some relevance and that he is more focused on the growth in client interactions. The new CEO’s main target is “reach” and “how many people do we meet?” he said. Visits to Ikea Group’s more than 350 stores rose 4 percent in its last fiscal year.
Ikea Group is the largest retailer in the Ikea franchise system, and accounts for some 90 percent of Ikea’s total retail sales. Inter Ikea Group, which owns the worldwide Ikea franchiser and the Ikea concept, said on Monday that total annual sales of all Ikea franchisees was 38.3 billion euros as it outlined plans to expand in South America and south-east Asia.