Ikea Australia is set to get a new boss as the Swedish Company confirms what ChannelNews tipped last year, the business is moving to smaller more local community stores as opposed to sprawling warehouses.
The new CEO is Mirja Viinanen, who will also be responsible for expanding the business into New Zealand, she previously worked for IKEA in Germany and Japan.
The Australian operation grew from $1 billion in annual revenue to $1.6 billion during last year’s pandemic with the business expanding their range of house brand appliances and consumer electronic products such as their Symfonisk WiFi bookshelf speaker which are cheap Sonos speakers.
Current CEO Jan Gardberg says more significant is what he calls the “leapfrog” in terms of accelerating the switch to online, which he otherwise expected would have taken years to achieve.
The Swedish business is as ChannelNews tipped last year planning a switch from its signature megastores to smaller “plan and order studios” which will be located in key local retail shopping centres.
He told the AFR recently that before the pandemic hit, about 12 per cent of IKEA’s sales were online, but it now has up to 2 million visits to its website each week.
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“We were already into this omnichannel direction, and we had in our plans at some point we would reach maybe 25, 30 per cent of our business online, so also not to continue to invest in big, large format stores, we saw that trend already,” Gardberg says.
“But, of course, what happened with COVID-19 was like a leapfrog into the future. So year-to-date we are already on 25 per cent of our turnover is online, at the height of COVID we had up to 40 to 50 per cent of our turnover was just from the online business.”
A visit to a local IKEA store now reals an extensive range of connected home gear and appliances spanning cook tops and ovens.
Gardberg reveals plans to open “plan and order studios” across Australian cities as IKEA switches from its familiar, large format stores, which have been the signature of the brand since the 1970s.
The business already has a small store in Warringah Mall on Sydney’s Northern Beaches.
While IKEA has 10 super stores across Australia, you can soon expect to see smaller IKEA shopfronts, with the first four or five expected to open across Melbourne within the next 12 months claims Gardberg.
“In the beginning the strategy was to create our destination stores, which meant very large and instant gratification, cash and carry for the whole range,” he says.
“That proposition has worked very well for more than 60 years. But that value proposition has been challenged.
“Today, to get a full-fledged kitchen or a big wardrobe solution, of course it consists of many different components. We are finding more people don’t want to spend that extra half hour running around in a self-serve warehouse to pick up 50 different items, so we want to offer more services for the future. “
It is a major change for a business which has traditionally owned most of its stores outright, securing an almost billion-dollar property portfolio, financial records with the regulator show. But Gardberg says the data is clear, consumers want IKEA’s products to be more conveniently accessible.
