Economic recovery continued during FY21, but the business environment remains extremely challenging. Halfway through the financial year, more than 150 IKEA stores were closed due to local lockdowns. This meant store sales were lower, but e-commerce sales increased 73%. IKEA franchisees’ total retail sales reached EUR 41.9 billion, an increase of 5.8% over FY20.
FY21 sales also surpassed FY19, when IKEA retail sales reached 41.3 billion. Total retail sales includes sales of IKEA products, food and services to IKEA customers.
The pandemic also disrupted global transport even as demand went up. As a result, many IKEA products sold out. At the same time, transport and labour shortages drove higher raw material prices. To mitigate these disruptions, Inter IKEA Group spent an additional 250 MEUR in FY21.
“This year IKEA e-commerce accelerated and now accounts for 26% of total retail sales. But stores welcomed only 775 million visitors compared to more than 1 billion in FY19. To keep products affordable and meet changing customer needs, we’ve invested heavily in the IKEA supply chain,” says Inter IKEA Group CFO Martin van Dam.
All of this led to lower financial results for Inter IKEA Group. Net profit amounted to EUR 1.4 billion in FY21, compared to 1.7 BEUR in FY20. Inter IKEA Group continued to hold a strong financial position, enabling the Group to protect the long-term success of the IKEA franchise system.
“Raw material shortages and the global transport crisis have impacted Inter IKEA Group margins. Although our costs increased, we did our utmost by keeping the prices to our retailers stable in FY21,” says Martin. “Though we can’t continue to secure fixed prices to the retailers under these challenging conditions, we also plan to absorb part of the increased costs during FY22.”
The Group continued to invest in product development, expansion and several initiatives to reduce the IKEA climate footprint. Popular new products include the SYMFONISK picture frame with Wi-Fi speaker and STARKVIND air purifier. Launched in September, manufacture of both products began during FY21.
Despite the pandemic, IKEA expansion continued – including further development of new IKEA formats. Around 45 new IKEA locations (including tests) opened in FY21, including the first stores in Mexico and Slovenia. Inter IKEA Group works closely with franchisees to plan, test and evaluate new formats before they become a formal part of the IKEA franchise offer. Franchisees also started e-commerce operations in the Philippines – a new IKEA market.
IKEA is striving towards 100% renewable energy throughout the entire value chain. To move closer to this ambition, Inter IKEA Group launched a programme for nearly 1600 direct suppliers to accelerate their transition to 100% renewable electricity. Today nearly 90% of IKEA Industry (owned by Inter IKEA Group) is already powered by renewable energy.
“Despite the challenges, Inter IKEA Group continues to invest in the IKEA franchise system and value chain to create a more affordable, accessible and sustainable IKEA for the many people” says Martin.
For facts & figures from across the IKEA franchise system visit: about.IKEA.com
IKEA offers well-designed, functional and affordable, high-quality home furnishing, produced with care for people and the environment. There are several companies with different owners, working under the IKEA Brand, all sharing the same vision: to create a better everyday life for the many people. IKEA was founded in Sweden in 1943.
About Inter IKEA Group
Inter IKEA Group includes Inter IKEA Systems B.V., IKEA of Sweden AB, IKEA Supply AG, IKEA Industry AB and related businesses. Inter IKEA Holding B.V. is the holding company for the Inter IKEA Group.
About the IKEA franchise system
The IKEA retail business is operated through a franchise system with franchisees that are authorised to market and sell the IKEA product range within specified geographical territories. Inter IKEA Systems B.V. is the owner of the IKEA Concept and worldwide IKEA franchisor, who also assigns different IKEA companies to develop the range, supply products and deliver communication solutions. Today, 12 different groups of companies own and operate IKEA sales channels under franchise agreements with Inter IKEA Systems B.V.