- IKEA is celebrating its 30th anniversary in Britain. UK CEO Gillian Drakeford says 2018 will be a year of “catch-up” for the retailer. Furniture giant is investing in digital and smaller stores to adapt to changing consumer behaviour. Drakeford on Brexit: “The world is transforming, everything is changing.”
LONDON – 2018 will be a year of “catch-up” for IKEA in the UK, according to country boss Gillian Drakeford.
“We’ve always worked on the basis that we do half, you do half, and together we save money,” Drakeford told Business Insider this week. “But of course, consumers are now wanting to shop in a different way. They expect to be able to get convenience and good prices through online as well.”
Drakeford spoke to BI at IKEA’s pop-up “House Party” in Soho, London – an installation showcasing how IKEA has kitted out the nation’s living rooms over the last 30 years.
The house shows that the biggest changes over the decades have been taste. But IKEA is now grappling with changing shopping habits.
“I can go on my smartphone, on the bus, and order stuff,” Drakeford said. “One of the things we’ve been catching up with very much is the fulfillment capability.”
IKEA recently acquired gig economy company TaskRabbit following a trial in the UK that let customers hire temporary workers to do small jobs like assemble furniture or hand curtains. Its one of several moves IKEA is making to become more agile and digital.
“We have better delivery prices, better time slots, we can now roll out click and collect, really bringing us up to speed with many of the other services that other retailers provide,” Drakeford said. “That is what I see as being catch-up.”
IKEA is in good health, with sales of £1.8 billion in Britain last year, but the flat-pack furniture store can see which way the wind is blowing. The retailer is trialling new, smaller stores – one is in the Westfield department store in Stratford, London, for example – in a departure from their traditional big, out-of-town stores.
“What we’ve seen is it really works when you want to meet somebody, plan something more complex like a kitchen, and you can pop in and out, rather than spend a whole day,” Drakeford said.
Today’s customers “don’t have to come to pick up the Billy Bookcase but they want to come and talk to somebody,” Drakeford said. “Our customers are shopping with the brand. Our strength has always been creating this immersive experience of being in somebodies home but in a shop.”
‘They’re time pressured, but still want an experience with IKEA’
IKEA’s move to smaller stores can partly be explained by changes in the way Brits are living their lives.
“We’re sitting in London today and we know that over 40% of people are renting, we know people are living in smaller space,” Drakeford said. “We also have, in London today and other big cities, the problem that people don’t have a car. They want convenience, they’re time pressured, but they still want an experience with IKEA.”
Declining car ownership and smaller living spaces are not the only barriers IKEA faces.
“We know today, even when we’ve continually lowered our prices, that it’s still not accessible to many,” Drakeford said. “If you saw the poverty report that recently came out about London – 2.3 million people are below the poverty line, but 1.3 million of those people are in work. How can we find a system that works for them?”
This is probably harder given Brexit. IKEA announced this week that it is raising its prices as a result of Brexit-fuelled inflation. Drakeford has called for more clarity from the government over any transition period.
“From my perspective, it’s not just about Brexit, the world is transforming, everything is changing,” Drakeford said. “Certainty is something that I believe we will ever have so then it’s actually about how do we lead a business like this through uncertainty, with agility, always keeping the consumer in the centre.
“We work in many markets where we are not part of the European Union and markets where there are financial ups and downs. The most important thing for me is I see potential in the UK.”
She added: “Of course I would like to have more time and a clearer transition because that enables us to be more prepared to do a better job.”
‘A vision and a values-led company’
Taken together, Britain’s looming exit from the EU, IKEA’s embrace of digital, and its new smaller store strategy mean 2018 is likely to be perhaps the biggest year of change for IKEA since the company first arrived in Britain in 1987. Drakeford was a shopkeeper at the Swedish firm’s first British store in Warrington.
“When IKEA arrived, they’d basically taken a very Scandinavian company, a very Swedish range, and really just landed it in the country and said, let’s see what’s going to happen,” she said. “There were some pretty quirky things at the time – I always talk about the two single quilt covers on a double bed.”
IKEA has adapted its range to suit local tastes in the decades since, but Drakeford says the company remains the same at its core.
“We are a vision and a values-led company with a strong business idea,” she said. “It is about creating the better every day for the many people and we do that through home furnishings. What I’ve seen through my IKEA career is, of course, we have Swedish roots but we are a truly global company. We connect to people through our values, it doesn’t actually matter what country you’re in.”