By Emma Thomasson | Reuters –
By Emma Thomasson
BERLIN (Reuters) – The Germany head of IKEA Group, the world’s biggest furniture retailer, eventually expects 10 percent of sales to come from e-commerce, although the Swedish firm is still investing heavily in physical stores.
“A long-term share of turnover of 10 percent is realistic,” Peter Betzel told the German retail congress on Wednesday.
IKEA Germany saw online sales grow almost 27 percent to 92 million euros (76 million pounds) in the financial year that ended on August 31, but that was still just 2 percent of total sales of 3.99 billion.
Betzel said he expected online sales of 150 million euros in the 2013/14 financial year, adding he hoped the full IKEA range would be available to buy on its website by the end of 2014 as logistics challenges are solved.
IKEA has been slow to embrace e-commerce given its focus on a shopping experience that combines maze-like showrooms with cafes and play areas, driving incidental purchases of high-margin accessories.
The IKEA Group, which owns most of the 345 IKEA stores worldwide, only sells online in half of its 26 markets, charges for most deliveries and does not offer the full range, but is now speeding up its expansion in e-commerce.
Dedicated e-commerce players are also investing in the lucrative German home furnishings market, including mail order giant Otto and start-up Home24 whose founders, the German Samwer brothers, are reported to have pledged to “take down” IKEA.
Research firm Euromonitor forecasts global e-commerce sales of home furnishings will grow almost 10 percent a year to $ 24 billion by 2015 from $ 20 billion in 2013. Growth is even faster in Germany, up 58 percent to 1.23 billion euros in 2012, according to the BVH e-commerce association.
However, IKEA remains committed to expanding its physical footprint in Germany, with two new stores due to be opened in 2014 and three more already in planning elsewhere.
“Because stores remain most important, we want to grow,” Betzel said. “We believe we have space for another 20 just in Germany.”
IKEA Group hopes to double sales to around 50 billion euros by 2020 through around 5 percent annual sales growth in existing stores, and another 5 percent through new store openings. It more than doubled sales in the last 10 years to 27.6 billion euros in 2011/12.
(Editing by Mark Potter)