The Indestructible Ikea

Ikea's parent company, Ingka, has been left short-changed as it annual net profits suffer a droop.

 Despite an increase in sales this fiscal year, net profits have plummeted by 40%- and ingka believes its online forays are to blame.

But what does it mean for the furniture giant?

Ikea’s business model is sturdier than even the most thoughtfully erected Skogstorp dining table- even so, like the best of them, Ikea has to tailor its strategy to suit the times.

Last Fiscal year, the Ingka group invested 2.8 billion euros into its stores, customer fulfilment networks, shopping centres and renewables sector.

It’s a lot of money, even for a supermassive global franchise- but Ingka’s investments don’t stop there.  

Noticing a dip in the number of cars per household, a rise in carless individuals, the Ingka group has set their focus on satisfying the new, present day urbanite.

They’ve been opening up a number of innercity stores and advice centres- moving away from their usual retail accommodation- of ‘sheds on the outskirts of the city-type’ infrastructures.

At the same time, Ikea has been upping its online powers, as online sales jump upwards 45% from the previous fiscal year- a steep incline that reflects the changing consumer norms.

A slice of Ingka’s profits are therefore having to be designated to reorganise their e-commerce strengths.

A quick look through Ikea’s annual report, however, does not suggest a company that’s suffering.

In spite of the slight dip to profits, all other facets of the company appear to be thriving.

Assets are up, debts are down, and sales are through the roof- so what are people complaining about?

Since their financial statement was released, headlines have been fixated on Ikeas PROFITS. Which, when we’re talking about a multi-million pound franchise, are rather insignificant indeed.

But for commercial retailers everywhere, any show of weakness from Ikea is a fleeting positive.

Founded in 1943- Ikea’s business model has succeeded in undercutting every aspect of the furnishings market. Lower costs, lower prices & higher volumes.

Pre-1940’s, households would have passed the same dining table through generations- a revamp of a kitchen would consist of a new tablecloth and maybe some chair cushions.  

They were a ‘one time only’ purchase- made by a carpenter, and maintained in the home.

Ikea turned that trend onto its head- offering cheap, trendy designs- accessible even for lower income families to change their dining table a few times a decade if they should so wish.

It had never been seen before. And such a model was simply unattainable to replicate. As Ikea sowed forth in success, they collapsed any mattress shop, furnishing company, and even garden centre that stood in their way.

In many ways, Ikea has contributed significantly to the death of the highstreet that we’re currently witnessing.

So, a dip in profits for Ikea, is a dash of hope for the rest. Are they too struggling with the times? Are they gonna join the House of Frasers, toys r us’s and carpetrights in extinction?

Are we going to have the house furnishing markets back to ourselves?

Well sorry folks, it ain’t gonna happen. Because Ikeas business model, is for now, futureproof.

Review, analyse and adapt. While highstreet chains are closing up, Ikea is closing in- offering new services, according to the times. Showrooms, advice centres, VR hubs.

A dip in profits is harmless to what appears to be, an indestructible Ikea.