IKEA commits to more Gulf stores despite e-commerce boom

Swedish retail giant says will continue store expansion despite increased online activity during Covid-19 lockdown

The iconic blue buildings and yellow lettering of the IKEA brand will be at the forefront of the company’s future plans in the region, despite a significant increase in e-commerce activity over the coronavirus crisis.

Both IKEA stores in Dubai were closed, from March 25 to April 25, as a result of the Covid-19-enforced lockdown measures, while the Abu Dhabi store on Yas Island opened only briefly during this time, in early April for a restricted number of hours.

The Swedish furniture giant continued to operate online, however, with positive results.

Vinod Jayan, managing director of Al-Futtaim IKEA, told Arabian Business: “The e-commerce has steadily grown from I would say the middle of 2018. It was steadily growing and, just before the Covid hit us, we were already on double-digit store share of the total sales of the UAE, from a digital perspective.

“Then what happens, during the time when the stores were closed, it went up by five or six times and you’re talking in thousands, I’m not talking about 10 to 50, we’re talking about thousands of orders.”

However, according to the company’s nationwide survey of around 1,500 people, conducted prior to Covid-19, 75 percent of people said, when it comes to home furnishing, they would still like to touch and feel the product before buying.

And Jayan revealed that, since the go-ahead was given to reopen its doors, the rebound has “exceeded expectations”.

“The best thing is, once the stores opened, we have seen a change in the shopping pattern where the growth in the e-commerce is continuing, not in terms of the five times, but the e-commerce is still selling at about 70 percent more than what it did before Covid and, at the same time, the stores are not being cannibalised.,” he said.

That, Jayan said, helps cement their commitment to bricks-and-mortar stores. This includes pressing ahead with expansion plans, with a second store set to open in Abu Dhabi in November, and further stores opening in Cairo in March and Muscat, towards the end of 2021 or early 2022.

And despite the global pandemic, he believed the company would exceed targets set at the start of the year.

He said: “We will be able to finish off the year as per our plans. That is why we have not scaled down any of our plans. We are actually going full blast.

“We were planning on having a higher sales than last year and a higher profit than last year and we will end up achieving both.”

Arabian Business. September 2, 2020