Ikea cooling on e-sales
By Brian Carroll -- Furniture Today, December 23, 2007
New York — A memo circulated to Ikea employees in Sweden signals a change in retail strategy for the global furniture giant, away from further investment in online shopping.
According to the memo, which came from Anders Dahlvig, Ikea's CEO and president, the Swedish company will focus on the in-store experience as "the only sales channel," putting a halt on "further investments to develop the Home Shopping or Online sales channel(s)."
Mona A. Liss, a spokesperson for Ikea U.S. and a member of the company's U.S. corporate public relations staff, confirmed the authenticity of the memo but said there are no plans to discontinue e-commerce in the United States.
"The global message (in the memo) is about the direction of the company to focus on the in-store shopping experience," Liss said in an e-mail.
The shift coincides with openings of huge new stores in Belfast, Northern Ireland; Coventry, England; Malaga, Spain; Moscow; and central and south Florida.
According to the memo from Dahlvig dated Dec. 7, the focus on in-store efforts is the result of a decision from Ikea's board, a decision based on the belief that Ikea "can give customers the best offer and the lowest price by making the range available only through Ikea stores."
The verbiage referring to exclusivity suggests a discontinuance of e-commerce. Reinforcing this interpretation is the statement from Dahlvig that Ikea's Web site will continue to be developed as "an important communication channel to recruit, inspire and prepare customers for their visit to the Ikea store."
Liss emphasized, however, that no decision to cease e-commerce in the United States had been made.
Dahlvig, who has been Ikea Group CEO since 1999, also cited the high costs associated with e-commerce as the reason for the change in direction. The large investment costs represent a commitment the company is "not prepared to make," he wrote.
In June, Ikea rolled out a new Web site design in 24 countries, a design that emphasized social shopping functions. At the time, Allan Lidforsen, Ikea's online group manager, said, "It is a great challenge to translate the Ikea brand values and visual identity to the Internet."
The shift in emphasis also could be a response to what have been problems with stores in the United Kingdom. Ikea has had to respond to overcrowding and customer complaints in the United Kingdom, as well as the negative publicity these problems have created.
The company introduced e-commerce in the United Kingdom in May, and in Germany, Denmark and Sweden before that. The first e-commerce presence for the company was in 2000 in Sweden.
In the United States, Ikea offers online approximately a third of the products made available in its superstores.
Earlier this year, Liss acknowledged to the New York Times some difficulty with e-commerce.
"We do have some challenges with our process of placing online orders," she told the newspaper, saying the company planned to improve the checkout process.
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Ikea to focus on stores, not e-commerce
Dec 17, 2007
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