Economic woes impact on home furnishing giant
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Thousands of people wait outside for the grand opening of an Ikea outlet in Canton, Michigan. Bloomberg News |
Ikea, the world's largest home- furnishings retailer, plans to slow the pace of its expansion as a global economic slowdown erodes sales, Chief Executive Officer Anders Dahlvig said yesterday.
The closely held company, which has stores in 37 countries, is being affected "quite a lot" by slowing economies, Dahlvig said in a presentation at a retail conference in Barcelona, Spain.
Future expansion will be at a "much lower" pace, he added.
Ikea's capital investment in coming years will be mainly in emerging markets such as Croatia, Slovenia and Ukraine, the CEO said.
Spending power is ebbing in Europe and the United States as inflation rises and higher energy and food bills sap incomes, while sliding stock markets weigh on consumer confidence.
"I definitely see big challenges in the western world and opportunities in emerging markets," added the Ikea chief executive.
Carrefour SA's Jose Luis Duran, chief executive officer of the world's second-largest retailer, said cost growth is outpacing price increases and that the retail industry "has never before faced so many challenges."
UK confidence dips
UK consumer confidence fell to the lowest in almost four years in March as the housing-market downturn worsened, and former Chancellor of the Exchequer Nigel Lawson said the economy is heading for a recession.
That's cutting into purchases of higher-priced versions of goods from stereos to vehicles.
"When you are short on money you will not look at home improvement," Greg Hodge, non-food research manager at Planet Retail in London, said yesterday in a phone interview.
"People are starting to get concerned. Consumer confidence is low and a lot of people will scale down on spending. 2008 will be a difficult year."
Ikea, which was founded in Sweden and based in the Netherlands, has about 260 outlets worldwide and has said it plans to open 22 more this year.
Sales increased 14 percent to reach 19.8 billion euros in the fiscal year through August.
Germany was the retailer's biggest market, the nation was responsible for 16 percent of Ikea's sales, followed by the United States, France and the United Kingdom.
Agencies
(China Daily 04/10/2008 page15)
