Europe needs swagger

IKEA CEO: Late to online boom but growth ahead

IKEA sees strong growth around the globe
We are seeing good times in Europe: IKEA CEO
We are not immune to the current economic situation: IKEA CEO

Swedish homeware retailer IKEA is late to the proliferation of online retail, its CEO has told CNBC, but plans to grow the e-commerce business significantly over the next five years.

The privately-owned firm, which records annual revenues in excess of 30 billion euros ($22.4 billion) and operates stores in 42 countries, currently has an online offering in 13 of its markets. Some 80 percent of the group's total sales are generated in Europe and it's aiming for 50 billion euros in revenue by 2020, an average growth rate of about 10 percent a year, partly through growing its online business.

The group is working on a new website as well as the logistics of getting its products to customers.

"Today our e-commerce business is 1 billion euros. It will probably be 5 billion euros in 5-6 years from now," CEO Peter Agnefjäll said.

Online retail has boomed in recent years, but IKEA's business is still mainly conducted in its vast warehouse stores.

"We could have been faster, I could agree to that," Agnefjäll said.

"But by being late we can skip a step in the technology development, straight to mobile and tablet."

Value for money?

Although the firm is not immune to the current economic climate, the economic downturn, resulting in a greater demand for value for money, has benefited it, Agnefjäll said. "Overall, from a market perspective it (the downturn) fits us quite well."

He was positive about the European economy, arguing that Europe was bouncing back and that the perception of a recovery was perhaps lagging behind.

Agnefjäll said the fact that the group had never been listed on a stock market allowed it to think more long term.

"For us it has served us very well to be privately held ... In our model the money never goes away. It can either be handed out to charity or reinvested in the business."

That enables the group to invest year after year, even if markets are volatile, he argued.

Growth in emerging markets

IKEA sees strong growth around the globe


Although IKEA's biggest market is Germany and its footprint is significant in Europe, it is seeing growth in eastern Europe too as well as China.

"We see that the underlying (Chinese) economy is growing strong," he said. The middle classes are moving into bigger apartments and having more children, all of which offers scope to grow.

In India, the group has bought its first site in the southern city of Hyderabad and it is looking for sites in Bangalore and Delhi. It hopes to open its first store in the country as soon as possible.

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