Ikea has announced a huge shift in their business model, aiming to nearly quadruple online sales by 2020.
The chief executive of the world‘s biggest furniture retailer, Peter Agnefjall, told the Financial Times he plans to raise the £1.19 billion in online sales to £4.27 billion and shift the retailer’s focus to digital retail.
Sales for the company rose by 7.1 per cent in the year to August and net profit increased by 20 per cent to £3.58 billion, the fastest rate in 10 years.
However, the retailer has announced ambitious plans to reach sales of £42.7 billion by the end of the decade, doubling from 2011.
Agnefjall said he aimed to move away from having giant warehouses in “potato fields” and focus efforts on online and more central stores.
He hopes to achieve this with new IT platforms, three of which are currently being trialled across the UK, aiming to roll them out worldwide by 2018.
This comes amid a major shakeup of operations as the group splits its retail and production arms.
In late August, Ikea sold its production, product development and supply chain businesses to Inter Ikea favouring a more traditional franchise model, paying three per cent for the brand usage.
Agnefjall‘s arm will now focus on retail alone.
“Our set-up has been built on franchising for about three decades,” he said.
“We have been doing so well in the past few years, and it‘s important to think about the future and how to set ourselves up for the next three decades. We have come to the conclusion that we need to simplify the model, and normalise it.
“They can develop the brand and the range together and we can really grow our business, which becomes much more customer-centric.”
Ikea will also pay £377.38 million to its 164,000 staff in profit sharing loyalty and bonus plans.