IKEA Southeast Asia & Mexico post THB 25.9 billion in turnover

Bangkok – After more than a decade of expansion and growth, IKEA Southeast Asia & Mexico charted its first drop in revenue by closing out its most challenging financial year with THB 25.9 billion in turnover. At the same time, the COVID crisis accelerated the company’s digital transformation as interest in home furnishings surged during lock-downs.

“The COVID crisis changed how many of us value life at home,” said Christian Rojkjaer, ManagingDirector of IKEA Southeast Asia & Mexico. “At a time of urgent need, people turned to IKEA to set uphome offices, study corners, outdoor living areas and functional kitchens. Many realised that homereally counts, and it’s worth investing to make our living spaces comfortable, functional and beautiful.” 

The company’s nine IKEA stores in Southeast Asia posted THB 22.4 billion in sales between September2019 and August 2020 – a 7.4% drop from the last financial year – after facing business closures of upto 2½ months, supply challenges and limits on building capacity. Combined with income from its fiveIKEA-anchored shopping centres (operated by Ikano Centres, which provided rental relief to hundreds of struggling tenants) the company’s turnover totalled THB 26.0 billion. That was THB 2 billion downon the previous year.

IKEA Southeast Asia & Mexico is one of 12 IKEA franchisees around the world, operating stores inSingapore, Malaysia and Thailand as well as the portfolio of Ikano Centres with some 1,500 tenantsand 4 million square feet in leasable space. The company is bringing Swedish home furnishings andmeatballs to millions more people in the coming year as it enters both Mexico and the Philippines,with web shops opening up months before the physical stores in both countries.

With ecommerce operating in all three of its Southeast Asian markets for the first full year, the IKEAstores were largely able to continue selling during long closures with support and guidance fromgovernment authorities. Co-workers set up large-scale fulfillment operations virtually overnight. Theteams sourced additional transport, opened up more delivery slots and refreshed websites as onlineorders flooded in. By the end of the financial year, customers had placed more than 525,00 onlineorders and rung up THB 3.1 billion in web sales – more than double the company’s ecommerceturnover from the previous year.

In Thailand, stores also started up a Click & Collect service. In both Thailand and Malaysia, IKEA Foodteams started up partnerships that enabled customers to order meatballs to the door. At the sametime, teams across the region distributed more than THB 11.5 million in goods and services tohospitals, migrant worker dorms, shelters and other organisations on the front the lines of the fighton COVID.

“This crisis brought out the best in us. The entrepreneurial spirit in our teams hit a new high, and ourbusiness developed with unparalleled speed,” says Mr. Rojkjaer. “We were under incredible pressureand we did not always manage to meet our customers’ expectations, but most were understanding.We emerged strong and I have never been prouder of our teams and our impact in the community.” 

During eight peak weeks in each of the active markets, customers in Southeast Asia snapped up morethan 212,000 IKEA desks and 64,000 office chairs. Annual sales in the IKEA Workspaces range were upin all three markets. The shopping centres, reduced to operating essential services during the lockdowns, have welcomed a steady increase in visitors since reopening and won praise from authoritiesfor social distancing communication, stringent cleaning routines, thermal scanners and other safetymeasures.

The company kept all co-workers on board throughout the lockdowns and, in Singapore, will recruit afurther 200 people as it prepares to open IKEA Jurong in 2021. In Mexico City, ecommerce operationswill start soon and IKEA Oceania opens in the new year. In Manila, the world’s largest IKEA store is alsoscheduled for a 2021 opening, designed from the start to house an ecommerce fulfilment operationand a customer contact centre. A team in Vietnam is working to open a store in the years ahead.

“Our priority is to do everything we can to keep co-workers and customers safe, and to keep going -because our vision of creating a better everyday life for the many people has never been morerelevant,” said Mr. Rojkjaer. He noted that IKEA has reduced its prices on hundreds of products in thenew IKEA Catalogue to make it more affordable for many people to make small changes at home.

FAST FACTS

September 1 2019 – August 31 2020

• 77 million visits to IKEA websites in Singapore, Malaysia and Thailand, up 46% on last year
• 28 million meatballs, chicken balls and vegetable balls sold across three markets
• 2.4 million IKEA Family loyalty club members three active markets, up 14% on last year
• 525,418 online orders placed in three markets, more than double the year before
• 3,561 co-workers (Singapore, Malaysia, Thailand, Philippines, Vietnam, Mexico)
• 1,481 tenants in five shopping centres, Malaysia and Thailand
• 145 flat-packed IKEA Shelters donated for test sites, clinics or rest areas in Mexico & SEA
• 73 no. of days stores were closed in Singapore; 56 days Thailand; 47-51 days in Malaysia
• 3 IKEA stores opening in 2021: Singapore, Manila and Mexico City. (Vietnam in planning)

FY20 Turnover

September 2019 – August 2020

• Singapore - IKEA Tampines and IKEA Alexandra
  
  • SGD 304 million
  • THB 7.0 billion
• Malaysia - IKEA Damansara + IPC shopping centre, IKEA Cheras + MyTOWN shopping centre, IKEA Tebrau + Toppen shopping centre and IKEA Batu Kawan + Batu Kawan Link
  
  • SGD 472 million
  • THB 10.9 billion
• Thailand - IKEA Bangna + Megabangna shopping Centre, IKEA Bang Yai and IKEA Phuket
  
  • SGD 344 million
  • THB 8.0 billion 
• Total IKEA Southeast Asia 
  
  • SGD 1.1 billion 
  • THB 26 billion