Ikea seeks to make more products in UK to fend off post-Brexit vote price rises – The Guardian

Ikea is considering making more products in the UK as the Swedish furniture chain bids to fend off Brexit-led price rises.

The retailer already makes some sofas and mattresses in Britain, but UK boss Gillian Drakeford said it was actively examining how it might increase that work while looking at other products that can be sourced domestically.

Drakeford told the Guardian that the chain’s growing UK sales gave her the capacity and resources to source more locally.

“We have a number of sofa suppliers in the UK we work with today and we are looking at what more products could we source in the UK.” She said manufacturing and sourcing more locally could help offset the risks in importing goods.

“Currency is our biggest challenge,” she said, referring to the fall in value of the pound against the euro and the dollar, which despite recent fluctuations, is down by between 10% and 12% since the EU referendum. The lower value of the pound has made it more expensive to import goods while potential tariffs once the UK exits the EU formally could also adds to costs.

About 60% of Ikea’s products are made in Europe with only a small proportion made in the UK.

“We believe we can double market share here,” Drakeford said. “We’ve been here for 30 years and will be here for the future.”

She said inflation, which hit a three-and-a-half-year high of 2.7% last month, was feeding into the UK furnishings market and the company was determined to maintain its reputation for good value. So far this year, Drakeford said Ikea had not seen shoppers holding back on buying expensive items such as kitchens and that the number of people visiting its stores had continued to rise.

But she said: “We know that wallets are going to be squeezed and inflation has started to kick in now and people are going to have less money in their pockets.”

All Ikea products are designed in Sweden but the group does develop local goods for certain markets if there is demand. Drakeford said any UK sourced goods would be developed alongside manufacturers. “It’s not us just going in and buying what you have,” she said.

She added that selling a bigger volume of items through its existing stores would help Ikea lower prices for shoppers. The company is also looking at using different materials, such as bamboo, in its furniture to keep prices down. Although Drakeford admitted there may be some price rises in the new Ikea catalogue when it is published in the UK in August, she said the price of some items which were clearly important to people would be cut.

Earlier this week Ikea said it would add 1,300 more jobs in the UK by the end of next year as it opens stores in Sheffield, Exeter and Greenwich, south London. The chain has begun expanding again after opening its first major new store in seven years in Reading last year. It is also experimenting with small stores in high streets and at a shopping centre.

A double-digit percentage rise in online sales helped overall UK sales rise by 8.9% year on year to £1.7bn for the 12 months to the end of August 2016. Today about 15% of Ikea’s UK sales are online. Drakeford said she wanted to introduce a proper “click and collect” service in the UK early next year, which will allow shoppers to check availability for items in store online and order goods digitally for pick up later.

She said the company wanted to test its four small stores for up to a year longer before deciding whether to open more. Drakeford said the stores held an advantage because they were closer to where shoppers lived.

“Even after 30 years in the market we only reach 64% of the people. We know that there is huge market potential and our idea is to bring Ikea closer to the people,” she said.

Ikea seeks to make more products in UK to fend off post-Brexit vote price rises – The Guardian

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