Retail news from around the world
Revamped Ikea posts record annual sales
Ikea has reported annual sales above €40 billion ($64.7 billion) for the first time following its ongoing refocus on smaller city-centre stores and online commerce.
In the 12 months to the end of August, the giant Swedish furniture group said it sold goods and services worth €41.3 billion, a 6 per cent rise from €38.8 billion last year. Online revenue surged 43 per cent to €2.9 billion.
Besides developing digital and other services such as furniture delivery and assembly, the new-look Ikea has set up stores and planning studios for kitchens in the heart of cities such as Paris, Moscow, Copenhagen and Sydney.
The smaller stores have proved a huge success, with 1.3 million people visiting the Paris shop in the first five months with sales levels running just below that of a warehouse six times its size.
“We opened more city stores than flagship stores for the first time last year… We are exploring what makes sense for people in terms of physical meeting places,” Jesper Brodin, chief executive of the main Ikea retailer Ingka Group, told the Financial Times.
Trade war spooks US consumers…
US consumer confidence has fallen in September as trade tensions fanned concerns about business and labour market conditions, a potentially worrying signal for consumer spending, which has been driving the economy.
The Conference Board pegged its consumer confidence index at 125.1 for the month from a downwardly revised 134.2 in August. This mirrors other confidence surveys, and could renew financial market fears of a recession that had been assuaged somewhat by strong August retail sales, industrial production and housing data.
The Federal Reserve last week cut interest rates for the second time to offset the impact on the economy from the year-long trade war between the US and China, and slowing global growth. The US central bank lowered rates in July for the first time since 2008.
“We aren’t in a recession yet, but the consumer is plainly worried,” Chris Rupkey, chief economist at MUFG in New York, told Reuters. “Consumer confidence is fragile and any further escalation of the trade war will probably be all it takes to push them and the economy over the edge.”
… While Brexit fears haunt the UK
British consumer sentiment has fallen to a six-year low due to increased worries about the effects a possibly disruptive Brexit will have on job security and individuals’ finances.
The UK economy unexpectedly contracted in the three months to June, and the Bank of England and other economists predict that growth in the three months to September will be dampened by the approach of the October 31 Brexit deadline.
Uncertainty about the terms and timing on which Britain will leave the EU has depressed business investment for some time, but consumer demand has proved resilient so far. But the signs are there that this is beginning to crack.
Market research company YouGov said its monthly consumer sentiment indicator, compiled with economic consultancy Cebr, dropped to 103.4 in September from 104.0 in August, its lowest level since May 2013.
Best Buy sees future in healthcare
Best Buy, the biggest US electronics retailer, aims to rake in revenue of US$50 billion ($74.05 billion) and cut about US$1 billion in costs by 2025, and sees its long-term future driven by a suite of health services and devices.
As its longtime customer base drifts away to online retailers, the company has decided to focus on the needs of the ageing US population. It has zeroed in on healthcare technology, making a series of purchases such as GreatCall in August 2018 for US$800 million.
The company’s plan includes serving five million seniors – up from one million today – with fee-based health programs.
The retailer in August reported disappointing sales and narrowed its revenue forecast for the year, blaming uncertainty about future consumer behaviour and the US tariffs on Chinese imports.
Mad Mex set for Asian rollout
Australian Mexican restaurant chain Mad Mex plans to expand into Asia, starting with its first Singapore restaurant which opened last week in the Marina Bay financial district. An inaugural Malaysian store is on track to open in December, and Indonesia and Thailand are also on the list.
Mad Mex, which recently partnered with Singapore’s 4Fingers group, runs 70 restaurants in Australia and New Zealand and claims to have served up more than four million burritos within the last year.
“Asia is a growth market with diverse cultures and adventurous appetites for great tastes and flavours, which is perfect for Mad Mex,” said founder Clovis Young.
Young said Southeast Asia is in the midst of a food revolution towards healthy eating, and believes Mad Mex’s healthy, quality offer will resonate with local customers.
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