Monday 23 September 2019

Ikea boss wants transition deal as pressure grows to avoid cliff edge Brexit

Ikea UK Country Manager Gillian Drakeford, Ikea/PA Wire
Ikea UK Country Manager Gillian Drakeford, Ikea/PA Wire

Ravender Sembhy

The UK chief of Ikea has thrown her weight behind a Brexit transition period as pressure mounts on the Government to sign a deal to protect Britain's businesses from a "cliff edge" severance from the EU.

Gillian Drakeford, who heads up the UK arm of the Swedish flat pack furniture giant, demanded "clarity" from Theresa May as companies brace for a new trading relationship with the single bloc.

She told the Press Association: "I'd like to see some clarity, Theresa May talked about a transition period and this would be beneficial for us to adapt to a new trading reality, to allow us to offer products at the best prices."

Her comments come after another fraught week for the Government in which divorce talks failed to advance to trade and Chancellor Philip Hammond warned a "cloud of uncertainty" was hanging over the economy.

Earlier this month, several business leaders are thought to have pressed the Conservatives to ensure a transition period at a summit attended by the likes of GSK boss Emma Walmsley, WPP chief Martin Sorrell and Vodafone head Vittorio Colao.

Ms Drakeford admitted that Ikea has had to raise prices after the pound collapsed and inflation soared following the referendum last year.

"It is difficult at the moment, currency is one of the biggest things that impacts a business like ours.

"We want to keep the product at a good price for the consumer because we know that wallets are thinner, but we've had slight price increases in line with inflation."

Rising inflation has pushed up shop prices for already hard-pressed consumers, leading retail sales across the board to slump.

Speaking as Ikea celebrates its 30th anniversary in the UK, she also pointed to a change of direction for the firm, with a move away from out of town big box stores that shoppers must drive to.

Instead, the retailer will look to add to its four smaller collection points and target dense population centres.

"With car ownership declining, we realise we need to be accessible to public transport and closer to more dense populations, and offer more home delivery.

"We've seen success with smaller collection points, and we will see more of them.

"We only have 20 UK stores and when I look at the market I still see space for traditional stores, but they may change and other touch points may be introduced because we need to be closer to people."

The furniture retailer recently acquired TaskRabbit, an online firm that connects users with handymen and women for odd jobs, and Ms Drakeford said that it was a sign that Ikea is "embracing the gig economy to change our offering".

Ikea will also press ahead with plans to manufacture more products in the UK to mitigate increased costs.

"We've started manufacturing more products in the UK and we are looking at where our products are coming from. This would be a win-win for the UK and Ikea, but it's in its infancy."

Ms Drakeford, who traces her own career at Ikea back to the firm's first ever British store in Warrington in 1987, also hailed the group's contribution to the economy over the past three decades and beyond.

"We've created jobs, contributed in taxes and to local communities and now have 11,700 co-workers. We are here for the long term."

PA Media

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