Sunday 18 February 2018

Swedish swashbuckler defies trend with huge profits

John Mulligan

WHEN Ikea burst on to the retail scene in Dublin in 2009, it brought tough competition to already jaded rivals.

The cachet of the international Ikea brand effectively ensured that the Swedish group's massive outlet in the capital would be a winner.

It didn't have to wait long to see just how popular its store was. Just a year after opening, Ikea applied for planning permission to boost its size by 10pc. And even though the store has experienced a tough trading environment, the Dublin outlet is still among the best performing Ikea premises in Europe

Within the first full year of being open, the Dublin store made an €11.4m pre-tax profit -- an astounding amount at a time when the country finds itself in the midst of political and economic turmoil.

With its extensive range of funky products, from candles and kitchen utensils, to bedding and furniture, Ikea has posed a major challenge for competitors, not just in the capital, but all over the country.

The store has even cannibalised significant business from the Ikea outlet in Belfast, which had benefited from shoppers from the Republic visiting it in droves before the Dublin premises opened.

While it would be wrong to point a finger of blame at Ikea for other operators' woes, it had an undoubted impact when the general effects of the downturn are factored into the equation.

While firms such as Woodies DIY or Atlantic Homecare -- both owned by Grafton Group -- and even B&Q, owned by UK-based Kingfisher, are not direct competitors to Ikea, they too feel the pinch in Dublin from the Swedish swashbuckler.

Ikea carries an extensive range of items, such as lighting and garden furniture, which DIY stores also try to sell to consumers.

But Ikea's core offering remains indoor furnishings and storage space. That means its rival firms, such as Australian-owned chain Harvey Norman and Irish-owned Bargaintown, are among those facing a battle.

Meanwhile, consumers are putting off expensive purchases, not spending at all, so there's significantly less money to go around.

But that hasn't deterred new entrants. British sofa chain DFS recently opened its first outlet outside the UK, in Dublin.

Few rivals are taking Ikea sitting down, it would seem.

Irish Independent

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