Ikea’s new CFO to maintain investment drive through 2020

Bachchan Kumar | Hindustan Times | Getty Images

Then – CEO of Ikea India Juvencio Maeztu (3R) with Maharashtra chief minister Devendra Fadnavis (3L) during the groundbreaking ceremony of Ikea’s store, at Turbhe, on May 18, 2017 in Navi Mumbai, India.

Ikea, the world’s biggest furniture retailer, will maintain or raise already high levels of investment in coming years as it adapts to fast-changing shopping habits, its new CFO said on Wednesday.

In a strategy shift, privately held Ikea, known for its huge out-of-town warehouse stores, is starting to add city-center showroom formats to entice new generations, while also further developing its online store to stave off competition from internet giants including Amazon.

Ikea must adapt if it is to stay ahead of online-only players such as Amazon — which in November launched two furniture brands of its own — as well as Flipkart in India and Germany’s Otto and Home24.

“Of course you can see online players such as Amazon and Flipkart growing,” Juvencio Maeztu told Reuters in his first interview since becoming chief financial officer of Ikea last month.

“What is more relevant than ever is to be as close as possible to the consumer – it has much more power than before,” he said.

That partly means maintaining heavy investment, even if it puts pressure on profits as it did in the financial year through last August.

Ikea, owner of most Ikea budget furniture stores worldwide, invested 3.1 billion euros in stores, distribution and customer service networks, shopping centers, renewable energy and forestry in its 2016/17 financial year.

Maeztu said total annual investments in traditional store expansion, new city-center formats, digital services, e-commerce warehouses and distribution would be as high or higher in fiscal 2018-2020 as in 2017.

“We will invest in being more accessible,” he said. “We will keep investing the same or even more over the next three years,” he said.