The new boss of IKEA Canada had a blunt message for his store managers this week: The retail competitive landscape is getting tougher and the Swedish home goods purveyor needs to get better.
Stefan Sjostrand, who arrived at the helm of the company two months ago, is intent on making his stores and e-commerce site more "accessible." His team needs to keep shoppers visiting the outlets even as other retailers grapple with declining traffic in a digital age.
"We must be even better as the competitive landscape is changing dramatically," Mr. Sjostrand, clad in faded jeans and a navy V-neck sweater, said in an interview on Tuesday. "If we don't take care of our customers, we will lose them."
Mr. Sjostrand, 46, who held positions at IKEA in Europe since 2007, is hitting the ground running here as he tries to heal the wounds of a bitter 17-month walkout at one store, while jostling for the business of debt-ridden consumers.
He's counting on making the buying process faster and cheaper to help entice frugal consumers to buy IKEA's affordable goods – and help him reach his ambitious financial goals.
On his first day as president of IKEA Canada, Mr. Sjostrand made it his priority to try to find a way to settle its staff walkout at its Richmond, B.C., store and regain sales, which were sliced by 40 per cent. (The retailer kept the outlet open with reduced operations.)
That task now accomplished – a week ago a mediator imposed a 10-year deal for the 330 workers – he now can't rest on his laurels at the cheap-chic Swedish home furnishings titan.
As he meets this week with his store managers from across Canada at a downtown Toronto hotel, he warns them that IKEA – a destination retailer that keeps its customers in its maze of aisles for an average of two hours per shopping trip – is operating in "a tough competitive landscape."
"You can read about Target, which has tough times," he said in the interview. "You read about Sears, which is having a tough time. You can listen to reports about Staples, which is closing stores."
IKEA feels the pressure to keep customers coming back to its stores because so much of its revenue depends on shoppers making last-minute, unplanned "impulse" purchases when they browse the aisles, said Steen Kanter, a former IKEA executive who now runs consultancy Kanter International in Raleigh, N.C. He estimated as much as 40 per cent of IKEA sales have been "impulse" driven.
Mr. Sjostrand acknowledged that the retailer aims to persuade shoppers to purchase "add-ons" and other products besides the items for which they headed to the retailer. But he said he is intent on improving IKEA's website to tempt e-shoppers to make more purchases online as well.
And he will start setting up "pickup point" locations to make it more convenient and free for customers to fetch their e-commerce orders instead of the hefty – although declining – shipping fees for its online customers, he said.
At the checkout, he is intent on reducing the amount of time it takes to process customer purchases – already the time has shrunk by 20 per cent in the past two years, he said. IKEA installed new point-of-sale systems this year that will speed it up even more, he predicted.
The initiatives should help him reach his goal of increasing sales by "double digits" in the next six years to help the parent company hit its target of doubling its total revenues by 2020.
In the past fiscal year, IKEA Canada's sales rose 5.2 per cent to $1.6-billion, compared with a 3.5-per-cent increase the previous year, he said.
While e-commerce sales now make up about 5 per cent of its annual revenue, he is targeting doubling that proportion by 2020.
Anita Dawson, bargaining agent for Teamsters Local 213, which represents the IKEA workers in the Richmond store, said she appreciated meeting Mr. Sjostrand last week, the day after the mediator imposed the labour deal.
She said she understands the urgency of the company luring customers back as it heads into the important holiday shopping season.
"I sincerely hope that it's a new era," she said.