IKEA looks to click and collect as furniture sales grow online

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IKEA is looking to omnichannel fulfillment options like click and collect as the furniture market makes its way online; over the past year, IKEA has opened 19 new click and collect points, according to its recent earnings preview.

The furniture retailer reported nearly $38 billion in total sales, marking a 7% year-over-year (YoY) growth, for its fiscal 2016 year ending in August. IKEA is banking on omnichannel to help move the company into the digital sphere without relying entirely on e-commerce sales, especially as consumers are increasingly turning online to buy furniture.

Click and collect can help drive up total sales for IKEA. Providing online shoppers with more flexible fulfillment options could provide a lift in incremental spending, especially for furniture purchases. Enabling convenient online purchases without forcing the customer to browse or carry items through the stores could increase average basket sizes at checkout.

And adding this convenience could drive up retention among shoppers when they make future furniture or home goods purchases, continually adding to IKEA's growing total sales. Overall, embracing an omnichannel strategy will help IKEA maintain its spot as a top furniture retailer as the market shifts to digital.

IKEA has an advantage as furniture sales begin to move online. Focusing on expanding its click and collect program as opposed to pursuing solely e-commerce gives IKEA a significant advantage over pureplays. Because furniture purchases tend to be more sensitive due to product longevity and pricing, giving shoppers a chance to inspect their items and address any issues before leaving the store could add significant value for its customers.

Therefore, even as the furniture market migrates online — BI Intelligence estimates that nearly one-fourth of all furniture sales will take place online this year — IKEA can use its brick-and-mortar stores to its advantage while pushing further into digital at the same time.

Click and collect — a fulfillment option that lets shoppers place an online order and pick it up at a store — is thriving in the UK.

Over half of UK shoppers report having used this method in the past year, according to a survey from JDA & Centiro conducted in April 2016.

However, the US is far behind on the click and collect trend, with just 27% of consumers using the service. This is largely due to slower growth in mobile commerce, and specifically, the hesitancy shoppers feel about using mobile retail apps.

Retailers in the US can look to the growth drivers in the UK to help drive up their own click and collect sales. Most notably, mobile commerce and adoption by grocery chains are driving shoppers in the UK to use click and collect.

Nancee Halpin, research associate for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on click and collect that breaks down the growth factors behind click and collect in the UK. It also discusses the retailers successfully implementing the fulfillment method, examines the of impact consumer behavior, and outlines some key steps that US retailers can take to replicate the UK's performance.

Here are some key takeaways from the report:

• The UK's click and collect market is expected to grow 78% by 2020, to £8.2 billion ($10.6 billion). Meanwhile, it is expected to reach £5.3 billion ($6.8 billion) by the end of 2016.
• Click and collect is benefiting from consumer adoption of mobile commerce in the UK. Mobile is a fundamental driver because it affords consumers more flexibility in the purchasing process. As a result, many UK consumers are purchasing goods on their mobile phones, and then picking them up on the way home from work, the gym, appointments, etc. 
• The service is particularly popular among grocery chains, with many of the UK's largest supermarkets offering click and collect. Since trips to the grocery store are made frequently and regularly, click and collect is a perfect fit for shoppers who want to avoid recurring issues like long checkout lines and crowded stores.
• To grow click and collect in the US, retailers need to invest in their mobile presence and dedicate in-store resources to click and collect shoppers. Merchants should do more than just recreate the desktop browser experience on a mobile app — this includes employing tools like mobile loyalty programs, digital coupons, and social media integration.

In full, the report:

• Sizes the market for click and collect in both the UK and the US.
• Identifies the key growth factors that are making click and collect successful in the UK.
• Discusses key players in the UK that are seeing success with click and collect.
• Presents some of the challenges the US faces in spurring adoption.
• Outlines future opportunities for US retailers to grow sales via click and collect.

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