Ikea flat-pack furniture sales hit by downturn

Ikea, the Swedish furniture group, warned yesterday that the housing downturn is hitting sales of its flat-pack furniture as global retailers painted a gloomy picture. Speaking at the World Retail Congress, in Barcelona, Anders Dahlvig, Ikea's president, said: "The housing downturn is important for our business and we feel it quite a lot. Our growth is going down slightly in the US, the UK and Germany."
His comments came the day after figures from the Halifax showed that house prices fell in Britain last month by 2.5%, the biggest monthly fall since the property slump of the early 1990s, and against a backdrop of a rapidly shrinking mortgage market in Britain. Both developments are likely to affect spending on household goods in Britain, where Ikea has 17 stores.
Dahlvig's gloomy description of the credit crunch's impact on retailing was echoed by several of the 2,000 delegates attending the congress. Another speaker, Paul Charron, chairman emeritus of fashion retailer Liz Claiborne, said hopes that recovery would emerge this year had been dashed: "Recovery in the second half of 2008 is clearly a pipe-dream - the second half of 2009 is more likely."
He forecast many more company failures in the US because there are "too many outlets chasing too few consumers".
However, Dahlvig said that the effects of the credit crunch were also an opportunity for Ikea, which operates in 37 countries. The company would focus on expansion into emerging markets such as Croatia, Slovenia and Ukraine. The boss of Carrefour, José Luis Duràn, said the sector faced its "most significant challenge in a generation". He added that the company, the world's second largest retailer, would wait until next year to consider a stock market listing of its property unit because of market conditions.