Shopping fever gives Ikea big lift

Ikea joins a growing number of retailers surprised by heady sales growth during the summer months

Ikea had double-digit sales growth last month. Silvia Razgova / The National

Ikea achieved double-digit sales growth in the Emirates last month as customers capitalised on falling property prices by moving to bigger accommodation and buying more furniture.

The Swedish furniture giant, which is managed by Al-Futtaim in the Middle East, joined a host of retailers reporting unusually strong sales during the holy month and holiday period.

"The news has really been good," said Mile Franicevic, the general manager for Ikea in the UAE, Egypt and Qatar. "We've seen double-digit growth in both Dubai and Abu Dhabi in August. It's been quite surprising."

More than 60,000 people walked through Ikea's doors during the final three days of Eid, resulting in a 17 per cent increase in sales compared with the same period last year. At Ikea's new Abu Dhabi store, sales were up 60 per cent compared with Eid last year, when the retailer was trading in the old store located in Marina Mall.

"It's certainly been a big increase in terms of visitors and sales," Mr Franicevic said. The Dubai store enjoyed 10 per cent growth in sales last month compared with the previous August, and growth at the Abu Dhabi branch was nearly 30 per cent.

Analysts say the strong performance is because of a number of factors, including the launch of the Yas Island store and the timing of Ramadan.

"The Abu Dhabi store has never had so many products available. It's a landmark store and in a location that's fresh," said David Macadam, the head of retail for the Middle East and North Africa at Jones Lang LaSalle.

He said that with the increasing availability of property in the UAE and lower rental prices, people were taking advantage by moving to bigger and more affordable properties. "People have been upgrading and the money they save in rent goes on home furnishings," Mr Macadam said.

Mr Franicevic believes his stores have also benefited from an influx of tourists boosting the luxury and discretionary retail sectors this year.

"I think we have had more people from the GCC in Dubai that would have gone somewhere else," he said. "You can see that, having a lot of Arabic-speaking people walking round the stores."

Retailers in general across the country have benefited from a high number of GCC tourists this summer, along with a greater level of consumer confidence.

This shopping fever is expected to continue throughout the rest of the year, despite global economic concerns.

Ikea has spent millions of dirhams this month launching its catalogue and delivering them to 700,000 homes across the UAE.

"It's almost like the beginning of our season. There's a lot of movement in the market," Mr Franicevic said. "That's why we try to launch the catalogue at the end of August, because it's when people start hitting the UAE. There are a lot of people back from holidays or moving home."