Neither furniture retailer IKEA nor fashion retailer Primark expect the second round of lockdowns spreading across Europe to have nearly as much impact as the first, but where the former is building its online capacity, the latter is not.
Instead, Primark is calling for extended opening hours in the UK during December in order to meet an expected surge in demand – an expectation based in part on its experience when the first lockdowns were lifted, in part on the annual pre-Christmas shopping spree.
“In some locations we could even open 24 hours. We know the demand is going to be there,” said George Weston, chief executive of Primark parent company Associated British Foods, in remarks reported by the Financial Times.
Unlike many other retailers, Primark has not pivoted to e-commerce during the pandemic, even eschewing a click-and-collect service.
“I don’t think click-and-collect would work,” said Weston. “We have a high footfall, low price model. The logistics would be very difficult.”
Compare that with IKEA, which has been pouring money into developing its online store at the same time as forging ahead with opening smaller format stores.
“This lockdown is incomparable to the first one,” Martin van Dam, chief financial officer of Inter Ikea, the main company in the Ikea retail empire, told the Financial Times. Then, restrictions limited the production capacities of the retailer’s suppliers.
“The big thing is we don’t stop production,” he explained. “There are slower sales, but there is not the inefficiency of the first lockdown,” he added.
Like Primark, IKEA witnessed “a tsunami of sales” when stores reopened in the summer. “People want to improve their homes as they’re in them for most of the day,” van Dam said. “There’s been a super strong acceleration in demand and we’re producing like never before.”
IKEA consumers are also spending more – the average basket size has increased by more than a quarter, from €93 to €119 – and spending differently – less on food, more on clothes and storage products.
Sourced from Financial Times; additional content by WARC staff