IKEA, the world's biggest furniture retailer, has reported an 11 percent increase in fiscal full-year sales to a record 31.9 billion euros ($35.8 billion). David Pollard looks at why the Swedish company, known for its flat-pack self-assembly budget furniture, is doing so well.
What's a flatpack furniture nightmare for some is big bucks for IKEA. And it proves that austerity doesn't always hurt. European governments and consumers have tightened their belts over the past few years. But profits of cheaper supermarkets and other retailers offering better value have been on the up. IKEA's sales have increased 11 per cent over the past year. That takes them to a record of just shy of 32 billion euros. Sales grew in nearly all its markets, with China the fastest-growing followed by Russia. In Europe, Germany showed record growth and southern nations showed ''positive progress''. Vicky Pryce is chief economic adviser for CEBR. (SOUNDBITE) (English) CHIEF ECONOMIC ADVISER, CEBR, VICKY PRYCE, SAYING: "The financial crisis has encouraged people to look at lower-cost, high-quality purchases that they can make and it's become quite acceptable for the middle classes to be doing exactly that. And, of course, in the areas around Europe which have been hit by austerity, then going to a place to which is relatively cheap and also the quality can be assured is the way things have moved.'' The Swedish company's built its fortunes on flat-pack self-assembly budget furniture. The new numbers could show that a push for sales growth is working. Its shoppers though - they still face some of their own challenges.