In IKEA'S biggest change in over 30 years, the Swedish flat-pack furniture business is to split its operations in two. Hayley Platt Hayley Platt asks why.
IKEA's flatpack business has barely changed in decades - until now. The world's biggest furniture retailer wants to make the company more manageable. The IKEA GROUP (INGKA HOLDING) currently controls the stores. The design. The factories that make the furniture. And the logistics operations. Soon it will just look after IKEA's shops and its website. Everything else will move to a separate company. (SOUNDBITE) (English) REUTERS CORPORATE STRATEGY CORRESPONDENT, TOM BERGIN, SAYING: "This is the biggest change in IKEA in over 30 years. You're seeing 25,000 workers shift employer effectively from one side of the group over to the other. The hope for the company is that this will allow the company and the overall group to change more quickly to meet changing customer needs." The changes should make it easier for IKEA to expand into new markets. To move away from large warehouses into smaller stores closer to town. And to test out new ideas. But the move isn't without risk. (SOUNDBITE) (English) REUTERS CORPORATE STRATEGY CORRESPONDENT, TOM BERGIN, SAYING: "There might be more tension between the operations that were previously owned under one umbrella and now under different umbrella's. But people have different agendas so everything might not fit together as well and consequently it might not be as efficient." IKEA employs 160,000 staff in more than 300 stores. Last year it reported pre-tax earnings of 4.3 billion euros. Maintaining profit margins of between 10 and 14 percent. But IKEA's founder Ingvar Kamprad is now in his nineties. Other family members are involved in running the firm. But he's wants to protect IKEA so it lasts - and grows - for another 30 years and beyond.