Image credits: Erika Wittlieb
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News Article

Online Furniture Sales Are Booming

By Alessa Flores | Thu, 05/14/2020 - 12:38

The opening of the renowned IKEA store in Mexico was planned for October 2020. However, the pandemic has generated unexpected turns in national and international trade. Malcolm Pruys, CEO of IKEA in Mexico, said in an interview with América Retail that today the company cannot speak of a date to open to the public but that the initial plan was to carry out the opening in October 2020 in Mexico City’s Oceania Mall.

IKEA’s first distribution center (CEDIS) in Mexico will have an estimated extension of 15,000m2, which will be key to supplying products to the store and supporting online sales and home orders. In addition, it is expected to generate between 300 and 370 direct jobs, as well as more than 1,000 indirect jobs, according to IKEA’s official communication.

However, given the confinement stemming from the COVID-19 crisis, shopping malls will not be reopened soon. This is why e-commerce has been portrayed as the ideal channel to continue with the sales plans and goals of a large majority of companies. IKEA is an example of this, since it plans to open its doors to the public but through e-commerce. "One thing I can say is that we have an e-commerce business that will start in the fall, as we said it would," Pruys said in an interview with America Retail. 

Despite the fact that for some, the turbulent times surrounding the economy and the ability of people to exercise their spending could be a commercial obstacle, for Pruys this is an opportunity. “Pandemic times do not have to be negative for the arrival of IKEA, since there may be opportunities for people, especially as it is a store that takes care of the comfort, design and accessibility of its products,” told Pruys.

Selling online is a growing market in Mexico, which has proven to be very attractive in these times of isolation. According to the Mexican Online Sales Association (AMVO), 7 out of 10 buyers mentioned wanting to take advantage of offers and discounts more than before, as they are being more careful with their money. Likewise, the association detected a significant increase in browsing and online shopping habits during this period at home. 

In 2017, the association detected that only 7 percent of people used e-commerce, while in 2018 the figure rose to 38 percent. The reason behind the growth in online sales is that 62 percent of people claim to have found more promotions and discounts, followed by greater effectiveness in comparing prices and variety, as well as better payment options. 

Online furniture sales are booming particularly in Europe, North America and Asia and it is estimated that worldwide online furniture and homeware sales were close to US$200 billion in 2019, according to Statista's Digital Market Outlook. Globally, China occupies the first place with about US$80 billion in revenue in online furniture sales, followed by US with US$44.5 billion and Japan with US$15 billion, according to the same source. Lastly, Mexico is no exception to this growth, since furniture is the third best-selling product online in Mexico according to AMVO.

Although today e-commerce in Mexico barely represents 2 percent of total sales, it has growth potential for the following years. According to AMVO, in the next three years, it is estimated that e-commerce will grow five times in Mexico and up to 10 times in the next 10 years. In addition to the fact that between 2009 and 2015 alone, the value of e-commerce in Mexico registered growth of more than 900 percent, going from MX$25.5 billion (US$1.06billion) to MX$257 billion (US$10.66 billion), according to data from the Mexican Internet Association (AMIPCI), the leader in internet studies and digital habits in Mexico.
 

The data used in this article was sourced from:  
IKEA, AMVO, América Retail, Statista, AMPICI
Photo by:   Erika Wittlieb
Alessa Flores Alessa Flores Senior Journalist and Industry Analyst