Aged only 33, Martin Hansson has been given control of Ikea’s UK business at the toughest time possible. But as he explains to Nicola Harrison, he sees the recession as a time of opportunity
Collapsed, decimated, panic-stricken: there are lots of words to describe furniture retailing at the moment and exciting would probably not be among them.
But that is how Ikea UK country manager Martin Hansson views conditions. While many of his rivals have posted devastating sales falls or even been wiped out altogether, the Swedish furniture retailer continues to gain market share and Hansson sees opportunities in a shattered market.
Hansson may see the UK as “an exciting market to be in right now”, but even he would not deny that it is also challenging. Sector veterans such as Carpetright founder Lord Harris have declared the economic climate the toughest they have experienced. Furniture and home retailers arguably feel the squeeze most, as consumers stop moving house and put off big-ticket purchases.
Despite having only been in his present job since October and having taken up the role during an extraordinarily tough time, the 33-year-old Swede is keeping a cool head. When asked what he expects the biggest challenge will be over the next 18 months, Hansson thinks long and hard before saying: “It’s important not to panic. One challenge is daring to think long term in times like this. We have been here 21 years and had tremendous success.
“The economy is a bit more challenging, but it’s important we see it through and stick to what we are good at. Ikea customers can take their products home today, have the lowest price in every segment of the home and continue to be inspired with products that suit their tastes.”
Living the brand
Hansson joined the flat-pack retailer straight out of university nearly 10 years ago and rose through the ranks until he was asked to head its UK arm as successor to Peter Hogsted, who left to join B&Q.
While studying in Gothenburg, like all typical students, he had a few pieces of Ikea furniture in his digs. “I’m a true fan,” he enthuses, adding that the majority of his west London home is furnished in Ikea goods.
It is not just the products he enjoys, but the retailer’s management style too. “I’m proud of working for a company that dares to give a young person like me the opportunity in a job like this, especially in the economic climate,” he says. “I think it’s great and I will try to transfer this attitude and let younger people come through and give them opportunities.”
But could Ikea be at a disadvantage to have such a young person at the helm? Experts say that leaders with experience of previous recessions will be better equipped to steer companies through this one. To a certain extent Hansson agrees, and he recognises the importance of surrounding himself with capable people. “We have one mouth and two ears – it’s important to listen. I’m young coming into this role and I don’t have all the answers. But in an organisation with 10,000 people there are lots of competent, skilled and experienced co-workers. We create the best team and agree on the best way forward.”
So what is the best way forward and how does Hansson intend to make his mark on the business? He says that in a company the size of Ikea, changes take a “little bit of time”. But he is intent on keeping a long-term view.
In the four months since he took on the role his focus has been the shopfloor. He has been touring the country, spending between five and seven hours in each store.
“The key for us right now is to stay close to the shopping experience,” he says. “We want to take care of every customer that walks through the door and know what’s going on in the front line.”
Hansson picked up that approach spending two years as assistant to Ikea global president Anders Dahlvig and company founder Ingvar Kamprad, acting as their right-hand man. Now he is using this knowledge to ensure Ikea continues to prosper through this unprecedented dip in the economy.
“Times like this will be good for us,” he insists. “We fit in when the economy is a bit more squeezed. Consumers are more value-conscious. Our sales pattern has been a little bit up and down but we know our core concept of low prices is working, so a few months of tougher trade is not going to change our business model. Things will turn and we will come out of this stormy situation.”
The general consensus has it that furniture retailers’ comparable store sales have tumbled by about 30 per cent since the downturn bit. While Hansson will not comment on Ikea’s like-for-likes he says, with a wry smile: “We are doing better than that.”
Dahlvig, notoriously reluctant to give indications on how Ikea is trading, last month admitted the downturn was “sharp and affecting all regions of the world”, and Britain and the US were “probably the two most affected regions”. He said Ikea group sales were up 5 per cent in the year to January, which compared with growth of 15 per cent the previous year.
The latest Ikea UK figures are for the year to August 31, 2007, and showed profits slid from£90m to£77.4m on sales of£1.3bn. Growth may have slowed but the figures are still impressive compared with rivals and Ikea is going after market share in the UK “like all good retailers are”, says Hansson.
Ikea, which opened its first UK store in Warrington, Cheshire, in 1987, has 5.8 per cent market share of the furniture market, according to Verdict. That leaves it second only to Argos, which has 6.4 per cent. DFS is the third largest furniture retailer, with 5.6 per cent.
While Ikea may have reined in its global expansion plans from the usual 20 to 25 stores a year to 10 to 15, Hansson denies the retailer has taken its foot off the gas in the UK. On Wednesday Ikea opened a 34,000 sq ft store in Southampton and it opens its first Republic of Ireland store in Dublin in July, creating 1,000 jobs in the process.
However, UK planning permission is still a thorn in Ikea’s side. Hansson says that, along with finding the right locations, this is the only thing preventing the retailer from ploughing ahead with its growth plans. By the end of the year Ikea will trade from 19 stores in the UK and Ireland, and in the past it has said there is room for a total of 32.
“We are continuing with what we planned and are still actively looking for sites, but we want to get them in the right strategic positions,” he says.
Hansson, who also spent two years as a store manager in Nottingham in 2004, says he is enjoying being back in the UK and regards UK retailers as some of the best in the world. “Retailing in the UK is really strong and it will continue to be strong,” he says. “It’s a really solid foundation of society.”
However, this foundation has looked wobbly in the past year. ScS, The Pier, Land of Leather and many others have collapsed in recent months. And of course there was Ilva, which hit the buffers last June – just two years after it burst onto the UK high street, positioning itself as the new Ikea.
Hansson is sympathetic about its demise. “Ilva was unfortunate to come into an environment where the markets went downwards from day one,” he says. “If the economy goes down some companies will leave and not manage.”
In order to ensure Ikea does manage in the downturn, the retailer has implemented cost-cutting initiatives such as making more than 300 senior management posts redundant in 2007.
On the potential of further job losses, Hansson remains philosophical. “Nobody knows what is round the corner and to promise this or that will happen or not happen… we would never do that. We’re looking at how we can be more efficient and better in what we’re doing. We will follow developments and adapt according to what is required,” he says.
He will not comment on what he thinks the Government should do to ease the pressures on retailers. However, he says that the 2.5 percentage point VAT cut in December has not brought any noticeable improvements for Ikea, despite it being passed on to all customers from November 24 onwards – the day the Government announced the initiative, not the day it was implemented, December 1.
The retailer will not reveal which of its 9,500 products are the biggest sellers, but Hansson does say that in the new Southampton shop Ikea has designed a “really, really big kitchen area, with lots of inspiration and more roomsets to show the depth of what we can offer”.
That might seem strange when kitchen specialists such as MFI are falling by the wayside. But again, Hansson takes the longer-term view. “Every family has a kitchen and people are spending more time at home, so the kitchen will become more vital to them and will be key for us,” he says. Tellingly, the retailer is offering customers 10 per cent off kitchens at the moment.
Ikea UK welcomed 41 million shoppers through its doors in the year to August 2008 – flat compared with the previous year – while recording 3.6 million visits to its website.
Hansson is keen to up these numbers while he is at the helm. “We see a lot of new customers coming to us, which is very positive,” he says. And competition is good, he adds. “If we promise our customers we have the lowest price, competition will keep us on our toes.”
So how does Ikea react if customers say they can find a product cheaper elsewhere? Grinning, Hansson responds: “I don’t know. We haven’t been in that situation yet.”
Martin Hansson: up the ranks
October 2008-present: country manager, Ikea UK
2006: assistant to Ikea global president Anders Dahlvig and company founder Ingvar Kamprad
2004: store manager, Ikea Nottingham
1999: joined Ikea Denmark as operations manager at Taastrup – various operational roles
1995-99: studied law at Gothenburg University