know, 2023 proved to be a challenging year for retailers globally. We responded by ensuring affordability was at the forefront for the customer. While the cost of goods increased in the past year, where possible, we did not pass these costs on to customers. Instead, we kept our prices as low as we could and reduced the prices of many of our iconic products.  Despite challenging conditions, our sales grew almost 5 per cent from FY22, and we saw double-digit growth across many of our iconic products, such as Malm beds and chests of drawers, Kallax storage, Kivik sofas and Trofast children’s storage.  As we move forward, we will maintain our focus on affordability by increasing our investment into lowering prices even further, and across more products.  IR: What are your expectations for consumer sentiment and spending in the year ahead?  MV: It’s likely that the first half of 2024 discretionary spending will remain tight for many Australians. We estimate the second half of the year will show an increase in consumer spending as we hopefully begin to see relief for mortgage holders after multiple interest rate increases. However, international shipping disruptions in the Red Sea and global conflict’s potential impact on oil prices will continue to put pressure on product availability and costs. We take the responsibility as a retailer to maintain our product offer through these times and not pass on these costs to our customers where possible.  In the property market, things are slowing for now, but the record shortage of rental properties will continue to drive prices up for tenants, particularly in our capital cities. Housing affordability is at its lowest in decades and will continue to make the wallets of Australians thinner. Customers may be considering items that are not necessarily new but new to them, by purchasing second-hand items. Research and consulting firm Fifth Dimension states that the second-hand market in Australia is now worth $60 billion and growing 25 per cent a year. Our buy-back service, where we buy back and resell preloved Ikea items, along with the as-is market and free spare parts offer, are just some of the ways we’re enabling customers to be part of the shift to a circular economy while also saving money. While 2024 is expected to be another challenging year, we will continue to focus on growth and our vision to create a better life at home by increasing the affordability and accessibility of Ikea, made possible by our 4000 dedicated co-workers. IR: What opportunities do you see to continue experimenting with physical retail in the year ahead?  MV: In recent years, we have invested heavily in our journey as an innovative omnichannel retailer, opening Plan and Order Point locations in Greater Melbourne and Sydney, enabling us to be exactly where our customers need us to be, which is a key part of our growth strategy for Ikea in Australia.  In 2024, another Plan and Order Point will open in Cannington, south of Perth, for customers to get one-to-one, expert planning advice.  This Plan and Order Point will also have a Pick Up Point for customers onsite. This means customers will be able to place an order online conveniently for products across the full Ikea range, with the option to pick them up from Cannington. We remain dedicated to enhancing both the in-store experience and accessibility for customers; for example, our Shop and Go feature on the Ikea app enables a faster and more convenient checkout experience in-store, and the installation of self-serve bistro kiosks in all stores reduces wait times for customers and also improves operational efficiency. IR: What role do you see innovation playing in Australian retail in the coming years, and what areas of innovation are you focused on now?  MV: At Ikea Australia, we have an ambitious growth agenda, with innovation playing a key role in delivering this ambition and our vision as a company ‘to create a better everyday life for the many people’. The rising expectations of customers are propelling our omnichannel strategy at lightning speed. For us, growth in online sales driven by the Covid-19 pandemic has led us to transform service formats and customer meeting points, reimagine stores as fulfilment centres, and evolve our customer service centre for customers to shop with us remotely. These actions ensure our co-workers can remain focused on ‘value-add’ engagements for customers. We are focused on creating further personalisation at scale, leveraging artificial intelligence, self-serve tools and automation where it makes sense, such as with Billie the Chatbot. We want to ensure our co-workers are available to provide more complex support and advice, which will enable us to meet our goals in a sustainable and cost-efficient way. For fulfilment, we are prioritising automation and artificial intelligence, building ‘demand sensing’ into our forecasting tools, and leveraging machine-based learning to forecast needs and improve stock integrity. We also maximise the availability of inventory across a total market and over multiple states, enabling us to hold less inventory but provide much better availability to a customer and maximise their potential to purchase. In the future, we will be looking to introduce and integrate ‘pick to person’ solutions with full automation for parcel delivery. For home deliveries, we are exploring technology for optimising route planning with our transport partners, so we can maximise productivity gains and cost structures. In terms of sustainability, we have big goals to fulfil by 2030, which will demand that we innovate to achieve them, through optimising resources, enhancing energy efficiency, and enabling sustainable solutions.  Despite the challenges to the decarbonisation of the transport sector in Australia, we remain committed to our ambition to achieve 100 per cent of customer deliveries by zero-emissions vehicles by 2025. In the past 12 months, we’ve achieved exponential growth on this ambition, with 32 per cent of truck deliveries now via a zero-emissions vehicle. IR: What are some of the retail fundamentals that you think are worth remembering?  MV: The customer experience is the absolute priority and remains at the forefront of our transformation. Each week, we receive more than 10,000 customer reviews through different channels, which informs the actions we take as a business. Ease of shopping is essential for customers and something we are always dedicated to improving, whether through our Ikea app and the online customer experience, improvements in payments or reducing waiting times for customers.  As we continue to develop digital tools to enable a better shopping experience, we recognise that co-worker interaction remains a top driver for customer feedback and is a fundamental we keep in focus. Finally, being the world’s largest home furnishing retailer, we are proud to be a pioneer in environmental and social responsibility. However, we never lose sight of the fact our product range is at the heart of our business – and the offer of affordable, high-quality home furnishings is who we are and what we do. It’s what our customers love most about us, what we have been relentlessly dedicated to for over 80 years, and what will ensure Ikea stays in the hearts and minds of ‘the many people’ and their ever-evolving needs and desires in the future. This story first appeared in the 2024 Australian Retail Outlook.