IKEA is Testing New Stores

Convershaken Staff
January 4, 2016

IKEA is famous for its mammoth, suburban warehouses, packed to the rafters with cheap, oddly named beds, wardrobes and cupboards. But changing consumer habits are forcing the world’s largest furniture retailer to try out new store formats such as inner-city outlets and pick-up points for online orders.

In a recent Financial Times interview, IKEA boss Peter Agnefjall pointed to rising urbanisation and online shopping as the reasons for his new strategy. He has already introduced collection points for online orders in areas that couldn’t support a full-sized store such as Kumamoto, Japan, and London’s Oxford Street is on the agenda.

The Swedish company has also opened outlets that are half the size of its typical stores in four locations including Zwolle in the Netherlands. And it recently launched a city-centre store in Hamburg, Germany, that sells IKEA products and lets customers borrow bikes to transport goods home. But the strategy threatens to remove one of the company’s key competitive advantages: its enormous, linear stores encourage shoppers to pick up products they didn’t plan to purchase as they trek to the checkout in the distance.

IKEA is betting on new and existing stores – it currently has 328 outlets – to double its revenues in nine years, to €50bn in 2020. The pick-up points should fuel further growth in its online business: sales soared 35 per cent to over €1bn in 2014.