Warehouse stores

Ikea heads to city centers to replace warehouse stores

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Ikea is stepping up its bet on small downtown stores and planning studios for kitchens, as the world’s largest furniture retailer tries to reduce its reliance on selling only through giant warehouses outside of the city. the city.

The CEOs of the two largest companies in the flatpack empire told the Financial Times that an experiment with new store formats showed that customers weren’t so interested in pick-up points, which have been known to difficulties in countries like the UK and Norway.

But the smaller downtown stores opened this year in Paris and Moscow were a success, with 1.3 million people visiting the La Madeleine store in the French capital in the first five months and higher sales levels. just below those of a warehouse six times the size. .

“We opened more city stores than flagship stores for the first time last year. We test everything we can dream of. We’re exploring what makes sense for people in terms of physical hangouts, ”said Jesper Brodin, managing director of leading retailer Ikea Ingka Group.

Torbjorn Loof, Head of Brand and Concept Owner Ikea Inter Ikea, added in a separate interview: “We are entering more new markets than ever before. . . It’s the new approach for Ikea to be more open and to test new things.

Ikea is in the midst of what the two executives called the biggest and most significant transformation since its inception in the Swedish countryside 76 years ago. It changes every aspect of its previous model of forcing customers to go to warehouses on the outskirts of cities to collect and then assemble their own furniture.

Ikea has made a big leap in e-commerce and revealed on Wednesday that online sales grew 43% in the year through the end of August to account for 7% of total revenue. Revenue increased 6.5% to 41.3 billion euros while same-store sales, which exclude new store effects, increased 1.2%. Ikea reports profitability and other numbers later in the year.

Ikea opened 10 flagship stores, nine planning studios and two smaller downtown stores last year. She recently opened a kitchen planning studio in Copenhagen and plans to open smaller stores in Queens New York and Tokyo, where she will focus on living in small spaces.

Ikea has also launched several furniture rental trials. Mr Brodin said early results suggested it was particularly appealing to students as well as some short-term expatriate business workers. “We are in the process of solving some of the practicalities of the financing,” he added. It is also offering more services such as assembly to customers as well as the use of its existing stores as distribution points for online sales.

When asked if moving from a sales model to multiple experiments was a challenge, Mr. Brodin replied, “This is a time when what we do is allow ourselves a greater degree of success. entrepreneurship. There is a risk of fragmentation or even damage to the mark. But we don’t see it like that at all. The speed of change and with consumers is accelerating and we must keep pace.

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