IKEA Joins Trend for Smaller-format Stores in Downtown Locations
Ikea is coming to a High Street near you. The Swedish retail giant revolutionized the way furniture is sold in the 1970s with its distinctive blue retail sheds in out-of-town locations. But now it wants to get closer to its customers with a new generation of smaller format stores in downtown locations.
Called Planning Studios, these new stores are designed to provide inspiration and advice for customers looking to furnish their kitchens and and bedrooms. Ikea recognizes that many of its customers living in urban areas lack the time to dedicate to researching furniture and don’t want to drive to Ikea’s traditional big-box locations.
It opened its first Planning Studio in Manhattan, New York and is now opening more of them in other countries.
The new smaller-format stores can be rolled out much more quickly than Ikea’s conventional out-of-town stores and they can take advantage of retail space that becomes available as some retailers abandon shopping centers or High Streets. In Spain, for example, Ikea has this year opened a dozen new smaller stores — branded as Ikea Diseña — in second-tier cities and towns such as León, Alicante and Cadíz.
Interestingly, these new stores have abandoned one of the hallmarks of Ikea’s big-box stores, namely that customers can take home anything they see in the store. Instead, the Planning Studios let customers order products that will then be delivered direct to their home.
The strategy of opening smaller-format stores in central urban areas has been adopted by other big box retailers, such as Target in the US, or Decathlon in Europe.
While many established retailers are closing stores to adapt to an an era of declining footfall and sales in physical stores, the more adventurous are experimenting with new store formats, such as Ikea’s Planning Studios.
We are also seeing online-only etailers and brand-name manufacturers that previously did not have physical stores adopt “bricks and clicks” strategies as they realize the importance of the physical channel, both as a way to fulfill online orders and also to showcase products that customers prefer to touch before buying.
The latest example is Chinese eCommerce giant Alibaba, which has opened its first European store in Madrid. Called AliExpress, the store is in Madrid Xanadu, one of the largest shopping centers in Europe, and functions as a showroom. Shoppers can try out products in the store, but have to purchase them online.