Finance Your Budget IKEA announces new stores with a big difference

IKEA announces new stores with a big difference

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Consumers might be breaking out the Allen keys more often, with Swedish furniture manufacturer IKEA revealing plans for an Australian online store, as well as another 22 smaller format stores and online pick-up points across the country.

IKEA Australia country managing director David Hood told Fairfax the move is part of the retail giant’s two-year plan to establish a global e-commerce platform.

To those familiar with IKEA’s maze-like layout, the concept of a smaller store might be shocking, but Mr Hood says that is what’s planned.

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The company aims to roll out 22 smaller stores and online pick-up points across the country, similar to the already operational third-party depot in Tasmania.

PARAMUS, NJ - JANUARY 27: A shopper seeks assistance from IKEA employees in the pick -up area at a Ikea store January 27, 2005 in Paramus, New Jersey. Ikea, a Swedish company, currently has 200 stores worldwide and in the next 10 years is planning to open five stores annually in the U.S., the company's second-biggest market behind Germany. (Photo by Stephen Chernin/Getty Images)
IKEA’s massive store size might be a thing of the past. Photo: Getty

“There are 22 locations that we feel the customers could meet IKEA in some way – what it will not be is what we see at Tempe [which is 37,000 square metres],” Mr Hood said.

“It could be 10 or 12 units of some kind to support the multi-channel rollout.”

The smaller stores will only be around 3000 square metres and will not contain the same range of products as the full-sized stores.

These stores will also have online pick-up points, where customers can receive their online orders.

IKEA’s online store is expected to be operating in Australia by the end of the year, and the company hopes to have established its global e-commerce platform within two years.


Maze-free shopping

IKEA already offers online sales in some countries, which account for only 3 per cent of the company’s global sales. Chief executive Peter Agnefjaell has said his aim is to increase that to 10 per cent by 2020.

While IKEA has been relatively slow to embrace e-commerce, Brian Walker, chief executive of the Retail Doctor Group, said this won’t be an issue.

IKEA will open a series of pick-up and drop-off points to support its online expansion. Photo: Getty

“I think it will be very successful, they’re set to pass 20 per cent sales this year, and Australia’s the perfect market because we’re early adopters.”

Mr Walker told SmartCompany 85 percent of consumers pre-research products online, and having the ability to do so for IKEA will attract more customers.

“This should satisfy the people who don’t want to or can’t go to the bigger stores,” he said.

“They’re clearly looking at the markets they’re not attracting, and they’re looking at smaller formats.”

Shopping for furniture online can be difficult as consumers can struggle to understand how the product looks.

But Mr Walker said online technology advancement should overcome these issues, and can provide unique in-store information.

“They can bring the online details in store, provide details of stock or pick-up locations in different areas.

“This expansion will allow IKEA to achieve a broader cross section, and establish themselves as an omnichannel retailer.”

* This article first appeared on Smart Company

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