IKEA invests 3 billion in future-proof stores

IKEA wants to increase customer experience in its physical stores. At the same time, the stores are being reorganised with e-commerce and home delivery in mind. A sensible investment, says operator Ingka Group. 

Fast delivery, lower costs

Despite the strong growth of e-commerce, physical stores remain an essential part of the Swedish furniture chain’s business model. Since September last year, the company has already opened sixteen new stores, small and large, and more still are planned: Ingka Group, the largest operator of IKEA outlets, will invest more than three billion euros in new and existing stores by the end of next year. 

In addition to expanding its network, the retailer will also reorganise its existing stores to provide an improved shopping experience and respond to increased demand for home delivery. IKEA mentions a recent shop remodelling in Kuopio, Finland, where delivery time for online orders was halved while costs were cut by 40 %.

Dual role

In new city stores, such as Stockholm and Toronto, the retailer keeps about 2,000 products in stock for immediate takeaway, while larger items of furniture are delivered at home. In London, IKEA is investing as much as 1.2 billion euros in its Oxford Street store, in new services and in a distribution centre in Dartford from which the entire capital can be supplied within 24 hours.

“Our stores remain one of our biggest strengths”, Ingka’s director of retail operations Tolga Öncü says. “We see many of our stores playing a dual role, giving our customers the best of both physical and online retailing.” He good potential for IKEA to expand even in mature markets. Over the past three years, Ingka has already invested more than 2.1 billion euros in existing and new stores across 32 markets.