Ikea will invest in more Citystores

Ikea wants to open smaller stores in city centers, starting in 2019. These stores should attract people without cars, a move that should tap into the world’s rapid urbanization and digitization.

Ikea in the inner city

Ikea has been looking at new sales channels to complement its traditional furniture store outside of the city for a while now: it has a pilot program to sell through third party platforms like Amazon and Alibaba; it will launch a new digital platform where customers can help create new products and there are plans for stand-alone Ikea restaurants in the inner cities.

Smaller Ikea stores have also popped up in several major cities, displaying the company’s entire product range on limited space. If new CEO Jesper Brodin gets his way, the company will open a lot more of these stores starting in 2019: “We want to become a recognizable feature in the street thanks to the Citystores, mainly to attract people without cars.”

Lower profit

The first new stores will open in Greenwich (England) and the Danish capital, Copenhagen, respectively in 2019 and 2020. “We have a ferocious desire to claim the city centers and we have several pilots ongoing”, Brodin said. He took over from Peter Agnefjall on 1 September.

Ikea not only wants to close the gap with the customer who uses web shops and home delivery more frequently. The new stores also have to counter the dwindling profits. The Swedish furniture chain generated a 3 billion euro operational profit in its past fiscal year, down 1.5 billion euro compared to the year before. Several profitable divisions were moved to Inter Ikea however, so that does explain the drop somewhat. Nevertheless, it is clearly a priority for the company to swiftly and decisively meet the evolving consumer habits.