Swedish furniture (and meatball) giant IKEA is investing over US$3 billion to bring stores to city centres and retool big-box locations as distribution hubs for online orders, per The Wall Street Journal.
- In the nearly 50 years since expanding outside of Scandinavia, IKEA has become a household name and staple, driven by the company’s commitment to simple designs, consistent quality, and relative affordability.
What happened: The world’s largest furniture company is now looking for things to stay that way by prioritizing accessibility for shoppers who have either turned away from the “IKEA experience” in favour of online shopping or have difficulty getting to their nearest store.
- Smaller, downtown stores mean replacing IKEA’s signature labyrinth style—which forces customers to take a one-way path through every single showroom.
- The old method has been successful for years, causing customers to spend a longer time in-store and live out their domestic fantasies amongst the model displays.
Meanwhile, expanding the distribution hub will support the e-commerce biz and combat supply chain issues. Last year, soaring transport and raw material prices dropped IKEA’s net income by ~17.3% despite an ~8.5% increase in retail sales (inevitably, price hikes ensued).
Why it matters: The future of retail is increasingly starting to look like a balancing act between robust online offerings (with speedy delivery) and inviting spaces that give shoppers a reason to go out and see a Blåhaj or Fjädermoln for themselves.
To thrive for another 50 years, even IKEA needs to keep up with the changing times.