Furniture giant Ikea opens a new kind of store in Australia
Ikea has opened the first of what could be a number of small format stores in Australia, minus the traditional maze-like showroom and Swedish meatballs.
The nation’s first Ikea plan and order point opened at Highpoint Shopping Centre in Melbourne’s western suburbs on Thursday.
There’s no navigating the maze in a traditional big blue warehouse, no food and no flat packs or products to take home immediately.
The Highpoint store is only 350sqm, a tiny fraction of the size of a typical 30,000sqm Ikea in Australia.
The new plan and order point at Melbourne’s Highpoint Shopping Centre is only 350sqm. Picture: Supplied by Ikea
The idea is that customers can get one-to-one advice to plan and order more complex home furnishing products and services like kitchens, wardrobe systems and bathrooms.
Ikea Australia CEO Mirja Viinanen said the new concept is part of the retailer’s growth strategy, including finding ways for it to become more accessible and convenient for Australians.
“This plan and order point is very unique for Australia,” she told realcommercial.com.au.
“No other retailers have done something like that in Australia.”
Based on the success of the first plan and order point, Ikea Australia will look at opening additional planning studios or another format as Ikea introduces new customer meeting points around the world.
Ms Viinanen said the company has a plan for additional plan and order points over the next two years, but she would not detail the number that may be rolled out.
“We would like to, first of all, take the learnings from the first one.
“It’s not only the Melbourne market. It’s other bigger cities as well included in this plan.
“From the learnings from here and from the learnings especially from other countries, it might be a different customer meeting point, the next one, when we increase the accessibility. But, yes, we have plans.”
The plan and order point is designed to give customers one-to-one advice when planning kitchens, bathrooms or wardrobes. Picture: Supplied by Ikea
Ms Viinanen said the goal for Ikea’s expansion is to be where ‘the many people’ are, offering more people the ability to choose when, where and how they engage with Ikea.
“We have seen that in Australia we are in the right places. If we think of the stores we have today, we are in the main cities already, but it’s not only the one spot and the market area around the store.
“To increase the opportunity to meet the many people and serve the many people with home furnishings and services, of course we need to be there where the people are.”
Ikea, the world’s largest furniture retailer, has 10 super stores in Australia: three in New South Wales, two in each of Victoria and Queensland, and one in Canberra, Adelaide and Perth.
How Aussies embrace a new Ikea format is key
Ms Viinanen said Ikea Australia would learn from the experience of its first plan and order point as well as from other countries where planning studios have been introduced.
“What we want to do in opening this first one in Australia is actually learn and then see how we can develop even more this kind of customer meeting point,” Ms Viinanen said.
“But I do believe this is one piece of the expansion as well – increasing the accessibility and opportunity to meet even more of the many people in Australia.”
Part of that involves listening to customers and whether they embrace the idea of a store that’s not a traditional Ikea warehouse.
“The purposes are different,” Ms Viinanen noted.
She said the new format created added value for customers planning a big purchase like a kitchen, wardrobe or bathroom.
“You have a personal assistant, somebody’s planning with you, and then you can choose on the way if you would like to go to one of the stores and touch and feel and see the whole huge range in this area.”
The new store format is designed to help customers plan big purchases like kitchens. Picture: Supplied by Ikea
Ikea Australia’s May announcement about its plans to open new customer meeting points identified Melbourne and flagged that it was searching for an additional location in Newcastle in regional New South Wales.
Ms Viinanen wants to assess the success of the first plan and order point, at the largest shopping centre in Melbourne’s west, before confirming future sites.
“Based on the success, learnings and insights we gather from this first plan and order point, additional locations may open in 2023 and beyond.
“Newcastle, NSW, is one city we have looked at as a potential future location, along with other cities across Australia.”
Ikea rolling out smaller format stores globally
The smaller format stores are part of a range of new retail concepts by the Swedish furniture giant. It’s part of Ikea’s vision “to create a better everyday life for the many people”, with a focus on accessibility, affordability and sustainability.
Ms Viinanen said there is still demand from customers for an in-person physical shopping experience, but customers also want convenience and easy accessibility.
The pandemic has accelerated the take up of online shopping by consumers and a shift by Ikea and Ingka Group, the largest Ikea retailer, towards smaller format stores.
Ikea globally now has multiple customer meeting points, from its traditional blue box warehouses to a range of smaller format stores including plan and order points or planning studios.
Ikea has been rolling out smaller format stores globally. Picture: Supplied by Ikea
One of Ikea’s global tests of its small format concepts stores was carried out in Sydney. Ikea had a temporary pop-up store in the Westfield Warringah Mall in Brookvale in Sydney’s Northern Beaches in 2019, which was open for about eight months.
It has rolled out planning studios in cities such as Los Angeles, New York, London, Berlin, Barcelona and Copenhagen.
Ikea has also opened city stores, a smaller version of its flagship big stores, in the likes of Paris, London, Mumbai and Tokyo.
In total, there are 474 Ikea stores in 64 countries.
Ingka Group, one of 12 franchisees, has 392 Ikea stores and 73 Ikea shops and planning studios in 32 countries, including Australia.
In May, Ingka announced it will accelerate its expansion by investing more than EUR3 billion ($A4.48 billion) in new and existing stores by the end of next year, focusing both on new physical stores and revamping existing ones to fulfil online orders and deliveries.
Ikea finalising its Australian strategy
As for whether Ikea will open more of its big blue warehouses in Australia, Ms Viinanen was non-committal while the retailer plans how best to meet customer needs for both physical and online shopping.
“This is the big question for the bigger retailers right now.
“It’s a huge continent.
“If you have the physical visibility and online as well throughout the country, you have to really rethink how you want to fulfil the orders and the customer needs as well.”
Ikea has 10 of its traditional big blue box stores in Australia, including this one at Tempe in Sydney. Picture: Getty
Ms Viinanen said Ikea Australia is working on its short, medium and long-term strategy, to take into account the rise in online shopping.
“This is something we are working on right now – what is the best way in the different regions in Australia to fulfil the customer orders and do it in the best possible way for the customers,” she said.
That included Ikea’s commitment to using electric vehicles for customer deliveries.
Ms Viinanen said Ikea Australia’s online share of sales was fairly low before Covid, when there was a big spike. In the 2022 financial year, online accounted for 27% of Ikea Australia’s sales.
While households are juggling cost of living pressures and rising interest rates, Ms Viinanen believes Ikea’s affordability will remain an attractive proposition, particularly given Australians’ love for their homes.
“Of course we are not immune when it comes to raw price increases, when it comes to transport, supply, and when it comes to energy pricing and inflation.
“But we have given the promise that we will be affordable for the many and we want to keep this promise as well.”
