Ikea goes small
First and only “Planning Studio” opened in London’s high street
Li Xuan Tan, Nottingham 04/03/19
Current Affairs Society, University of Nottingham
The Swedish multinational corporation that specialises in home decor and furnishing with a DIY philosophy is set to open smaller outlets in the UK. This will give shoppers a chance to browse products and get individual home decor advice from expert staff members. Newly appointed head, Javier Quinones called for restructuring of the company’s business model after complaints from customers that shops were “often too far away.” In Norwich alone the journey to the closest IKEA shop takes more than two hours for shoppers.
Moreover, technology and innovation which has caused a shift to online purchasing in recent years as consumer preferences change. As the population in cities are increasing and fewer individuals have cars, it is no surprise that “online was the standout performer, with 199.3 million visits to Ikea's website, an increase of 13.4%. Website sales grew by 14.4% and now represent 15.5% of total sales.” Therefore, a lot of IKEA’s spending and investment has been aimed at enhancing its online store.
Sticking to its roots the spin off stores will also offer food outlets, a customer favourite. Menus are constantly updated and promise healthier options and high quality sourced produce such as its partnership with an ecological salmon farm in Norway. The food aspect has been a long-term success as clients spend long hours in stores and often get hungry after completing their shopping. In 2016 alone a staggering “650 million people in 48 countries” ate Ikea based food products.
Recent traumatic economic impacts of Brexit have caused the pound to fall against the euro and dollar and potential tariffs have pushed up costs by 13.7%. Furthermore, 60% of IKEA products are made in Europe which has influenced the UK to source and manufacture more goods domestically to help offset the risks of importing components.
High inflation costs as a result of the referendum coupled with the unstable nature of the housing market, has resulted in a disincentive to purchase furniture as customers are” renting rather than owning their homes.”
The real effects of an increase in IKEA stores in the UK are currently unknown and can only be measured after the completion of mini stores nationwide. Previous UK Ikea CEO explains, “Even after 30 years in the market we only reach 64% of the people. We know that there is huge market potential and our idea is to bring Ikea closer to the people.”
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