As Ikea’s small-format store in Hammersmith prepares to open its doors next week, Retail Week sits down with Cindy Andersen – boss of the retailer’s sister company and property firm Ingka Centres – to discuss the new concept and how the Covid-19 crisis has reinforced its strategic shift to multi-purpose spaces.
Ingka Centres boss Cindy Andersen wasn’t working at the real-estate development arm of Ikea owner Ingka Group when it acquired what was then Kings Mall in west London in 2019. In fact, she wasn’t even working in retail property, but instead was more than a decade into her time at Ikea of Sweden, part of the group’s retailing arm.
When she took over as Ingka Centres managing director a year ago, the world was more than a year into the coronavirus pandemic.
Ingka Centres was also in the midst of a strategic shift away from targeting large, single-purpose, out-of-town shopping centres, towards a focus on what it calls ‘meeting places’ – multipurpose destinations in more urban locations, anchored by smaller Ikea stores and supported by complementary retail, food and beverage and leisure units.
Opened under the new Livat branding – a Swedish word meaning ‘a lively happening’ – these meeting places are designed to bring people together, either for shopping, eating, socialising or to work.
While some observers may have questioned the move in an era of social distancing, Andersen insists the health crisis has only served to reinforce the change of tack.
“I think [during the pandemic] we have learned how to lead and adapt as an organisation. To operate in a more adaptable and flexible way during these times,” she says.
“Ingka is very much in a transformative state, with a new direction and strategy that we didn’t want to lose speed on implementing during the pandemic, but actually accelerate.
“A couple of years ago we started the transformation going from a more traditional shopping-centre business into a meeting-place business. Many of the trends that we saw back then that set us in this new direction have only been accelerated by the pandemic, such as online, an increased customer desire and need for experiences, convenience and so on.”
The new Livat Hammersmith site will be the 48th such meeting place Ingka Centres has opened and its eighth in the last 10 months alone.
The shift has borne fruit – sales made by the centres’ occupiers across Europe, Russia and China jumped 16% to €6bn (£5bn) during Ingka Group’s 2021 financial year.
The group’s truly global scale also points to how its meeting-place concepts will perform in countries currently still dealing with waves of Covid-19.
In China, which has aggressively pursued a ‘zero-Covid’ strategy, footfall at its meeting places climbed 23% last year.
Globally, Ingka Centres’ meeting places racked up more than 372 million customer visits in 2021.
The centrepiece of the 244,000 sq ft Hammersmith redevelopment is a 49,000 sq ft Ikea – the first smaller-format, high street store of its kind in the UK.
It will carry a reduced range of just 4,000 products and is designed to encourage customers to order in store for home delivery – just 1,800 lines will be available for customers to take away on the same day.
The retailer’s embracing of a more multichannel approach is no surprise – digital sales now account for £1 in every £4 spent with Ikea.
Food will also play an important part. The Ikea store will feature a Swedish deli, serving up its famous meatballs, as well as a literal smörgåsbord of Nordic fare.
Ingka has fully refurbished the remaining 326,000 sq ft of the old Kings Mall, letting out space to other retailers as well as food and beverage and leisure operators.
Andersen says the centre will “provide the people of Hammersmith with a place to come together, experience new things, eat and shop”.
Catering to the needs of the modern city
Although Ingka is closing in on 50 meeting places in its portfolio, Andersen says all are carefully tailored to their local catchments.
After almost two years of upheaval, keeping people apart from friends, family and colleagues, and leaving gaps in shopping locations on all four corners of the globe, communities worldwide are crying out for multipurpose destinations that meet their specific retail, hospitality, leisure and work requirements.
At Livat in Changsha, China, for example, Ingka Centres thought carefully about the needs of a city that has become a hub for new start-ups. It built more than 500 ‘small home office’ flexible working units to address a shortage of office space and included a gym, reception areas and 120,000 sq ft of green space – a luxury in the densely packed city – to allow customers the “ability to entertain, work or sleep, reflecting their lifestyles”.
In November 2021, Ingka Centres revealed plans for its first meeting place in India, with construction due to start in the northern city of Gurugram in the second half of 2022. Alongside its food, retail and leisure offer, Ingka Centres said the new site will offer customers ‘edutainment’ learning spaces and will act as a communal space for festivals and cultural exhibitions with an emphasis on sustainability.
“There’s a process [in looking for new meeting places] where we start with insights, trends, local specifics, but it’s important that independent of where we are developing – be it a smaller-format or one of our larger schemes – we always start from the needs and dreams of the people living nearby in the community,” she says.
“It’s my deep belief that people will continue to want to be with other people”
While Andersen won’t be drawn on Ingka Centres’ wider plans for the UK, she insists it will continue working with Ikea on “looking into bigger cities” on the hunt for “interesting opportunities where we can contribute”.
With the Hammersmith opening now just days away, Ingka Centres and Andersen have already moved on to their next major meeting-places project – earlier in February, it started renovations on the long-vacant 945 Market Street centre in San Francisco, which it acquired for $198m (£146.3m).
And despite its strategic shift to multi-purpose shopping destinations, Ingka and Ikea haven’t completely abandoned the big-box homewares cathedrals that have served it so well over the decades.
Last October, Ikea struck a £378m deal to take over the former Topshop flagship on Oxford Street and Andersen is currently exploring new, larger-format opportunities for the retailer in India.
Rather than diminish the need for physical retail spaces, Andersen believes the last two years have only increased their importance to the modern shopper.
“It’s my deep belief that people will continue to want to be with other people,” she says.
“We will continue to seek destinations where we can be together, experience new things. Those needs haven’t been changed by the pandemic; they’ve only been strengthened.
“That doesn’t mean we can just lean back and continue on as we always did, though. This is the time to show there’s not an either/or between physical and digital, but actually it’s a both/and.”
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