Ikea is expanding its footprint in the UK with a new “refreshingly compact” retail park format in three former Homebase units. Sitting down with Retail Week, Ikea UK and Ireland chief executive Peter Jelkeby shares the story behind the move, what shoppers can expect from the stores and what he’s most excited about in the retailer’s anticipated Oxford Street location
What can you tell us about the new format?
“It’s a smaller format with a simplistic approach to how we want to operate so we can be quite quick on getting going. We’re very curious about retail parks, in some cases our big box stores are attached to retal parks but this format is a smaller size, which will fit directly into a retail park. We’re offering a similar experience on a smaller scale compared to even our city stores like Hammersmith.”
How big are these new locations?
“Two of the locations are about 2,500 square meters, and one is actually 5,000 square meters. We still want customers to come in, walk through a showroom, and get inspiration in a more simplistic way. Not necessarily with full room sets everywhere, but still showcasing our furnishing expertise.”
How will the customer journey work?
“Customers will experience a condensed showroom first. We believe that even in that small space, we can share quite a bit about our furnishing expertise. Then you come into the pickup area where you can take home around 3,000+ products, there will be roughly 5,000 products on show. You’ll have the same service offerings as our other stores – if you can’t take your purchase home, you can order it for transport, pick it up at a collection point, or use click and collect.”
Will there be a food offer?
“Yes, there’s a food-to-go offer and it’s going to be spot-on for retail park customers.”
Are the new stores multi-level?
“Two are on one floor, and one has two floors. The two-floor location is twice as big as the other ones, which gives us more space to particularly show more room sets and vignettes than we can in the other two areas.”
Why is Ikea pursuing this simplified format?
“It’s a way of complementing our network of stores with something fairly simple and straightforward that we can quickly turn around and get into without taking too long to get going. At the same time, it will still be recognisably Ikea. We’re taking existing buildings and not going to transform everything as we’re quite known for normally doing, but you’ll still see that it’s Ikea. We’re trying to use as much of what exists as possible.”
Why is speed important for these openings?
“We always want to open as soon as we can. If we can use a building where the floor is good, or we can use the existing lighting or other elements, why wouldn’t we? It’s a way of getting up and running quickly, and it’s also a bit of a test. These are the first three of this format that we’re doing, so the sooner we can test and try, the better it is for us to evaluate and take the learnings into the future.”
Are you planning to open these stores this year?
“Yes, they will open this year.”
Was the retail park format inspired by the availability of units or has this been in the works for a while?
“When we looked at how we can penetrate more of the UK market and be more accessible, retail parks have always been a consideration. The affordability agenda is important – we want to reach customers and be relevant for them in retail parks. We’ve been testing and trialing different things, but this format with more pickup lines and home furnishing accessories (HFA) complementing the planning is interesting for us in a way we haven’t done on this scale before. If you look at physical space accessibility in the UK, this format allows us to reach many more places.”
If this goes well, would you look to roll out this format more widely?
“If it meets certain criteria, we would.”
What’s driving home and furniture retailers to look at new spaces and formats that what they traditionally look for?
”I think the good retail parks have been successful for quite many years, particularly around ease of access and the affordability agenda. When you find a healthy mix of retailers in a similar space, that makes shopping quite easy for consumers. We see this as part of a total network – we still have high street locations and big boxes, and this format is a way for us to access cities where we know the customers. It’s a way for us to come to Harlow, come to Norwich even though we’ve been there before, and come to Chester.”
Will these stores be used as distribution centres?
”We won’t. We can use them for click and collect, but distribution and last-mile delivery will still happen from the bigger stores.”
Will the new stores have a different name or sub-brand?
”They will be branded as Ikea. We’ve debated this, but we think the trick for us is more to explain what to expect when you get inside. We’re investing quite a bit in our service communication in general, to explain how you can shop with us on the website and also when you come into the store, so you know what to expect.”
Oxford Street is opening in a matter of weeks, what are you most excited about?
”I hope when you have walk the store, you’re going to say it was so Ikea, and you would’ve thought that you walked around a big store, but actually you walked in a store that is a quarter of our Greenwich location. I hope you feel that Ikea experience, and that we have not compromised on anything.
“What I’m most excited about is to open the doors on that location and see who comes through them. We have theories about who will visit, but who knows – that’s what makes it so exciting. We want to be relevant for Londoners, even though it’s bigger than London because this is a store for the UK and beyond. It’s a bit of a global store, but it’s also for Londoners. We have curated the shop and we’re showing how Londoners live, and presenting that as a thread across the store.”
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