“The New World of IKEA”: how the company plans to change the format of stores

IKEA is going to completely change its strategy by 2030. With the growing population of megacities and the refusal of young people from their own cars, the company begins to open small stores in city centers and focuses on online sales.

What's happening

• Since 2015, IKEA has already opened 12 new outlets around the world. They are completely different from the usual huge warehouses with cafes with Swedish meatballs. New IKEA stores are several times smaller and located in the centers of large cities. In many of them it is impossible to buy something right away - you can only order delivery or pick up the goods later.
• The shift is also in the direction of online sales: now you can buy the company's products online only in half of the markets where it is presented, but by the end of 2018 the company promises to make this option ubiquitous. In Russia, online sales at IKEA launched last year.

What is the reason

The company's CEO, Jesper Brodin, explains that the company wants to go straight to the living room of customers, increasing its focus on digital services, online shopping, and providing an improved service for customers in need of delivery.

• IKEA is gearing up for a future urbanized world, where most people live in large metropolitan areas but in small apartments (and a significant proportion of new city dwellers don't earn as much), he says. The company's own research shows that by 2030, about 60% of the world's population will live in large cities, which is twice as much as it is now.
• Another important reason is the priorities of the company's key customers - young people. Attendance at traditional IKEA stores has not increased in the last five years, as young people living in big cities and moving there use cars less often and use the Internet more often for shopping. A young couple who used to be ready to spend a day off at IKEA are now more likely to prefer online shopping, writes Bloomberg.
• “The whole idea that IKEA developed was that customers would want to travel 50 km by car in order to buy something that looks fantastic cheaper. Young people love IKEA but can't or don't want to go there. The company has no other options but to invest in more suitable services,” explains Ray Gaul, an analyst at Kantar Retail.

What will the new stores look like?

• One of the new outlets that IKEA opened in London (there is no meatball cafe there) occupies only 900 square meters. m. The traditional IKEA store in the suburbs is located on an area of ​​​​more than 25 thousand square meters. m. In the center of Madrid, the company recently opened a pop-up store (temporary outlet), where only bedroom furniture is presented. A similar pop-up in Stockholm specializes only in kitchens, where you can try to cook something yourself using the samples presented. After the opening of online sales, IKEA Madrid's revenue increased by 50%.
• Due to the new formats, the company managed to reach an audience that had never visited IKEA before. 70% of shoppers in Madrid have never been to the out-of-town hypermarkets of the company.
• The company continues to experiment with its 24 newly opened outlets around the world varying in size, location (ranging from malls to business districts) and cafes.
• Another way to find new buyers is through sales through third-party stores, which IKEA has not dealt with before. Now the company is thinking about selling furniture through intermediaries - Amazon and Tmall online stores.
• Despite all the changes, IKEA does not abandon the policy of low prices, which was followed by the legendary founder of the company, Ingvar Kamprad , who died at the beginning of the year. The company is also not going to completely abandon traditional stores that bring IKEA more than 90% of sales.

What do I get from this?

Russia is one of the most successful international markets for IKEA, the company often tested new formats with us - for example, Mega shopping centers. This means that soon we can see experimental IKEA stores in the center of Moscow.

Artem Gubenko