IKEA is synonymous with the suburbs; part of the furniture shopping ritual has always included an often-lengthy drive to a industrial or semi-rural area of your town. But now the company is testing out a new paradigm for its empire: stores in the city. With far fewer spots for cars.
This week, Bloomberg sent an intrepid reporter to the newly-opened IKEA in inner-city Hamburg to pick up a few odds and ends. The project wasn't as boring as it sounds. This store is a pilot for IKEA, which has commonly built in areas with the most inexpensive real estate in proximity to densely-populated areas. This location is different: It's 25 per cent smaller, includes a much smaller carpark and cost twice as much as a normal location to build. Generally speaking, whatever you buy, you carry out with you, whether by hand, taxi or rentable IKEA cargo bike.
Why would IKEA be so interested in downsizing? Well, according to a Forbes report on the experiment, the new store — which is located in a pedestrian area — attracts many more visitors than any of the company's other locations in Germany. Paradoxic though it may seem, building an IKEA in an area it's tough to drive to actually increases the number of visitors. And what's more, the fact that you can walk in without spending half a day on the process of getting there means that the hellish Saturday/Sunday crowds are alleviated. What's more, people actually visit for the restaurant alone.
There are downsides to building small and urban obviously, chief among them that people buy less. But it's all a matter of balancing the smaller average shopping cart of a customer with how frequently they visit and, of course, how many of those customers actually make it to the store. If the Hamburg store is successful — and it seems it will be — IKEA says it has plans to open up smaller, walking-friendly stores in other cities, including those in the US, building on the success of its Red Hook, Brooklyn store which is closer to New York than most other American locations.
So if you're in a city that's been waiting for an IKEA for decades, your wait may be over. Although at this point the reality of the meatballs probably can't compare to the hype. [Bloomberg]