Expedit Bookcases and Swedish Meatballs Might Go Uptown

Expedit Bookcases and Swedish Meatballs Might Go Uptown

If Ikea says it’s a trend, it must be a trend. The giant furniture retailer known for its affordable products as well as its make-a-day-of-it-and-eat-the-meatballs approach to shopping, is thinking of changing strategy. Noting that tight budgets mean people do not want to shell out for fuel to drive to suburban stores, the Swedish group has said that they are thinking of opening a new Ikea right in the heart of Paris. It would be a bit of a game-changer, to say the least.

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Those of us who own their furniture or who maybe owned it before being able to afford things that come pre-assembled, know the drill when it comes to Ikea. The stores are huge, so they are built on the sides of highways somewhere outside of large cities. As well as lots of room displays, they provide babysitting services, cafeterias stocked with well-priced food, and stacks of practical and bargain priced goods for your home. You might only come in for the Expedit bookcase, but chances are you will leave with a 6-pack of Svalka champagne glasses (just $4.99!) and maybe a Bekvam stepladder as well.

But now Ikea might change things up, because after all things have changed around it. France, where it may pilot a new model, has been going through a rough time in terms of its economy. That is not stopping Ikea from a six-year plan to double the number of its stores to 40 from 20 at present, but it is also looking at where to put them. On the table: a store in the heart of Paris, rather than outside the city.

In many ways, there is a case to be made for putting Ikea in cities. Cities are where condos are being built, and condos are in many ways made for Ikea’s value-priced and efficient offerings. Downtowns in major centers worldwide are being revitalized, and are now rife with both young couples, and with retiring boomers as well. There is also a small but growing trend for couples with children to resist the suburbs and stay in the city, making the best use of space they can in the largest condos they can find and afford. All these things support Ikea’s idea to locate within Paris. Still, it seems to me that Ikea would have to sell an awful lot of bookcases to make it worth their while to purchase pricey downtown space.

What also interests me particularly is the idea that in France gas prices are making people resistant to the idea of making a day trip out of going to Ikea, meaning a in-city store makes more sense. This
article from Reuters also suggests that shopping at out of town stores is being hurt by tight household budgets which make people reluctant to shell out a lot of money at once, instead choosing to make more frequent trips closer to home. That’s at odds with the recent earnings results from Costco, which has said its buoyant fourth-quarter results were driven by value-conscious shoppers, both in the United States and internationally.

So which model will prevail – a move to downtown stores, or a continued trend towards bigger stores further from the core? In Ikea’s case, a lot will depend on the success of a pilot store in the German city of Hamburg, which will be placed in a central pedestrian shopping zone. The fact that Ikea is even mulling the possibilities though speaks to the changing nature of retail and the changing views of how to use downtown spaces.

 

 

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