retail watch | Sep 2, 2021 |
How Ikea is revamping stores and rehabbing its image

This is not your baby boomer’s Ikea. In fact, it’s not even your millennial’s Ikea.

The Swedish home furnishings retailer, known for its gigantic, mazelike stores and inexpensive, ready-to-assemble furniture, continues to reinvent itself 78 years after its founding. The company routinely moves into new formats and merchandising strategies, and these days, it seems to be rethinking its retail approach and rehabilitating its image as the global wellspring for disposable, very-much-unsustainable furniture. Not all of Ikea's current initiatives have shown up on this side of the Atlantic, but many have, and it stands to reason others will appear in its American stores sooner or later.

The only true global home furnishings retailer, Ikea opened its first U.S. store near Philadelphia in 1985 and now has more than 50 American outposts, with a few more debuting each year. More recently, it has been supplementing those massive 500,000-square-foot monsters, typically located on urban outskirts, with stores of assorted sizes and locations. These include a scaled-down—at least by Ikea standards—100,000-square-foot space in Queens, New York, and a series of inner-city stores that combine design studios for bigger projects like kitchen renovations with pick-up stations for those unable to schlep to the suburbs.

The company has said it expects to open many more of these over the next three years. Similarly, Ikea recently opened a store in downtown Vienna on five floors with a rooftop cafe. Most tellingly, it offers no parking spaces, which is likely a nod to its urban customer target.

The smaller stores are just one aspect of the company’s new retail strategy. In August,
Ikea reopened its Shanghai location as a “store of the future,” with a fresh new layout. Gone was the company’s signature maze, which requires customers to meander through the entire store, room type by room type, in one direction, and in its place was a central theater-type space where shoppers can hang out and meet, plus a more traditional restaurant (not cafeteria) showcasing sustainable foods, and even an area where old Ikea products can be repaired and refurbished. Though it’s billed as a “future” format, the company says it will continue with its trademark maze footprint as well.

Then there are the steps the company is taking toward becoming a more environmentally friendly operation. This month only, Ikea is testing a furniture buyback and resale program at that original Pennsylvania location. Customers may sell their gently used furniture back for store credit; the used items will then be sold at a discount in the "as is" area of the store. Ikea has piloted the same program at locations in other countries, and expects to roll it out across the U.S. eventually.

And perhaps most significantly, the retailer has begun selling renewable solar- and wind-powered energy in its home country of Sweden. Consumers can purchase the energy on the local power grid, tracking their consumption on—where else?—an app. There are not yet public plans for this technology to come to the U.S., but other eco-friendly programs, like buying up forest land to replace trees cut down for Ikea furniture, have made it stateside, as seen with the Ikea’s recent purchase in Georgia.

These initiatives clearly show that Ikea wants to move away from its reputation for cheap expendability—one that has been unbelievably successful, it should be noted—and help consumers steeped in climate panic regard the company in a new light. And, not incidentally, sell more Ikea products in the process. “I’m convinced that if we do our job in a good way,” said Stefan Vanoverbeke, the company’s global deputy retail manager, when discussing the new store formats, “we’ll make home furnishing more important for people.”

Homepage image: © Alexandr Blinov | Adobe Stock

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Warren Shoulberg is the former editor in chief for several leading B2B publications. He has been a guest lecturer at the Columbia University Graduate School of Business; received honors from the International Furnishings and Design Association and the Fashion Institute of Technology; and been cited by The Wall Street Journal, The New York Times, The Washington Post, CNN and other media as a leading industry expert. His Retail Watch columns offer deep industry insights on major markets and product categories.

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