The globally recognized furniture company, IKEA, is testing a new retail solution that could not only save brick and mortar businesses but also change how retail functions as a whole.  Smaller store footprints, leveraging logistics efficiencies and deploying cutting-edge technology including virtual reality is what IKEA believes they must implement to remain the market leader. 


IKEA plans to test “open-source” design and full-range town-center showrooms as part of the furniture retailer’s efforts to adapt to rapidly changing consumer shopping habits.

The retail giant will not change their primary out of town warehouse stores.  These are the traditional stores you think of when you think IKEA.

This new strategy is designed to create greater accessibility both physically and digitally.

Focusing on smaller store footprints located in key city centers that will offer ordering and pickup points.

One of the latest is a kitchen showroom located in the heart of Stockholm’s financial district.

Torbjorn Loof, chief executive at franchiser Inter IKEA, said the group would try more things in different markets. “Our customers will see new initiatives, both physical and digital,” he told Reuters.

Mr. Loof reported that global sales reached $44.9 billion in their fiscal year that ended in August.

Unlike most retailers, IKEA’s earnings are actually up year-over-year from$36.4 billion the year prior.

With so much direct to consumer and Internet-based companies emerging worldwide IKEA has focused their ownership of retail operations, includeing shopping centers and food retail, to IKEA Group.

As for their innovative Supply chain management and design operations, they have transferred to brand owner and franchiser Inter IKEA.

This means IKEA Group Is solely focusing on the retail experience.With a clear and concise objective, their hope is this will position them better defend its market-leading position while maintaining growth goals.

They have also stressed that as competition increases both in the physical and digital space they do not want to sacrifice consumer expectations.  One major consumer expectation resides in ease of online shopping and home delivery.

Loof believes That the ability to fine tune their city center retail store concept will lead to better formatting design best display their entire range of products in a smaller footprint. The only way to accomplish this is to leverage new digital experiential tools and cutting-edge virtual reality.

With the increased focus on home delivery services, the new stores will not need large parking lots or massive on-site inventories.   Meaning, they will be able to acquire prime real estate without the traditional needs their older stores require.

Although the tests are proving extremely successful, Loof does forecast that will take a couple years to fully deploy this new model.  As virtual reality becomes a mainstay in today’s society technology advancements and costs in just a couple years will assist in this transition.

The group is also planning a digital platform next year that mimics the IT sector’s ‘open-source’ software development, Loof said. This will allow customers to take part in the development as well as testing of new products.

“We are launching ‘Co-Create IKEA’, a digital platform where customers will have the possibility to develop and test new products … a bit like the open-source development within IT,” Loof said.

By the end of 2017, IKEA hopes to have 403 stores in 49 markets.

“In (fiscal) FY18, 22 new IKEA stores are planned, which includes new markets in India and Latvia, as well as continued roll out of new formats and expanded e-commerce activities,” Inter IKEA said in a statement.

With this clear focus on a new retail experience, long-term growth and new potential markets IKEA is focusing on include South America within the next five years.

Today, IKEA stores are owned by 11 franchisees, of which IKEA Group is the biggest with 355 stores.

Another immediate advancement IKEA implemented was to test selling its products on websites other than its own from next year in another strategy shift to reach more customers.

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