Lessons for the High Street: Ikea Planning Studio

Welcome to our brand new series of articles on retailers that are operating in ways that provide some interesting and valuable lessons to the wider industry.

Newly arrived on the UK high street: Ikea

Name: IKEA

Location: Tottenham Court Road

In a nutshell: Ikea recently released revenue figures which showed a plummet in its profits by 40%. However, this is not down to the public turning away from the retailer, in fact overall revenue rose by 2% to 37 billion Euros. So where is all the money going? In the main, it is funding the massive four year structural transformation Ikea is going through where the focus will shift between 2018 -2022 for the first time towards having a presence on the global high street and smaller stores.

Ikea’s operating arm, Ingka Group, chose London’s premier furniture and homewares street to open one of its first planning studios which is a tiny fraction of the size of one of the traditional Ikea stores. And there isn’t a big blue bag, a Swedish meatball or an arrow on the floor in sight.

What there is, however, are two floors of instant access to Ikea’s range with six or seven kitchens laid out in the usual ‘shop the look’ manner and tablets on the wall allowing customers to personalise the range themselves with a running budget, one-to-one appointments with a sales assistant and drawers full of the various kind of finishes/doors available so that the feel can be gauged.

There are information screens on the products’ sustainability credentials, videos about how individual items are designed and the processes involved in production, all of which highlight that Ikea’s core Millennial customers now expect ongoing proof that things with a budget price are not destroying the environment at the same time.

The London store, which has been deemed a success already, will be followed by a Manhattan planning studio in 2019 with Riyadh, Paris and Shanghai also expected to be studio venues in due course while a middle size store which is also to be located in high streets could number around 30 units globally.

IKEA planning studio, Tottenham Court Road.

But what is it about the high street that is more appealing than the out of centre box? Driving is a major factor. Ikea’s core customer have always been younger couples who liked the designs and previously were willing and interested to drive out to, and then spend an afternoon in, a remote warehouse somewhere. That is essentially no longer the case as that core demographic would prefer to look at the range online and do something else with their precious afternoon.  No one walks out of this planning studio with shopping bags. It is for looking and thinking and then the delivery will come afterwards to your home.

Ikea has experienced a standout rise in online sales and this hitherto slightly untapped market for the retailer is ideally partnered with these smaller/planning stores. Chief Executive Jesper Brodin has been quoted as saying Ikea wants to claim back city centres and although undoubtedly some customers will always want to experience the full meatball as it were, many will be delighted that they can design their kitchen unencumbered in a lunch hour, and then order home delivery and even help with assembly. Online sales for Ikea now count for 5% of total revenue – a jump of 31%.

The store in Tottenham Court Road features motivational phrases on the wall such as ‘Make Your Dream a Reality’ and the upper floor has large planning desks, some fenced off to provide privacy for staff and customers and some open plan. It is obvious that a large part of the attraction is the personal service aspect and Jane Bisset, Ikea London City Centre market leader, put this on record when she said that the studio would “give Londoners a relaxed and professional experience to get the advice and inspiration they need … with the expertise and specialist support of our co-workers”.

In other words, the old Ikea where you looked around yourself, hauled it off the shelf yourself, bought the stuff yourself, loaded it into your car yourself, unloaded it yourself and then put it all together yourself is now partnered with a much more curated approach. The effect of all this interaction on its traditionally low product prices remains to be seen but for the high street as a whole this more convenience-led, digitally friendly Ikea brings a gleam of hope.

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