Dive Brief:
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Ikea is testing smaller-format stores more suitable in scale and inventory to urban areas. The first smaller Ikea will be tested in London, Ontario, opening later this year.
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Such stores will be 20,000 square feet or so, compared to more typical Ikea stores, which range from 260,000 to 340,000 square feet.
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The smaller stores will have a mix of items more conducive to immediate shopping, with fewer large items, but there will be banks of tablets available to shop Ikea for other items. Shipping within London for large items will be $80.
Dive Insight:
If this pilot is successful, Ikea could eventually follow in the footsteps of big-box retailers like Wal-Mart Stores Inc. and Target in targeting urban areas with smaller stores that also have a targeted mix of inventory. It's a smart move, seeing as 80% of Americans lived in urban areas in 2010, and a majority of millennials continue to choose to live in urban areas over the suburbs or rural communities. As these millennials move into their acquisition years, investing more in real estate and home furnishings, Ikea will want to be visible when they make these purchasing decisions — both in cities and in the suburbs.
No word yet on whether the so-called “Ikea meltdown,” where couples argue because of the retailer's overwhelming inventory, is more, less, or equally likely to happen in smaller stores.
