At its first store in the heart of Paris, IKEA will display its new strategy for contending with changes in consumer habits and the rise of ecommerce.
As the world’s biggest furniture retailer, IKEA is taking the lead in adapting its business model to customers who prefer to shop online, put more money into experiences, and consume less. The new central Paris store, in the Madeleine district, will showcase what IKEA has in mind for its new range of shops. They are a departure from the sprawling, warehouse-like self-service stores on the outskirts of cities for which the retailer is known.
“La Madeleine is an innovation test laboratory for us”, said Jesper Brodin, Chief Executive of Ingka Group, which owns most IKEA stores. “If La Madeleine is successful, we will open more (such) stores in France, but also in the U.S., Japan”, he added. The new store will be IKEA’s 34th in France, but the first in the centre of the capital.
IKEA currently has city-centre stores in other European markets, each with different themes and offerings. These include a store in Stockholm with a dedicated kitchen showroom, a London store featuring personalized planning for home renovations, and one focused on living room furniture in Madrid. The new Paris store will have a salad bar and restaurant, and offer various classes and workshops, as well as art exhibits.
France is IKEA’s third largest market, after Germany and the U.S. Sales in the country increased 3% in the 2017 - 2018 fiscal year, to 2.8 billion euros. IKEA plans to invest 400 million euros in France over the next three years to upgrade existing stores, build new city centre stores, offer new services, and enhance its ecommerce capabilities. The new Paris store should help boost the city’s retail sector, which has been hit by the “yellow vest” protests, Reuters reports.
Like other discount brands, IKEA has fared relatively well during this historically challenging time for the retail sector, steadily increasing year-on-year sales for over a decade. In 2018 the Swedish company had global sales of nearly 39 billion euros ($44 billion), up from just over 36 billion euros the previous year.
Brodin was appointed Group CEO in 2017, and was previously Managing Director of the global furniture retailer’s Sweden unit. He has been with IKEA since 1995. In his current role, he has led efforts to renovate IKEA’s business model to respond to evolving consumer habits and the rise of ecommerce. New services are an important part of his strategy. IKEA plans to roll out furniture rentals in its main markets, including the new Paris store, to appeal to increasingly environmentally conscious consumers who tend to rent rather than buy their homes and move more frequently.
The new emphasis on services is evident in IKEA’s acquisition of American odd-jobs site TaskRabbit in 2017. It has since expanded TaskRabbit in the U.S. and launched it in Britain and Canada.