IKEA opened its first high street IKEA store in Britain, anchored on its first-ever inner-city mall in London’s Hammersmith district. The furniture retail company said on Thursday that it would invest £1 billion ($1.4 bln) for over three years.
Known for its giant out-of-town warehouse stores, IKEA is in the middle of a strategy shift to smaller locations in inner cities. They are also shifting to more digital and other services as it adapts to people’s shopping habits.
Ingka Group, the owner of most IKEA stores and IKEA store-anchored shopping malls across Europe, Russia, and China, began this strategy shift with smaller inner-city stores in Paris in 2019.
Investments in London are planned to be in existing and new stores, distribution and delivery services, and pilot trials, Ingka Group said on Thursday during the inauguration of the Hammersmith store and mall.
Ingka Group said in a statement: “Using London as a test-bed for innovation, the retailer will trial and develop new formats and initiatives.”
Autumn 2023 marks the opening of the next inner-city IKEA store in London. It will be located on Oxford Circus, where the company bought an iconic building in 2021.
Ingka Centres’ head of malls subsidiary Cindy Andersen said that the Hammersmith Mall was now fully let, compared to the 25% vacancy when Ingka purchased it in late 2019. This marked defiance in the commercial property market downturn.
Andersen predicted that the redeveloped mall—or “meeting place,” a nickname for Ingka’s malls—would double its annual footfall to 6 million. This is compared to its 2019 figures.
“Fundamentally, our belief is still that people want to be with other people, to experience exciting spaces, to gather,” Andersen said. She added that the aim was to create a space that people would visit every day.
San Francisco is the next expected location where Ingka Centres will open its second inner-city location as it is redeveloping an old mall in the city that they bought in 2020 despite the depressed retail markets due to the pandemic.
IKEA stores, alongside Ingka Group’s malls, are experiencing a good recovery from the impact of the pandemic. Tenant sales in the festive period November-December rose up to 25% globally from a year earlier, Andersen told Reuters. It also rose to 1.3 billion from the 8% in pre-pandemic 2019.