IKEA will spend 3 billion euros in its stores to adapt to e-commerce

IKEA retailer Ingka Group is spending 3 billion euros ($3.2 billion) through 2023 on new and existing stores, largely to modify its out-of-town outlets so they can also become e-commerce distribution centers.

Tolga Oncu, retail director for the group which owns most IKEA stores globally, told Reuters the money would be spent in all regions, although around a third would be earmarked for London, a bench testing for new store formats and logistics configurations.

“Most of it will be in our existing stores, since we are talking about transforming, rethinking the destination of square meters,” Oncu said in an interview.

In recent years, Ingka has adapted to the rise of online shopping by developing smaller stores, revamping its website and rolling out a new app as well as digital services such as remote scheduling tools .

“We believe we have some catching up to do on the back-end of our operations (and) we’ve realized that by including stores in our last mile design and execution network, we can create a win-win situation. -winner,” Oncu said.

Shipping online purchases from out-of-town store warehouses will mean faster and cheaper deliveries, with fewer emissions, than shipping from a few logistics hubs, he said. -he declares.

“Instead of creating central warehouse capabilities for online shopping, why not ship it from our IKEA stores?”

Automating warehouse sections of existing out-of-town stores will account for a large part of the investment, Oncu added.

The plan comes as many companies are becoming cautious in the face of geopolitical tensions, high inflation and deteriorating consumer confidence. But Oncu said that for IKEA, which is funded by its proprietary foundations, the timing couldn’t be better.

“I agree that the outlook (for overall consumer spending) looks a bit gloomy. This means that the value for money and time, affordable solutions that are of good quality, functional and designed and durable will increase demand,” he said.

During the pandemic, IKEA saw record demand for its discount home furnishings as people spent more time at home.

Over the past three years, Ingka has invested around €2.1 billion in new and existing stores in its 32 markets.

The latest spending will also focus on new traditional “blue stores” in Romania, China and India, and new urban stores, as well as planning studios, in Canada, Denmark, Italy, India, in the United States and other countries.

Lance B. Holton