When home-furnishings giant IKEA opened its first Planning Studio—a smaller format than its traditional stores, tailored to U.S. city centers—on Manhattan’s Upper East Side in April, the Swedish chain said it was one example of how it was reaching customers in “new ways that are more accessible and more personalized.”
Accessible it is for Karima Rustin, a 42-year-old real estate agent who lives in Harlem. A month and a half after the store replaced what was once an Urban Outfitters store, opening right across from Bloomingdale’s flagship department store in a busy commercial section of New York, Rustin decided to check it out on Monday instead of making the usual trek all the way to Brooklyn, where IKEA’s mega-store is.
“I definitely see the value of having a store like this in Manhattan,” she said. “I do like the fact if I want to see something, I can come here instead of going all the way to Brooklyn. It gives people an idea of how to visualize something. You can see how you can set up a room. It has a lot to offer.”
Rustin wasn’t alone: A steady stream of consumers showed up at the location on Monday to check out how they could set up a living room, a kitchen or a bedroom space or take in how IKEA designs a 400-square-foot apartment or a 333-square-foot living space with a bathtub. On the basement floor of the three-story IKEA space, separate sitting areas are set up for free design consultation appointments.
But if you see and want to buy a $9.99 shower curtain or a $4.99 octopus-shaped hanging dryer on the spot? You are out of luck. You will still need to travel all the way to a regular mega-store or order online and pay a shipping fee. That’s not to mention that—at a time when Amazon, Walmart and other retailers are eager to compete with free shipping offers—IKEA charges at least $9.99 for delivery, according to its website.
Meanwhile, none of the IKEA chain’s famous discount restaurants or Swedish food items could be found at the Manhattan location, either.
As IKEA vies with increased competition, especially from Amazon and other online sellers, the smaller Planning Studio is one way for it to attract more urban-area consumers, in a strategy also adopted by Target and other big-box retailers that have opened smaller, city-format concepts. It may also help IKEA increase its online sales.
While the company’s annual report showed its global online sales jumped 45%, outpacing the 4.7% total constant-currency retail sales in the year through August, IKEA has trailed its retail peers in online share. For instance, Rakuten Intelligence data showed IKEA had only a 1.6% share of the online bed and mattress market in the U.S. through March, compared with Amazon’s 32%, which included all orders on its site. Costco had a 4.3% share while Walmart garnered 3.2%.
IKEA has said the Planning Studio, with a focus on urban living and small spaces, will give “customers the opportunity to discover, select and order” its products. The company said it’s planning to enter other major U.S. city centers including Los Angeles, San Francisco, Chicago and Washington, D.C.
The U.S. is the company’s second-highest-selling market, after Germany.
However, as much as the store is a smart way to extend the company’s reach to time-starved consumers and potentially drive sales, IKEA, which said the store was designed with input from New Yorkers, may also do well to factor in a crucial part of brick-and-mortar retail: instant gratification and impulse purchases.
“I saw some baskets that were really cute, and I saw how they looked in the kitchen area, and I want to purchase now,” Rustin told me, adding that as a renter, like many other New Yorkers, she doesn’t need to undertake remodeling projects. “For small stuff like bath and kitchen accessories, it would be really convenient if you can purchase right now versus having to order and pay for shipping.”
She wished that she had made that trip to the Brooklyn store after all.
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