Ikea is usually rolling back one of its biggest draws — massive store showrooms. The Swedish furniture retailer is usually scrapping plans to open three brand new showroom stores in suburban Glendale, Arizona; Cary, North Carolina; as well as Nashville, Tennessee to instead focus on online sales, the company told BuzzFeed News.
“We are in a rapidly changing retail environment,” the company told BuzzFeed News. “To be fit for long-term growth, we are creating a brand new business type to make sure we’re accessible as well as convenient for our customers today as well as from the future. As a result, some of our expansion plans may change, however at the same time we are also investing in our e-commerce as well as services to ensure customers can access Ikea no matter where they are.”
Instead, the company will focus on expanding its retail footprint in “urban city centers to be more accessible to more consumers,” This specific added. The company added 14 brand new stores globally in 2017.
The change in plans comes as e-commerce companies like Overstock.com, Wayfair, as well as Amazon pursue growing online furniture sales, leaving Ikea trailing the pack when This specific comes to online sales investments.
The online household furniture industry’s growth outpaced the traditional furniture store industry, with revenues increasing over 40% through 2013 to 2018, Claire O’Connor, an analyst at IBISWorld, told BuzzFeed News. Traditional furniture store industry revenue growth was around 17% during the same period, which includes Ikea. Ikea reported a 7% increase in total sales between 2015 as well as 2016.
“As the earth has become more digitized, consumers are more comfortable with purchasing furniture online,” she said. “While stores will likely never disappear, furniture stores, like Ikea, will continue to invest in their online business in order to compete from the growing online marketplace.”
Tom Forte, a research analyst with D.A. Davidson, told BuzzFeed News of which Ikea is usually pivoting at a crucial moment from the online furniture market, considering Amazon has trained consumers to expect shipments in two days as well as few shoppers stick with one particular furniture brand.
“There is usually no real dominant player in furniture,” he said. “In these categories the consumer thinks of an e-commerce company very quickly, however there are not many brands of which are commanding loyalty. Therefore, in This specific category, the consumer is usually willing to buy the product sight unseen as well as This specific’s a reason to see acceleration with online penetration.”
Ikea has been gradually putting more emphasis on online sales. This specific has rolled out brand new lower-priced shipping as well as delivery, TaskRabbit assembly to build its notoriously complicated furniture at shoppers’ homes, brand new financing options like a credit card, as well as Click & Collect, the company’s buy-online-pick-up-in-store program.
This specific’s also building two additional distribution as well as customer fulfillment centers in Staten Island, brand new York, as well as Joliet, Illinois, of which are slated to be ready from the fall to process online orders.
Ikea’s recent efforts to ramp up its online presence have proven successful, according to a March report through IBISWorld. Visits to its website reached 2.3 billion in 2017, compared to 936 million physical store visits the company reported of which year. In 2015, the company reported 1.9 billion website visits as well as 884 million store visits.
“This specific does mean Ikea definitely is usually moving through its established type of which has been proven to grow as well as where there aren’t as many players,” Neil Saunders, an analyst at GlobalData Retail, told BuzzFeed News. “In my opinion, they’re not abandoning stores; they might just build smaller outlets.”
The company is usually still scheduled to open stores in Norfolk, Virginia, as well as Live Oak, Texas, in 2019.