IKEA is ditching its massive warehouses for tiny city shops. The furniture giant's boss in the UK and Ireland, Peter Jelkeby, said they will stop building new megastores, blaming insane property taxes and shoppers who cannot be bothered to drive to the edge of town anymore. They are going all in on small spots like their Oxford Street and Brighton stores after seeing those places crush it.
Basically, the old blueprint of a giant blue box in a retail park is dead. They will keep the existing ones open but will not add more. Jelkeby pointed directly to business rates, a property tax, as a major reason. Bigger stores get absolutely hammered with bigger bills, and a new rule will slap an extra charge on the largest commercial properties. He basically said the tax system needs to change yesterday for retail to survive.
Their new game plan is way more flexible. They are trying midsize stores in places like Harlow and Norwich, which are smaller than a warehouse but bigger than a city pop-up. They figure they have enough huge locations already, so they will just upgrade those with better pickup options and services instead of making them bigger.
The learning lab for all this was their Oxford Street flagship. That place blew away their expectations, especially the meatball traffic, forcing them to add more cashiers and kitchen staff. They had already closed their massive Tottenham store in London, betting a central location would work better.
Jelkeby is taking this playbook to Germany next, since he is moving over to run that division. He called the UK a test market for this whole small store idea, which they will now try in their biggest but more traditional German business.
Basically, the old blueprint of a giant blue box in a retail park is dead. They will keep the existing ones open but will not add more. Jelkeby pointed directly to business rates, a property tax, as a major reason. Bigger stores get absolutely hammered with bigger bills, and a new rule will slap an extra charge on the largest commercial properties. He basically said the tax system needs to change yesterday for retail to survive.
Their new game plan is way more flexible. They are trying midsize stores in places like Harlow and Norwich, which are smaller than a warehouse but bigger than a city pop-up. They figure they have enough huge locations already, so they will just upgrade those with better pickup options and services instead of making them bigger.
The learning lab for all this was their Oxford Street flagship. That place blew away their expectations, especially the meatball traffic, forcing them to add more cashiers and kitchen staff. They had already closed their massive Tottenham store in London, betting a central location would work better.
Jelkeby is taking this playbook to Germany next, since he is moving over to run that division. He called the UK a test market for this whole small store idea, which they will now try in their biggest but more traditional German business.
