Ikea is experimenting with smaller stores in urban centers.
John Sibley/Reuters
  • Ikea is opening 50 new smaller-format stores in urban areas around the world as the Swedish furniture retailer experiments with new retail concepts. 
  • According to an Ikea spokesperson, the expansion is part of parent company Ingka’s “global ambition to evaluate opportunities within 40 major cities” in order “to introduce their vibrant, urban destinations” to the company’s portfolio.
  • In the US, this includes smaller format locations in cities like New York, Los Angeles, and Chicago, the spokesperson told Business Insider. 
  • Visit Business Insider’s homepage for more stories.

Ikea is gearing up to open 50 more stores this year, with an emphasis on smaller locations in cities and urban centers. 

According to Ikea, the expansion is part of parent company Ingka’s “global ambition to evaluate opportunities within 40 major cities across Europe, Russia, North America, Asia, and Oceania” in order “to introduce their vibrant, urban destinations” to the company’s portfolio, a spokesperson said. In the US, new store locations will open in cities including New York, Los Angeles, and Chicago.

“This is how we have accelerated in our ambition to become more accessible,” Jon Abrahamsson Ring, Ikea’s newly appointed chief executive of brand, told the Financial Times regarding the new store concepts. “It’s never going to be that we go back to only opening big stores. It will be a mix of formats, including smaller stores closer to where people live or work or move.” 

Ikea currently has more than 420 stores across 52 countries, and is best known for its sprawling warehouse locations, typically situated in the suburbs or other more remote areas. Though the spokesperson did not provide further details on what the forthcoming stores will look like, the Financial Times reported they are likely to include elements like “kitchen planning studios” and services such as furniture rental. 

The announcement comes as many retailers struggle to stay afloat against the global pandemic, as several took significant sales hits due to the temporary shuttering of stores in response to the coronavirus. According to the Financial Times, sales in Ikea’s financial year that ended in August slumped by 4% as a result of store closures. 

Still, smaller store formats have long been top of mind for the Swedish retailer, which has invested heavily in modernizing its business in recent years. In 2017, Ikea acquired freelance marketplace company TaskRabbit, before slashing 7,500 jobs the following year in order to reallocate funding to digital ventures.

At the time, Ingka CEO Jesper Brodin announced that Ikea's digital transformation would also involve opening locations in city centers, telling the Associated Press in a statement "the retail landscape is transforming at a scale and pace we've never seen before." He added that Ikea needs to be "investing and developing our business to meet their needs in better and new ways."

The effort also reflects a wider push across the retail industry to downsize physical retail space while reaching new demographics. Target, for example, opened several smaller format city stores in recent years to great success. Traditional department stores like Macy's and JCPenney are testing similar models. 

"We continue to believe the best malls in the country will thrive," Macy's CEO Jeff Gennette said in an earnings call in September. "However, we also know that Macy's and Bloomingdale's have high potential off-mall and in smaller formats."

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