Ikea to Focus on 30 Megacities for Future Small-Store Openings

(Bloomberg) -- Ingka Group, the largest Ikea franchisee, will focus on 30 megacities as it rolls out its concept of opening smaller stores in central urban locations globally.

Those locations include cities such as Paris, New York, Warsaw, Tokyo, Shanghai and Barcelona, Ingka Group Chief Executive Jesper Brodin said in an interview in Madrid.

Here are the other key takeaways from the interview:

  • Ingka is also opening two new stores in London: one in Tottenham Court Road on Thursday and another in Greenwich in February
  • The smaller stores aren’t necessarily profitable for the first six months, but tests have shown that profitability is within Ikea’s reach, Brodin said
  • Although Ikea has seen some cannibalization from smaller stores on larger warehouses, Brodin said it is reaching people who otherwise wouldn’t go to Ikea as a result of the expansion
  • "It’s not really about how many stores we’ll have but much more about how we penetrate city centers on the right spot," Brodin said. "It’s a new potential for us. We move Ikea where the money people are, instead of asking them to come to us"
  • NOTE: Earlier, Ikea Plans to Expand to a Dozen New Markets in Coming Years

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