IKEA To Spend $3.2B Transforming Physical Stores Into Fulfillment Centers
IKEA’s parent company, Ingka Group, is planning to make a $3.2 billion investment in upgrading its new and existing stores to also serve as eCommerce distribution centers.
The company plans to make investments in stores across the world from now through 2023, although a third of the investment has been earmarked for London, which has become an innovation test-bed for the Swedish retailer.
“Most of it will be in our existing stores since we talk about transforming, redesigning the purpose of the square meters,” said Tolga Oncu, retail manager at the Ingka Group.
The company’s move to make investments in innovating physical stores is part of its strategy to keep up with changing times. The company is also developing smaller format stores, rolling out a mobile app, offering remote planning tools, and revamping its website.
“We feel we have a catch-up to do on the back-end of our operation (and) we have realized that by including stores in our last mile and fulfillment design network, we can create a win-win situation,” Oncu said.
Transforming stores into fulfillment centers — a move that is becoming increasingly popular among large retailers — will help the company offer faster and cheaper delivery options that have a lower carbon footprint.
That being said, the investment comes at a time when retailers across the board are adjusting their financial outlooks in response to a decrease in consumer spending and the ongoing geopolitical tensions and war in Europe. Oncu, however, believes that the timing for fresh investments could not have been better for the company.
“I agree the outlook (for consumer spending overall) looks a bit gloomy. That means value for money and time, affordable solutions that are of good quality, function and design and sustainable will increase in demand,” he said.
Originally published at https://retailbum.com on May 9, 2022.
