What makes Americans such fans of IKEA?
In an era when many big box retailers are experimenting with scaled-down store formats, IKEA has just opened its largest warehouse in the United States at a location in Burbank, CA.
The 456,000-square-foot unit, which opened for business yesterday, drew a crowd of more than 1,500. A line began forming at the store at 6:00 a.m. as many hoped to be among the shoppers who would win free furniture, such as a free Landskrona sofa ($799) or Poang armchair ($109). The first 100 kids on line received a soft toy from the flat-pack furniture retailer.
The new store, which has 1,700 parking spaces and is situated on 22 acres, was opened as a replacement for IKEA’s oldest store in the Western U.S. That location, which opened in 1990 and closed last weekend, was 242,000-square-feet.
While the store in Burbank is massive, IKEA has begun opening smaller locations of its own. Last year, the company opened 19 IKEA pick-up and order point stores in urban centers across the globe. The stores offer customers the means to order items online and go to a location to collect them for a flat $20 fee. Customers can also place orders online at the stores for pick-up.
The Swedish retailer, which operates 392 stores in 48 countries including 43 in the U.S., saw overall sales increase by 7.1 percent in 2016. Comparable store sales improved 4.8 percent.
The chain’s growth has continued unabated despite some high-profile product recalls. Last year, IKEA recalled 29 million MALM chests and drawers after four children died as the result of the furniture tipping over on them.
“Growth and profitability give us the freedom to choose our own way, the flexibility to move fast and the independence to think and invest long term,” said Peter Agnefjäll, president and CEO, IKEA Group, in December. “We are in a good place and we have an exciting journey ahead with a strong focus on continuous growth and efficiency in our operations.”
- IKEA to Offer Swedish Food, Fun, Furnishings, Convenience and Spaciousness When Its Relocated Burbank Store Opens Wed. Feb. 8 – IKEA Group
- IKEA: More than 1,500 line up to shop retailer’s biggest U.S. store – The Daily Breeze/The Mercury News
- Grand opening of the nation’s largest IKEA draws more than 1,000 shoppers – Los Angeles Times
- IKEA Group presents another year of solid growth – IKEA Group
- Following an Additional Child Fatality, IKEA Recalls 29 Million MALM and Other Models of Chests and Dressers Due to Serious Tip-Over Hazard – IKEA Group
DISCUSSION QUESTIONS: What has made IKEA so popular with consumers in the U.S.? Do you expect that popularity to continue or is the current IKEA business model susceptible to disruption?