IKEA tests hybrid pick-up stores
In Canada, IKEA is testing two smaller stores that work as pick-up spots for their faraway larger stores but also allow enough room to sell the chain’s best sellers.
The Pick-Up-Points, to open late 2015, measure 20,000 square feet in London, Ontario and 40,000 square feet in Quebec City. IKEA’s regular stores range from 260,000 to 340,000 square feet.
The locations will allow customers who have shopped online or at an IKEA store to pick up their products closer to where they live, thereby reducing delivery times and costs. Orders can be picked up within two days.
With the nearest IKEA store a 1.5-hour drive to Burlington, Ontario, delivery of a kitchen to a London resident can cost $450, according to the Toronto Star. London residents will now be able to pick up online purchases for a $20 fee or pay an $80 delivery fee to have the London location drop the purchase off.
The locations also promise to deliver "inspiration and services," some intended to support their purchases, such as returns, exchanges and assembly. They will also be able to sit at computer stations to browse www.Ikea.ca to make online purchases, utilize "home furnishing inspiration areas," or use stations designed to help customers with their planning process.
Source: IKEA corporate video
Finally, as a store, the locations will stock 99 of its most popular products for immediate takeaway.
IKEA currently has 12 stores across Canada. Pick-Up-Points is part of a global test pilot in markets where there are currently no stores. Other pick-up stores are being tested in Spain and Greece, with one for Thailand to open this summer.
"The ambition is to make IKEA more accessible to the many Canadians," said Stefan Sjöstrand, president, IKEA Canada, in a statement. "The Pick-Up-Points allow IKEA to expand quickly into markets that have been identified as having potential, resulting in consumers having easier access to our products."
Discussion Questions
What do you think of the expansion potential for IKEA’s Pick-Up-Points? Should other largest format stores open smaller hybrid pick-up stores to support online sales, customer services and best sellers?
Poll
BrainTrust
Ben Ball
Senior Vice President, Dechert-Hampe (retired)
Kevin Graff
President, Graff Retail
For IKEA this works because of the distance between some top markets and their super stores. Other retailers can try it, but it they will need to be as detailed and high-functioning as IKEA is. Many retailers still have old platform systems that could never sync up a pick-up center with online orders and top sellers to push at a center.
IKEA is strong in these areas and thus has customers that keep coming back for more.
I support this for IKEA, if for no other reason than the possibility of avoiding the ZOO at their Woodfield, IL location. I only go there when whatever my wife or relative is buying won’t fit in their car and they need a truck.
The key to this working will be the planning centers though. Unless you are an IKEA engineer, it takes one of their trained associates and their CAD/CAM programs to figure out how many left opening vs. right opening cabinets you need for your wall unit!
Being here in Canada, I can guarantee you that these outpost stores will be jammed with customers and business. It’s almost like a pilgrimage up here for folks to drive as far as three or four hours to visit an IKEA store.
Other retailers have been doing this (in various formats) for a while now. Reference how Costco and Home Depot have moved into city centers with much smaller boxes and selections.
Given the size of a traditional IKEA a smaller, more manageable pickup location makes sense. The ease of pickup or delivery plus related service and stocking of the top 99 selling products allows IKEA to make legitimate omnichannel claims.
Could be a model for others to emulate.
It’s the right move for IKEA. Customers would drive over an hour to get to an IKEA when it first opened in the U.S. and the biggest loss of sales revenue for IKEA is the high shipping cost that customers must pay for delivery of large items. A pick-up site concept will pay for itself in the long run.
Way to go IKEA! I have relatives who love IKEA but don’t have one in their towns. They don’t hesitate to call me and ask if I can run to IKEA and pick up such and such. Do you know how LONG it takes to simply get through an IKEA store? WOW—is this a life saver!
As for other stores? Many of them have already thought about and implemented steps that meet their customers needs. Home Depot, for example, will pre-pull orders or deliver to site (for contractors).
Each retailer always needs to be thinking about their customers and how to meet them where and when they want. That is simply the name of game these days.
And that’s my 2 cents.
As we are all aware, there have been and are many previous searchers from big-box-ville working on the solution for this opportunity. Buying a property or lease and staffing offer the investor little resistance for success here.
What is not owning up to the cause is the small store merchandising. Big store chains rely on the existing operations mantra to predict customer/consumer interest and buying habits. This is where slow store sales resulting and continuing under performance is forcing the retreat from this new concept. Close attention to long term comprehensive exit poles aimed at consumer only why and why not purchases were made will help those looking for success. This is something Target might have done for each store to save and/or enhance the Canada investment.
Winner all around. Too bad they can’t fit the marketplace into these spots.