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IKEA's shopping malls arm plans U.S. entry in major play
- tpmx 7y agoInteresting. It's a bold gamble betting that central city shopping will make sense in a few years from now. I've got to applaud them. I'd hate to see these cities reduced to banking storefronts/tech worker office buildings. They do have the financial sustainability to attempt this during a 10-15 year trial period or so (compare with the attempt to enter the russian market), even while suffering massive losses every year. Not being a listed company has its perks.
- jsight 7y agoI'm happy to see this. There is a lot of potential for new growth in this sector and woefully insufficient ongoing investment. It seems like a tremendous opportunity for them.
- jseliger 7y agoIKEA seems like an underappreciated force for greater physical mobility: https://jakeseliger.com/2015/03/10/does-ikea-enable-mobility/ https://jakeseliger.com/2015/03/10/does-ikea-enable-mobility...
- hhs 7y agoIf interested, this gives info on Ingka Centres: https://www.ingkacentres.com/en/what-we-do https://www.ingkacentres.com/en/what-we-do
- llsf 7y agoIKEA might be into something here. Inner city retail has been dying slowly, never really recovered from 2008 crisis. There might be an opportunity here opening up. I would assume that commercial real estate is cheaper now (and might be even cheaper in few months with COVID-19), and there is still infrastructure (public transportation, even parking lots) and demand for meeting place (for shopping or entertainment) in city centers. Curious to see how this is going to pan out...
- hhs 7y agoIndeed, curious how this will work out in the long term. How will they evolve? Doesn’t IKEA also sell food items? Wonder if they’ll expand and go into groceries, and compete with Amazon/Whole Foods and Lidl?
- kevindong 7y ago> Doesn’t IKEA also sell food items? Wonder if they’ll expand and go into groceries They do have a cafeteria and then a frozen/dried goods area in all of their stores that I've been to. Selling perishables (e.g. fresh veggies) is a whole 'nother beast from selling frozen/dried goods and would be effectively trying to enter into an entirely new market.
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- alpinemeadow 7y agoYes! We do sell food items and I can tell you that all these new touch points for meeting the customer will have food ... we need to be where the people are, online and downtown.
- impalallama 7y agounfortunately it seems to be 90% corporate buzzwords and jargen so I still have no idea what an Ingka Center is. I'm pretty sure they are a building with, things in it...
- josephpmay 7y agoIf you look at what they actually own, they're just normal malls. It looks like the buzzwords are just that-buzzwords
- padseeker 7y agoBuilding an IKEA, even a mini IKEA, inside an existing mall in a major metropolitan city, i.e. Chicago, would be a massive success. I hate having to drive 20+ miles into the suburbs to get to an IKEA.
- keenmaster 7y agoChicagoans have to drive all the way out to Schaumburg or Bolingbrook and somehow take the furniture back with them. It’s a big hassle. I think what is usually regarded as a downside of IKEA, user assembly, will be an advantage in cities where it’s hard to arrange for the transportation of furniture. In Chicago I think a place like State St. would be perfect for IKEA. It’s the “second” shopping boulevard (with the main one being Mag Mile) where rent is cheaper and the businesses attract more locals as opposed to tourists. It’s also centrally located in the Loop where it will be more equidistant to the various neighborhoods. They would be well advised to sell a greater selection of office furniture being so close to millions of square feet of office space.
- padseeker 7y agoIt would be neat to have something downtown on State street. IKEA has stuff that isn't as big as say furniture, and could be hauled on the CTA. However my thoughts were more along the lines of the very near suburbs, where there's a fair amount of vacant properties. I don't know how well things are going at the Lincolnwood mall, on Touhy and McCormick Ave, just on the border of the city. Carson's just closed, and the Room Place furniture store has moved in. There are a handful of underperforming malls on the outskirts of the city, and it would putting an IKEA would definitely drive of traffic and make it more attractive.
- keenmaster 7y agoMillennials value convenience a lot. I think they would consume more IKEA, and more furniture/decor in general, if there was an IKEA downtown. IKEA would really have to narrow down its SKUs for that to work though. Alternatively, they can take the approach you suggested (near suburb) but also use that IKEA as a warehouse-like hub for cheaper and faster deliveries to Chicago with a greater selection.
- DevKoala 7y agoI am not confident on malls being a viable business on the coming years, but I am glad some corporations still believe in them since they generate tons of jobs.
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- kube-system 7y agoI think they will continue to exist if they focus on their unique strengths that online cannot compete with. They'll never compete as a place to get a good price on a commodity widget. They'll become places for things where experience, sensation, or interaction are important.
- JoshTriplett 7y agoAgreed. There are a few (very few) cases where in-person still wins heavily; clothing, for instance. Are there any malls out there run as a co-op between the businesses within, rather than as a separate business that leases space out?
- bobthepanda 7y agoMaybe not a mall, but isn't a food hall a very limited interpretation of this?
- lainga 7y agoLot of the small Japanese shopping arcades are organised that way
- goatforce5 7y agoIt seems as though their model is to have malls with Ikeas attached. Some with really large Ikeas, others with smaller Ikea pick-up points or whatever. Ikea generates a ton of foot traffic. Using that as the anchor will probably guarantee a lot of traffic to the other stores in the mall (when many malls are losing their long standing anchors). It seems like a pretty smart idea to me.
- pengstrom 7y agoIs the name "Ingka" simply a play on the name of the IKEA founder, INGvar KAmprad, like IKEA itself?
- cs702 7y agoThis is NOT about buying suburban malls. It's about buying properties in 45 "inner-city" (high-density) geographical markets worldwide, not just in the US, and transforming those properties into mixed-use spaces. "We plan to build mixed-use facilities that we call meeting places and that have a wide range of facilities and services," an Ingka representative explains in the OP, adding that "activities could range from healthcare and education to festivals and events, besides retail and food." I view this as a minor but still welcome development for real estate in high-density areas.
- mark-r 7y agoBut it also says they'll be extensions of existing Ikea stores. How many of those are in inner-city areas? The one in Minneapolis is in the suburb of Bloomington. It's also right across the street from the Mall of America, which will lead to an interesting competitive situation.
- apcragg 7y agoThe one in Atlanta is next to Atlantic Station which is a large business and residential development with rapid bus transit. It is also near Georgia Tech and Midtown though to get to Midtown you have to cross the highway which is not bike/ped friendly.
- cs702 7y agoYes. They don't go into a lot of detail, but I suspect they will look at all existing IKEA stores and selectively expand/convert some of them into mixed-use spaces. In particular, I can see them offering, say, 'satellite' office space and meeting rooms in certain suburbs near high-density areas -- for people that now want to work remotely but don't necessarily want to work from their own home every day.
- alistairSH 7y agoDC Metro has 2 Ikea stores. One in College Park (inner suburb on the MD side, just outside the Beltway). And one in Woodbridge (outer suburbs, a fair hike south in I-95 in VA). I've never visited the MD location. The VA location is in strip-mall hell. I have mixed feelings about mixed-use development. In theory, it's great - put shopping, dining, work, and homes in one place. Reduce driving, make walking/cycling possible, etc. My problem is the way the US approaches mixed-use continues to be at a "larger than human" scale. It's not organic - it ends up being super-blocks developed in one go by a faceless developer. The common spaces tend not to be used - they look good in architecture drawings, but don't work well in meat-space. And parking lots are still built, which creates a Potemkin Village effect (multi-story garage surrounded in fake building facades, etc).
- fermienrico 7y agoI bet HN would react differently if we replace IKEA with Amazon - same concept of huge "public" spaces governed by a massive corporation.
- RobLach 7y agoGoverned by IKEA and governed by Amazon are vastly different situations despite their size and reach.
- pkaye 7y agoWhat is the difference?
- bobthepanda 7y agoMalls have existed since the '50s and were literally designed to be this for suburban areas. This isn't some crazy new play.
- jeffbee 7y agoIs the whole thing laid out in a giant 3-dimensional space-filling curve? Do you have to walk through the Cinnabon to get to the Foot Locker?
- jchallis 7y agoAlways worth noting that IKEA is a nonprofit. https://www.racked.com/2014/9/16/7576651/ikea-non-profit-company https://www.racked.com/2014/9/16/7576651/ikea-non-profit-com...
- Matt3o12_ 7y agoCan someone who understands tax law explain how this is legal and is continuously being tolerated? This clearly goes against the spirit of the law.
- progre 7y agoOnly the poor pay taxes. I used to work for a company in Sweden owned by Nestlé. In our monthly all hands meetings our CFO would always present 2 sets of numbers, one where it showed our financials without licencing fees. This would show an about 5% margin, pretty healthy for a food manufacturer. This was shown to us so that we wouldn't be so depressed. Then it was the numbers with licencing fees. Theese would always show a margin of about 0.01 percent. We where taxed on the 0.01 percent. The rest would go to Nestlé where they would pay no tax at all because the canton in Swizerland where they where registered had no tax on licences.
- seanmcdirmid 7y agoIKEA’s founder did the same thing, moving from Sweden to Lausanne Switzerland to avoid tax. Switzerland has taxes, but they can be negotiated to flat values rather than rates on income.
- syedkarim 7y agoThat someone would need to understand tax law in the Netherlands and Lichtenstein. It's possible that in those jurisdictions, this type of corporate arrangement is very much within the spirit of the law. Hopefully a European expert chimes in. A comment above states that IKEA is very much a for-profit operation. I don't quite understand that. Whether an organization is for-profit or non-profit, they are all businesses in the sense that the cash-in must match cash-out. Most American hospitals are non-profits, but look at the way they conduct operations. Some for-profits receive grants from foundations for doing work that would be considered charitable. The only real difference between non-profits and for-profit corporations is that the former do not have shareholders. Both types of organizations can still issue monstrous bonuses to employees and offer performance-based compensation (commission for donations generated, etc). But it's only with a for-profit company that the owner(s) can sell the company, or pieces of it.
- OzzyB 7y agoI think this might actually work out because IKEA will essentially become the new $ANCHOR_STORE. In previous times these anchor stores were businesses that got blown out by the Internet so there was no more anchor, and no more reason to visit the mall. > Big Clothes Store - Go Online > Big Book Store - Go Online > Big Cinema Complex - Go Online But furniture? People still wanna visit the showroom and check out the merchandise before dropping $thousands, and you might as well get a new pair of shoes and a sandwich too while you're there. In short, don't change the Mall, change the Anchor.
- jermaustin1 7y agoI have noticed over the last 15 years or so, a lot of the anchor stores in suburban malls (Macy's, Dillard's, JCP, the now defunct Montgomery Ward's) attempting to become furniture stores on their upper levels, but their execution was awful. The furniture is typically stodgy looking, almost like what a grand parent would have in their home, but worse quality. Its like the furniture is an afterthought to the store, and I rarely see anyone actually purchasing anything. Then when you go over to the UK, an visit a department store like a House of Fraser or John Lewis, their furniture has a much more contemporary look, and there are always people buying, talking to clerks about pieces, etc.
- cosmodisk 7y agoI do notice this with a lot of things in the US. It looks like it's either super expensive stuff that looks great anywhere and is usually targeting upper middle class/elite, or tacky, tasteless crap on the other side of the spectrum. There's almost nothing in between.
- smacktoward 7y agoEver-increasing income inequality means there’s really only two classes anymore: the rich, and everyone else. A bifurcated furniture market (tasteful, well-built stuff for the rich, disposable cardboard trash for everyone else) is just one natural consequence of that.
- jldugger 7y agoWow, there's a massive amount of dead retail in the US already. A few metros may have thriving retail but there certainly aren't 45 of them. But I guess IKEA might bring enough foot traffic to offset some of that?
- coronadisaster 7y agoThe shopping mall where you can only go one direction in a maze... good for physical distancing.
- yters 7y agoikea was founded by a nazi
- jdkee 7y agoIsn't the U.S. the most highly developed retail environment with in excess of xxxx square feet of retail per person at a much higher rate than the U.K. or other developed countries?
- kleiba 7y agoOT: This must be one of the hardest headlines to parse for a non-native speaker of English I have encountered on the front-page of HN.
- orki 7y agoI still don't understand what does it mean.
- Gravityloss 7y agoIkea's shopping malls branch is planning to enter USA. This is a major play. P.S. Kudos to Reuters for a proper tracking opt out UX!
- Dobbs 7y agoThe division of the "IKEA Corporate Family" that runs shopping malls is planning on opening malls in the US.
- hellweaver666 7y agoI'm native English and my brain is still struggling to parse this headline.
- kylegordon 7y agoAs a native speaker, it's a terrible headline. It took several attempts and one coffee to parse it. My wife, a Dane with a Masters in English Literature... "that's an appalling headline." The author has smashed in every keyword in an attempt to hook people from the beginning with the IKEA keyword. Ideally it would be something like "Ingka Centres, IKEA's shopping mall arm, plans U.S. entry in major play" I expected more from Reuters. The author is Swedish, and it's not even a sentence structure that makes sense in Scandinavia.
- janekm 7y agoHow about something more clear like: "Ikea to open shopping malls in the U.S." The details can be in the opening paragraph...