May 6, 2019 / 7:30 AM / 3 months ago

IKEA opens central Paris store to cater for changing tastes

PARIS (Reuters) - IKEA opened its first store in the heart of Paris on Monday, its latest step in developing a new range of shops designed to meet changing customer habits.

IKEA Group President & CEO Jesper Brodin attends the opening of the company's first store in the heart of Paris, France, May 6, 2019. REUTERS/Charles Platiau

IKEA, the world’s biggest furniture retailer, is known for its vast self-service out-of-town stores, but it is adapting its business model in the face of mounting competition and customers who prefer the ease of buying items of furniture online.

To a soundtrack of Abba songs and with staff waving blue and yellow Swedish flags, IKEA opened the doors on Monday at its first store in central Paris, in the Madeleine district, which will be its 34th outlet overall in France.

“La Madeleine is an innovation test laboratory for us. We want to serve the people who know and love IKEA but think IKEA is too far away,” Jesper Brodin, chief executive of Ingka Group which owns most IKEA stores, told Reuters.

“If La Madeleine is successful, we will open more (such)stores in France, but also in the U.S., Japan,” he added.

Its other city center formats include a dedicated kitchen showroom in Stockholm, a London store offering personalized planning for home renovations, and one for living room furniture in Madrid.

IKEA, which had global sales of around 39 billion euros ($44 billion) last year, plans to invest 400 million euros in France over the next three years.

The Madeleine store should also boost Paris’ retail sector, which has been hit by France’s “yellow vest” anti-government protests since late last year.

IKEA’s new French investments will entail upgrades to its existing store network, building up new city center stores, offering new services and improving its online capabilities.

RENTALS AND SERVICES

France is IKEA’s third largest market, after Germany and the United States.

Since taking over as group CEO in 2017, Brodin has led efforts to overhaul the IKEA business model to respond to the rise in ecommerce.

The group is planning to roll out furniture rentals to its main markets to appeal to increasingly environmentally conscious and transient customers.

“Yes, we will test furniture rentals in this (La Madeleine) store, probably within a year,” said Brodin.

To help accelerate its services drive, IKEA bought U.S. odd-jobs site TaskRabbit in September 2017, expanding it in the United States. It has since launched it in Britain and Canada.

“France is next, with Paris this summer,” Brodin said.

The new 5,400 square meter Madeleine store spreads over two levels, and will employ 140 people.

Slideshow (8 Images)

The store will include a salad bar and restaurant, and offer Feng Shui, cooking classes and workshops on repairing furniture or on home renovation. It will also host art exhibits.

Items that cannot be taken from the store can be ordered online and delivered at home or to 350 pickup points for parcels up to 20 kilograms.

IKEA employs around 10,000 people in France, where its sales rose 3 percent in the 2017/18 fiscal year to 2.83 billion euros.

Reporting by Dominique Vidalon; Editing by Emelia Sithole-Matarise and Keith Weir

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