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IKEA Downsizes Food Courts Killed Off

Ikea who are well known for paying a minimum amount of tax in Australia despite raking in hundreds of millions in sales is downsizing with the business moving to one-on-one retailing.

The Company that has recently expanded their audio and smart technology offering despite poor sales is moving to a new smaller store format in Australia, which means you don’t have to walk through mazes of products to get to the ones you want.

Also gone is the IKEA food hall with the Swedish Company now investing in new “plan and order point” concept stores.

As one observer said, ” I don’t want one on one retailing if it means looking at images, I need to see and feel the quality of an Ikea product”.

The first one on one retail store has been launched at Melbourne’s Highpoint Shopping Centre.

Ikea claim staff will help customers plan out more complicated projects, such as buying a new kitchen, then place their orders online for delivery or pick-up nearby.

The Company has not said how long customers will have to wait for their goods Vs picking them up immediately from one of their stores.

Ikea Australia chief executive Mirja Viinanen claims the retailer is working to make its brand as accessible to as many consumers as possible, including through shopping centres, at a time when shoppers are perusing in-store and online before buying

“We sell things in channels [offline or online], but the customer does not think in channels,” she said. “It’s not that the customer is only coming to the plan and order point. People are stepping in; they are enjoying the planning system – then they may go to the store as well.”

Retail data from the Australian Bureau of Statistics released on Wednesday showed overall consumer spending increased by 0.6 per cent compared with last month, and 19.2 per cent compared with August 2021.

Household goods retailing rose by 2.6 per cent for the month to hit $6.1 billion. In August 2019, the figure was $4.6 billion.

The “plan and order” sites mark a move towards more one-on-one customer service. While traditional Ikea stores lead shoppers around a maze of self-service products, the new format is more of a concierge service claims management.

The new Ikea concept store is about 300 metres squared, compared with the big box stores which vary in size but can be bigger than 30,000 metres squared.

While the company has not announced plans for more “plan and order” sites yet in Australia, the format has formed a key part of Ikea’s strategy overseas.

Viinanen said the company would be evaluating how customers respond to the store before deciding whether to roll out more sites or try another format that would fit in a shopping centre complex.

“We will see how successful we are, and then we will have to figure out the next step.”

Ikea recently booked its first profit in Australia for five years despite the pandemic.

Credit: IKEA

The Swedish retailer who has spent years shovelling money back to Sweden, has not posted a local profit since 2016, despite booming sales of well over $1bn a year.

Their books have been riddled with unexplained expenses in the past.

This left no pre-tax profit for the Australian Taxation Office to make a claim over.

In their latest results the business reported net profit of $7.89m on billions in sales for 2021 against a loss of $8.66m in 2020.


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