Ikea is now pushing into the city center

Ikea is pushing into the German inner cities - away from the commercial areas. "We want to be where the people live," says Walter Kadnar, the Swedish furniture store group's new German managing director, who has been in office since the beginning of October. Ikea is therefore planning new, small inner-city locations instead of the large-scale houses on the green field as in the past.

For example in Berlin. There are to be two new planning studios in the capital from next spring: one in the Köpenick district in a shopping center and one in Steglitz in a listed building on a popular shopping street. In these stores, which are only a few hundred square meters in size, Ikea shows a selected range of furniture, primarily from the kitchen, bedroom and living room areas. Customers can get advice there on site and then have the chosen furniture delivered to their home or pick it up at a furniture store. “Our goal is to make the shopping experience as easy as possible. Our inner-city formats are an important building block,” explains Nele Bzdega, who is responsible for expansion at Ikea Germany.

Planning studios play a central role in their strategic planning. "The response to these city formats is positive," reports Bzdega. Ikea tried out this concept for the first time in Germany in 2020 – with a studio in Berlin and one in Potsdam. A third store was added last year, also in Berlin. But that's not all: In Ravensburg, Ikea is currently testing a pop-up store measuring just 75 square meters in the city center. Before that, there had been a small order and pick-up station in the city near Lake Constance for a few years.

In the coming months, the new head of state, Kadnar, will be traveling across the republic to get an idea and to explore new possibilities. It does seem clear, however, that the Ikea presence in Munich will be expanded. The region will be given more attention, says Kadnar, without wanting to give any details. But Hamburg, where there is already a large inner-city branch in the Altona district, appears to be on the list as well. "There's still something going on," announces the manager.

As in other cities in Germany, locations of the department store chain Galeria Karstadt Kaufhof could play a role. The company, which has gone bankrupt again, recently announced that it would close at least a third of its 131 branches. This is of course interesting for a retailer, says Kadnar and speaks of “new opportunities” that could arise. However, he has not yet given any concrete thought to this.

The Federal Republic is the world's most important single market for Ikea, followed by the USA, France and Great Britain. The Swedes turned over almost 5.7 billion euros in Germany in the 2021/2022 financial year that ended at the end of August, which is a good seven percent more than in the previous year. According to the company, the kitchen, bedroom and home office ranges did particularly well.

However, the comparison period was still partly characterized by lockdowns. Price increases also distort the picture. The group had raised prices worldwide by an average of nine percent in December 2021 and referred to high raw material costs. Country chief Kadnar does not want to specify how much and for which products the prices in Germany have risen. He also keeps a low profile on future price rounds. Ikea wants to remain affordable and will ensure price stability as much as possible, assures the Austrian, who managed the Ikea companies in Poland, Russia and France before moving to Germany.

Especially since the furniture trade in Germany is currently facing a critical phase. This is shown by a recent survey by the Munich Ifo Institute. According to this, consumers in Germany go shopping much less frequently. "Because of the high inflation rates, people on low incomes in particular can afford less and are reluctant to make purchases," says Klaus Wohlrabe, head of Ifo surveys. And the latest survey of retail companies on the course of the third quarter shows that furniture stores have been particularly hard hit in the past few months. 80 percent of the furniture retailers surveyed reported that fewer customers came.

Ikea reports around 74 million visitors to its 54 furniture stores in Germany for the 2021/2022 financial year. That was almost 40 percent more than in the previous year, which was characterized by lockdown, but still less than before the pandemic. Meanwhile, Kadnar is trying to find a positive perspective and believes in additional growth potential: "We're not so big in Germany that we can't grow any further."

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