Online shopping, pick-up points and ... meatball delivery? Ikea’s bold expansion plans

WE DON’T want to alarm anyone, but you may soon be able to have Ikea’s famous meatballs delivered piping hot to your door.

Ikea hints at meatball deliveries

WE DON’T want to alarm anyone, but you may soon be able to have Ikea’s famous meatballs delivered piping hot to your door.

The Swedish furniture giant, which is celebrating its 40th anniversary in Australia this week, will soon begin offering online shopping for the first time in Australia — and it has revealed ambitious plans to double its business.

The company wants to open another four or five of its 30,000sqm megastores and two massive new multipurpose distribution centres in Sydney and Melbourne.

But it is the company play for online sales, due to kick off in early 2017, that should be a game changer. And Ikea country manager David Hood says the restaurant won’t be left out.

“There is definitely the possibility [to deliver food],” he told news.com.au. “The number of meatballs we sell is vast, and food is a big part of Ikea’s strategy globally over the next few years.”

Mr Hood said while the logistics hadn’t been thought out yet, Ikea could look at partnering with food delivery companies who already work with the likes of Woolworths and Coles.

The restaurant, once seen as an add-on, is a large and growing part of the business, accounting for 5 per cent of turnover for an average store. The best-performing restaurant is at the new Marsden Park store, accounting for 10 per cent, with a projected $10 million in turnover.

“These are big restaurants,” Mr Hood said. “The biggest Ikea stores in the world for food are Japan and Korea. In Seoul we seat 960 people. We’re now exporting meatballs to other markets. The restaurant business starts to become really interesting.”

And contrary to earlier reports on news.com.au, Mr Hood said Ikea restaurants are not some clever loss-leading psychological gimmick. “That’s not the case, so you can correct that one. We intend to make a profit in the restaurant,” he said.

Is this real life?

“There are elements of our food offer that we sell at compelling prices, but that’s the intention, it’s the same for the food as for the range. We have very clear goals on how much the food business should make.”

Ikea expects to double its business in Australia in the next few years with the opening of another four or five of its 30,000sq m megastores and two massive new multipurpose distribution centres in Sydney and Melbourne.

Marsden Park opened last month, Canberra will open in November and a second Brisbane store will open in August — creating 1000 jobs in total — and Mr Hood sees room for another two stores in Melbourne or Sydney.

The distribution centres will hold between 85,000 and 100,000 pallets of stock — compared with the current 14,000 at Ikea’s temporary warehouse — cutting down delivery times and acting as the hub for online shopping.

He said it was still early days, but Ikea would experiment with a combination of click-and-collect, home delivery and pick-up.

While the first distribution centre and online store won’t be live until early 2017, in the meantime Ikea will experiment with a new format: smaller than the old small-format stores, but bigger than a straight pick-up location.

David Hood predicts Ikea’s turnover will approach $2 billion in the next few years.

Mr Hood said the trial store, which is expected to open in February or March next year, was one of 12 being tested in different markets globally, each with a slightly different configuration.

He points to the recently launched pick-up point in Pamplona, Spain, as the most likely format for the new stores.

“What we have to do is increase the access of Ikea to people, and that can be done in a number of ways. If you go back a few years ago it was building big stores, but as we go forward you see multiple options driven by online,” he said.

Ultimately he thinks Australia can support around 13 full-size Ikea stores, plus a number of pick-up locations scattered in areas like the NSW central coast, north eastern Queensland and Tasmania.

The entire Ikea brand — Perth and Adelaide stores are owned and run by an independent company — turns over about $1.4 billion each year in Australia.

With the extra three stores adding about $300 million on top of that in the next 12 months, plus the launch of the online store, Mr Hood says it’s “not unrealistic” to expect the total brand to touch $2 billion in the next five or six years.

So will offering online shopping ruin the famous Ikea experience? “Based on what we’re seeing in the UK trial, it’s not detrimental at all to our existing footprint, it’s quite the opposite,” he said.

“People still want to come, get ideas and room search, but often they will purchase additional items once they go home. It’s an inconvenience to have to go back to the store.”

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