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Ikea is going small

Ikea is going small
[Source Photo: Steve Proehl/Getty Images]

Ikea is known for its gigantic blue box stores, where customers can lose themselves for weeks amidst row after row of couches and office chairs. But the company’s approach to physical retail is changing, alongside its evolving digital strategy. Following a 40% drop in its profits over the last year, Ikea has announced plans to build smaller stores with footprints that are easier to build in cities. The first smaller location, opening this fall in Tottenham Court Road in central London, signals another shift, too: Its restaurant won’t serve any meatballs–not even futuristic meatballs made out of bugs and stuff.

The new approach, reported by The Times, is being led by Ikea U.K. retail manager Javier Quiñones. It appears to be a European strategy for now, but would be sensible for the company’s other markets across the globe. We’ve seen chains ranging from Target and Sephora to Whole Foods and Taco Bell embrace smaller store concepts to squeeze their brands into increasingly dense and expensive urban environments. Smaller stores cost less to operate, and they’re potentially faster to open. Ikea’s smaller store concept can be opened within six months, while large-scale Ikea stores take an average of three to four years.

Even if these stores can’t carry everything a flagship location would, they can serve as a showroom–a more accessible place to get a physical experience with Ikea’s brand. Besides, having more locations may come with a secondary benefit: It creates a network of delivery hubs that could compete with the lightning-fast shipping times of companies like Amazon. Ikea is investing heavily in its own delivery infrastructure, and within the next year, it wants to gain the capacity to allow customers to order any of its 10,000 products online and receive them within a day. We can only hope those options will include the famous meatballs.

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