Euro-style IKEA hits metro N.Y. market - discount home furnishings store

Discount Store News, June 4, 1990 by Richard C. Halverson

Euro-Style IKEA Hits Metro N.Y. Market

ELIZABETH, N.J. - With the opening of its first store in metro New York, IKEA has again demonstrated how to transplant a retail concept from its native country to nations as diverse as Saudi Arabia and Hong Kong.

A comparison of IKEA's latest store in Newark and a similar-size store in Brent Park, London, shows almost identical store formats, merchandise, catalogs and fixtures.

The only concession the Swedish home furnishings chain makes to U.S. tastes is to make its wallpaper strippable. Otherwise, it offers a standard merchandise mix developed for European tastes.

Offerings include scatter rugs measured in centimeters, kitchen cabinets and bath vanities that can't be screwed directly into American house studs, paint by the 10 liter (2.64 gallons) and 5 liter (1.34 gallon) pails and beds that won't fit U.S.-sized mattresses. Such merchandise ensures that replacements must come from IKEA.

U.S. sales of $130 million in 1989 from four stores are too small to warrant special products, according to Steen Kanter, president of IKEA East. Total IKEA sales last year came to $2.7 billion from 85 units around the globe.

Despite any glitches from buying in metric sizes, American consumers have taken the IKEA approach to heart. Just four years after it opened its first U.S. store in 1985 - in the Philadelphia market - IKEA has become the nation's 15th largest furniture retailer.

IKEA's expansion plans call for 25 more U.S. stores over the next 14 years.

Other IKEA markets are: Washington, D.C.; Baltimore; and Pittsburgh.

In a move further west, IKEA will open in Burbank, Calif., in the fall, with plans for a second store in Los Angeles next year. In Los Angeles, IKEA will bump heads with STOR, which operates a similar concept, and Conran's, which is more upscale.

So far, IKEA has translated its concept of carry-out, ready-to-assemble furniture to nations with widely varying cultures: Switzerland, Norway, West Germany, the U.S., Italy, France, Great Britain, West Germany, Canada, Austria, The Netherlands and Denmark. In addition, franchised IKEA stores operate in Australia, the Canary Islands, Hong Kong, Iceland, Kuwait, Saudi Arabia and Singapore.

Now IKEA has set its sights on Eastern Europe and expects to open a store in East Germany by the end of 1990 and another in Budapest, Hungary. It plans to open in: Warsaw, Poland, in 1992; Leningrad, 1992; and Moscow, 1993, IKEA president Anders Moberg said at a press preview held a week before the May 23 grand opening of the Elizabeth, N.J., store.

IKEA built its first metro New York unit (No. 5 in the United States and No. 87 worldwide) on industrial park land purchased from the Port Authority of New York and New Jersey.

At 270,000 square feet, the Elizabeth store is the third-largest in the IKEA system.

IKEA has no set prototype size, Kanter said, but instead expands or contracts stores to fit the site and the market. In Hicksville, N.Y., for example, the planned store will be 220,000 square feet, he said.

The Elizabeth store carries 12,000 sku's, Kanter said, every one designed and made to IKEA specifications.

The basic concept behind IKEA's marketing and merchandising strategy is to sell read-to-assemble furniture, and some case goods, and urge customers to take their purchases home.

Since so few New Yorkers who live in Manhattan own cars, IKEA made special provisions to make sure customers can get to the store by public transportation and still get their purchases home.

The retailer arranged to have weekend buses run every hour from Manhattan directly to the store for a round-trip fare of $7.10.

As an alternative, New Yorkers can take a PATH rapid transit train from Manhattan to Penn Station, Newark, and catch a bus to the store for total roundtrip fares of $4.

To help its 267 employees get to work, IKEA is subsidizing half the $1 bus fare from Penn Station, Newark.

To help the carless to get their goods home, IKEA is arranging with Ryder to open a truck rental agency on the store site. Customers will be able to drop off trucks at any Ryder location.

In addition, IKEA has arranged for next-day delivery service. For a fee of $40 for as much furniture as a customer can stack on three shopping dollies, IKEA will deliver the goods within a 40-mile radius that includes New York.

For car owners, IKEA sells a $22 cartop carrier, with the money refunded if they return the carrier.

The format for the new Elizabeth IKEA is virtually identical to that of most other IKEAs throughout the world. A greeter at a store information booth guides shoppers up a flight of stairs to the furniture floor.

A four-leaf clover traffic pattern takes them past about 100 room settings of furniture displays.

In front of most room displays sit selections of inexpensive items, such as $9 pyramid clocks, for impulse shopping.

From the furniture floor, the shopping pattern flows downstairs to the ground floor featuring: fabrics, curtains and blinds, bed linen, area rugs, lamps, kids corner, walls and floor, bath, wicker, small storage, home office, cookware, table ware, posters and frames, and green plants departments. The U.S. store also offers work place equipment, such as tools, and floor and ceiling tiles.