IKEA opens 1st California store: chain aggressively pursues international expansion - home furnishings warehouse store

Discount Store News, Nov 26, 1990

IKEA Opens 1st California Store

Chain Aggressively Pursues International Expansion

BURBANK, Calif. -- Bright blue T-shirts with yellow lettering beg the question: "Why did it take four years for IKEA to come to Southern California?" The back of the T-shirt purports to provide the answer: "Traffic."

While residents of Burbank and surrounding areas smile wryly when the Swedish company jokes about the sore reality of driving a car in Southern California, traffic did not keep consumers from flooding the first IKEA on the West Coast.

The 240,000-square-foot home furnishings megastore in Burbank, opened earlier this month in 41-acre Media City Mall, is the first of four IKEA stores scheduled for construction in the Greater Los Angeles market.

Growth on the West Coast will be supported by the construction of a new distribution center in the Inland Empire region, East of Los Angeles. Plans are to have the DC up and running within the next two years. Internationally, IKEA distributes to its stores in 21 countries with 21 DCs.

The Burbank store is expected to contribute $50 million in sales to the company's annual business, according to Goran Carstedt, president of IKEA North America. IKEA's U.S. sales for 1990 are projected to reach $280 million, according to Carstedt.

The new store is just a piece of the aggressive international expansion roster for the decade, outlined by IKEA executives during a pre-opening press conference at the Burbank store.

A second California IKEA will open in Fontana early in 1992; the two other stores for the Los Angeles market are expected to be up and running by the end of 1993. Currently five U.S. stores are open: Philadelphia; Washington, Baltimore; Pittsburgh; Elizabeth, N.J.; and Burbank.

Carstedt said that in addition to a previously announced spring opening on Long Island, two more stores will be opened near the New York metropolitan market. IKEA's North American flagship store was opened roughly a year ago in Elizabeth, N.J. Other North American openings during 1991 include IKEA's eighth store in Canada, its second for the Toronto market.

Anders Moberg, president and chief executive officer of IKEA Worldwide, noted that 1990 marked IKEA's first stores in both Hungary and Poland and that the first IKEAs in Czechoslovakia and Yugoslavia will open next spring; the first store in the United Arab Emirates is also slated for next year.

IKEA is also actively pursuing sites in Russia. Long-range plans will include an additional 15 to 20 stores in Eastern Europe by the end of the decade, Moberg said.

Subtle changes were brought to the Burbank store, primarily to appeal to the local tastes of urban California. Lighter colored fabrics and a year-round outdoor furniture area suited the area's climate. IKEA also decentralized its order and information hub. Previously a single core area, the information towers--equipped with computerized order systems--are now scattered throughout the store.

IKEA is also working on locating suppliers for U.S. and Canadian stores. Carstedt estimated that currently 25% to 30% of goods sold through North American stores are sourced in locally.

PHOTO : Goran Carstedt, president, IKEA, North America.