With Ikea revealing plans to close its Coventry store in the summer, its first big closure in the UK, Russell Smith reflects on the current state of the retail market and how property strategies need to adapt in line with evolving consumer demands.
The retail market is undergoing fundamental disruption and Ikea’s Coventry store is, sadly, just the latest casualty. It probably won’t be the last, as retailers and landlords seek to rebalance their strategies and property portfolios in line with changing shopping patterns.
Larger format stores are being scrutinised closely, and we’re seeing real efforts made to try and subdivide space to ensure that every square foot is maximised – importantly that’s just not about range of product, it’s about diversity of experience and generating footfall and dwell time. Ikea aren’t alone, the same is true of the big department and DIY stores – some of which have had to go down the route of a CVA are even administration – who are rationalising their property portfolios in response to poor sales.
Retailers have learned, the hard way in some cases, that bigger is not always better when it comes to store format. Many large store concepts really struggle with design, accessibility and connectivity with the wider location and footfall. Ikea Coventry demonstrates not just the need to respond to the change in customer profile, but also the need for quality design thinking to make the most of location and footprint.
Ikea’s setback in Coventry is as much to do with location as anything else, but the retailer has made some strides overall. In Ikea’s case, the core product is flat pack furniture and, in reality, people either want to buy it online and have it delivered, or they want to go – or have to go – to an out of town fulfilment centre to collect in a car or van. Formats and locations that fall between these two poles are the ones that are going to be at risk. Ikea are therefore looking at smaller showroom format stores in affluent locations and with high footfall – such as Bromley or Hammersmith – or larger stores close to motorways or in accessible out of town sites.
Put simply, retailers have to understand that the way consumers want to buy their products has changed, and property decisions need to be made firmly in that context.