Following the news that IKEA has acquired three former Homebase stores, Matt Walton, senior data analyst at GlobalData, offers his view: “IKEA’s acquisition of three former Homebase stores in Harlow, Chester and Norwich offers a significant opportunity within homewares, though it must incorporate what it learnt from its previous experiments with smaller format outlets. IKEA has found the going challenging in homewares in the UK recently as it has slipped from third to fourth place behind Dunelm, B&M and Home Bargains in 2024. The rapid expansion of the discounters has made these retailers a greater consideration when shoppers are buying homewares.”
“One of IKEA’s main barriers in homewares is the difficulty of getting to its stores. This limits potential customers to those within close proximity to the store and those visiting for its furniture offer – something that cannot be relied on as IKEA’s lower income shoppers continue to be financially stretched. The delivery charge on relatively small-ticket items also makes buying online less appealing. Collection points at Tesco car parks have helped increase IKEA’s accessibility to an extent, though do not offer the immediacy of buying from a store. Having physical locations that are easy for a greater number of shoppers to get to will make IKEA more of a consideration among homewares shoppers.”
Walton adds: “This is not the first time that IKEA has tried a smaller format store. It opened four ‘order and collect points’ between 2015 and 2016, with three having closed by 2021, as their offer was clunky and struggled to resonate with shoppers. The plans for the recently acquired stores look more positive, and indicate that it has learned from this past failure. The range of take-home products has tripled to around 3,000 SKUs and the stores will also be used as click & collect points. This will help give IKEA an advantage over its competitors, offering greater convenience and encouraging footfall. The stores will also include a food-to-go offer and a more curated range, boosting footfall and encouraging repeat visits as it can refresh its range more frequently and include capsule collections.”
Walton concludes: “This new format provides IKEA with a path for it to regain share within homewares. Opening stores within city centres and supermalls becomes a possibility as well in locations which would be unable to support a full line
