What: Ikea is investing in new store formats as customers complained that its locations were too far away.

Why it is important: The retailer is listening to customer feedback and focusing on providing new store formats that are convenient for shoppers.

Ikea is investing USD 2.2 billion in its US omnichannel strategy, supporting the opening of eight new stores, nine Plan and order points, and 900 pickup locations and an additional EUR 3 billion in new and existing stores internationally.

Despite the retailer reporting eight in ten customers starting their shopping experience online, Ikea is focusing on its in-store experience as there will still be a need to touch and feel products in person according to the retailer’s COO.

In addition to introducing smaller city store locations, Ikea is also opening Plan and Order locations which range from 1,100 square feet to 8,600 square feet. While these locations only offer delivery, customers can also meet with associates for design assistance.

The success of these smaller format stores is reliant on Ikea’s ability to be more effective at inventory management and outbound logistics as well as the functionality of its e-commerce platform.

Ikea is also leveraging technology to improve logistics and inventory management, using drones and automation to use its existing store footprint in new ways.

Ikea banks on new store formats to sustain success