OPINION, NZ Herald, 11 January 2019.
So, welcome to New Zealand, Ikea. I’m excited, the country is excited.
Of all the overseas mega brands that inspire hype on their potential arrival, probably Ikea is the greatest.
It’s less niche than the fashion brands that have been arriving lately like H&M and Zara, and less exclusive than the lower Queen Street darlings like Hermes, Louis Vuitton and Tiffany.
It’s accessible, on trend (and ‘scandi cool’), affordable, and massively popular.
It’s a wake up call for New Zealand retailers, many of who have so far escaped the worst of the reset going on in retail across the planet.
The good news is everyone has about a three year timeframe to gear up.
The bad news is that many of these retailers, based on their track records, will still fail to be ready to combat the retail juggernaut that is Ikea.
What makes Ikea a bigger threat to existing local competitors, apart from the above and the obvious novelty factor, is that they are environmentally friendly (something few NZ retailers are yet to overtly be) in terms of product sourcing, manufacturing and packaging, and they also have an efficient ecommerce model.
Currently 60 per cent of Ikea’s products are made from recycled or renewable materials and they recently pledged to make this 100 per cent by 2030. I’m not aware of any NZ retailer of equivalent products remotely in this zone.
Anyone thinking the lack of a significant footprint will hamper Ikea better think again.
Ikea’s efficient ecommerce platform will render geography irrelevant, the flat pack nature of their products relatively cheap and safe to ship. New Zealand will be able to access Ikea from day one.
And don’t think people outside the metro areas don’t know who Ikea are; as such a well travelled society, there aren’t many people who haven’t heard of them.
I’ve been holidaying in the Bay of Islands and can tell you firsthand how excited they are up here.
Ikea have to deliver against global retail best in class – and they win in it, especially at creating an entertaining, engaging retail shopping experience where a trip to Ikea is actually a fun thing (ie even men like to go).
Wherever it is sited (and let’s hope it’s West Auckland, the Westgate area is so perfect), the retailers in the immediate vicinity (whether competitors or just other stores) will benefit from a scientifically evaluated boost of 20 per cent sales rise (Daunfeldt, Nilsson, Mihaescu & Rudholm, 2015) simply because Ikea is such a magnet.
Who in our local retail scene has the vision, bandwidth, momentum and imagination to not be put into their shadow?
First of all, which categories are Ikea in? Well, for over 10 years Ikea have been the world’s largest furniture retailer.
If you are Harvey Norman, Farmers, Freedom, Target, Big Save, and the many bed chains, you are going to be under pressure.
But Ikea is also pretty massive in kitchens, homewares, manchester, lighting, and entry level home decoration.
So add in Briscoes, Stevens, the DIY retailers, kitchen specialists, Lighting Direct, Spotlight, the list goes on.
And let’s not forget K Mart and The Warehouse who again trade in many of these categories; K Mart have been really on their game (and are used to competing with
Ikea in Australia where they and Ikea are number one and two in homeware sales) but The Warehouse have recently been apparently more concerned with the threat of Amazon than creating a modern and engaging retail store environment.
Those who have failed to truly contemporise their ranging will find it looking very dowdy against Ikea’s vibrant, Scandinavian chic ranging.
Directly, no one is going to be put out of business by Ikea. But they will impact some retailers more than others.
Ikea’s marketplace area is the ultimate dumpstack near the till that alone is a category killer.
But the consumer will be the winner with greater choice, better quality and range of products at an affordable price, and the opportunity to try and pronounce the bizarre Swedish product names they give everything.
Also, the famous Billy bookcase will probably now be even more prolific in NZ (I brought one back on a plane from Australia once).
Ikea have successfully wrapped around a very basic concept (flat pack furniture) an amazing sense of brand, experience, design and affordability.
It’s up to our retailers here, especially the most impacted, to seriously take stock about how they will be repositioned by Ikea’s arrival.
This will require them taking a long hard look at their own ranging, store experience and the nature of their brand.
It’s going to be exciting to see who does so, especially with the massive rise of apartment and townhouse living driving demand for a more modern style of living.
– Ben Goodale is a New Zealand expert in retail marketing.
