Ikea is planning to profit from its popularity by investing up to $3bn in new shopping centers and renting space to retailers willing to open stores close to the largest furniture retailer in the world.The Sweden-based company formed IKEA Centers during last year to combine its out-of-town retail parks and shopping centers and to develop their entry into the real estate market. According to John Tegner, shopping centers not only increased the number of customers visiting their stores, but also provided the group with additional revenue from rentals and asset investment.
The group’s plan is to invest in new shopping centers based mainly in China and Russia.
Since its first opening during 2001, the group’s shopping center section has acquired 58 retail parks and out-of-town malls within 13 European countries, and it has also acquired centers within China. Its portfolio has grown to a value of around €10bn, which makes it one of the top 10 global operators.
Although the economy has remained slow, the European centers have experienced an average 2% like-for-like increase in visitors over the past year, compared to 1% for the overall shopping mall industry.
IKEA reported a profit of €3.3bn for the year ended August and often fares better than other retailers during economic downturns due to its low prices. Despite the sharp decline in the Russian economy, IKEA is to go ahead with its plan to invest €2bn in existing and new centers in the country over the next few years. Russia is the largest single market within IKEA Centers and all 14 stores have adjacent centers.
Apart from the potential IKEA recognizes within Russia and China, it also sees potential for Poland and Sweden due to the increase in purchasing power of consumers.
The group intends opening one new shopping center during this year – a three-level 127000m² structure in Wuhan in China. Its plans include the opening of two centers during 2016 – in France and Sweden.