Ikea reveals tentative plans for standalone restaurants: Can food drive retail foot traffic?
Wednesday, April 19, 2017/
You might only get to experience a serve of Swedish meatballs during once-a-year Ikea trips or when watching re-runs of the Muppets, but with news the furniture retailer is toying with the idea of standalone restaurants, the cuisine might be about to become more readily available.
In an interview with FastCompany, managing director of Ikea Food Michael La Cour has discussed the potential opportunities behind Ikea restaurants separate to the furniture stores, noting that an astounding 30% of Ikea Food’s customers are coming to stores not to buy couches, but just to eat.
“The mere fact that we don’t need so many square feet to do a café or a restaurant makes it interesting by itself,” La Cour told FastCompany.
“I firmly believe there is potential. I hope in a few years our customers will be saying, ‘Ikea is a great place to eat—and, by the way, they also sell some furniture.’”
The company’s food division serves around 650 million diners a year, which amounts to around $US1.8 billion ($2.3 billion) in sales over 2016. This is a far cry from the company’s $US36.5 billion ($48.2 billion) in 2016 revenue, but La Cour says, comparative to other food companies, the division is “not that small”.
The Swedish retailer has been trialling a number of pop-up dining stores in locations such as Shoreditch in London, and retail expert at Retail Oasis Pippa Kulmar says standalone restaurants could be an extension of the pop-up concept.
“It looks like more of a marketing concept rather than Ikea expanding its core business into food,” Kulmar told SmartCompany.
“It’s playing off the fact that everyone loves the quirky Swedish food at Ikea, it’s quite clever.”
Kulmar believes it’s also an opportunity for the big-box retailer to move into smaller footprint metro locations and serve as a reminder to Ikea-loving consumers.
“These restaurants could act more as a reminder for shoppers to travel to Ikea locations out of the city,” she says.
“It’s a nice way of playing to the things people love about Ikea and letting them know they don’t have to go to a bigger Ikea for meatballs.”
“It’s part of Ikea’s culture too. It’s not just trying to get money from you, it’s looking for fun ways to interact with consumers.”
Although Kulmar supports the idea, she believes Ikea is uniquely positioned to take advantage of the possibility, and it’s unlikely Australians will be seeing standalone Bunning’s sausage sizzle restaurants anytime soon.
Despite this, the strength of food offerings in retail environments is starting to be realised, says Kulmar, saying the lifecycle of food is much shorter than furniture.
“You only purchase new furniture maybe once a year, but you eat food all the time. It’s a great traffic driver in retail, food can drive a frequency of visits stores would otherwise not achieve,” she says.
Ikea has opened a number of online stores in some Australian regions, but Kulmar says the retailer still doesn’t have a strong online presence, which it could be trying to fix with a healthy serving of meatballs.
“A new focus on these areas from Ikea could be thanks to online sales significantly decreasing retail foot traffic, so they’re hoping to drive the traffic back via food.”
SmartCompany approached IKEA for comment but did not receive a response prior to publication.