Ikea announces first big UK store closure as retail landscape evolves
Ikea has announced that it will shut down its Coventry city centre store this summer, in its first big closure of a UK outlet. The Swedish flat-pack furniture giant said the store had made “consistent losses” since it opened in 2007, with fewer people visiting it than expected.
It said it would be consulting the 352 workers affected and would try to find them jobs at other stores. The Usdaw union said it was “devastating news” for staff.
Ikea, which has 22 stores in the UK, said that it remained committed to growth in the UK. It said the Coventry site, which cost it £35m, had been built in the city centre as one of its earliest examples of testing a new format to meet customers’ changing needs.
‘Changing customer behaviour’
“However, given its location and the size of the land available at the time, the store was built over seven levels, which resulted in a significant impact on the operating costs of the store and the shopping experience for customers,” the firm added.
“In addition, the changing behaviour of customers in the area who prefer to shop in retail parks and online has resulted in visitor numbers being substantially lower than expected and continuing to decrease over time.”
After the closure, customers will have to journey to Birmingham, Nottingham or Milton Keynes to find their nearest Ikea branch.
Dave Gill, national officer for the Usdaw union, said: “Our priorities are to seek redeployment opportunities, minimise compulsory redundancies and secure the best deal we can for our members.”
Ikea stores are generally in out-of-town locations and the firm has made various attempts to bring its outlets to city centres.
In 2018, it closed three smaller inner-city collection-point stores in Norway, which had been a test for a new format that it hoped to roll out worldwide.
Other retailers have been harder hit by the rise of online shopping, resulting in the disappearance of a number of well-known UK High Street brands.
Already this year, department store chain Beales has fallen into administration, while John Lewis has warned that its staff bonus may be in doubt after it reported lower Christmas sales at its stores.
Ikea is trying to respond to changing customer tastes, says Patrick O’Brien, GlobalData’s retail research director.
“When the Coventry Ikea was opened, it was still very much about imposing the ‘Ikea way’ on customers; you walk this way round the maze, you pick it up yourself, you put it together yourself.
“Things have moved on in UK retail now, it’s all about how best to serve the customer, and Ikea has had to adapt and change their model. This is about Ikea adapting how it uses physical spaces rather than a beginning of a retreat.”