HAMBURG, Germany — IKEA’s first inner-city store, which opened in June, is trying to remedy a couple of headaches that come along with its new city-center concept.
Located in the upscale Altona district of this northern port city, the pilot project of the world’s biggest home-furnishings retailer is testing a more urbanized concept. The idea is to cater to that 40% of Hamburg’s 1.8 million residents who don’t have a car.
The Altona store’s goal is to attract 60% of all visits by foot, bike or public transportation, in line with the city’s ambitious Green Network project to make large parts of Hamburg — Germany’s second largest city — car-free by 2034.
But the 60% goal has been overachieved, and that has caused a misconception that the store doesn’t have parking available.
“We do have 700 [parking spaces] here,” store manager Christian Mollerus said in an interview at the Altona store. “And in total I would say we never use more than 150. … Our future advertisements will go a little bit further in the direction to say we actually have car parks as well.”
No more than 10% of the store’s customers arrive in automobiles, Mollerus said.
The store has attracted more daily visitors than IKEA’s other German locations since its opening — between 10,000 and 12,000 walk through the doors on an average day, according Mollerus. But many visitors pop in for smaller purchases like napkins, candles and glasses.
“It’s nicer. It’s clean. Not so crowded,” said Marena Bader, a shopper visiting for the first time. “Because I live around the corner, it’s so much easier to get here.”
“The amount of small items we sell in the store is by far bigger than the other stores. That’s a fairly profitable business for us,” the manager said. “On the other hand, we are still lacking a little bit [in] the furniture sales. So coming back to that rumor — people believe that we don’t have furniture. We have to work with it.”
But customers know about the store’s restaurant. “Today we just came here to eat, not to buy anything, because we work quite close by,” said Stephanie Michel, who was visiting the IKEA store for the second time in a month.
Currently, in fact, the receipts in the restaurant have been outpacing those for the store proper. “We are No. 1 in Germany when looking at the turnover in the restaurant,” Mollerus said.
IKEA is based in Älmhult in Sweden, but Germany, with 44 stores, is IKEA’s biggest market, followed by the United States.
IKEA’s U.S. spokesman Joseph Roth said that, while the retailer’s U.S. branch is “open to locating stores in urban centers,” there is more to be considered when thinking of IKEA’s U.S. expansion strategy.
“This is big country, and we only have 38 stores,” Roth said. “The IKEA presence in Germany is much further established than that in the U.S., and the country is geographically populated and ‘transitly’ supported differently, too. … At this time, we are not planning a store design in the U.S. that would fit Manhattan.”
IKEA does have a location in the highly urbanized Red Hook section of Brooklyn, though, and in June, it broke ground to build a new store in the heart of St. Louis.
“Inner-city stores are fertile territory for the giant furniture retailers,” said Michael Silverstein, a senior partner at the Boston Consulting Group. “They come to market with incredibly low product cost. They have breadth of catalog and product offering.
“The conversion rate — the percent of consumers buying — approaches 90%. [That is] higher than virtually any class of retail.”
Mollerus called the Altona store “a test to see how do we do in an inner-city environment.”
“If we are here really successful,” he added, “then the potential is there that we do the same in other cities in Europe — or the whole world, as well.”
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