IKEA Expands Its Business In China To Plan New Breakthroughs

In the cold days of the traditional retail industry, this achievement is not easy. In the past two years, China's shopping mall market is already booming.

According to the Research Report of the China Federation of purchasing links, as of the end of 2013, the stock of China's shopping centers has reached 3450. The volume of commercial real estate development in China will reach 564 million square meters in 2015, accounting for 50% of the total commercial real estate development in the world, and the number will exceed 5000.

However, this is not a problem with Ding Hui, general manager of the IKEA shopping center group (hereinafter referred to as IKEA) in China. It is his confidence to make IKEA home as the main store and ensure the customer experience.

"The era of making quick money has ended. If we train our internal strength and focus on long-term development, we can have a foothold."

He told reporters that IKEA is ready to further expand its shopping mall development in China, and there will be more plans for the future.

Turning waste into treasure?

The IKEA shopping center group, formerly known as IICG, was jointly established by IKEA's parent company IKEA group and Intel IKEA group in 2001 by 49% and 51% respectively.

On the last day of 2014, IKEA group and IKEA group completed the joint stock purchase paction, making the original joint venture company's income pocket become the wholly-owned parent company of IKEA shopping center group.

The two IKEA shopping center is looking for practical support for its own theory -- how to reconnect the customers who are accustomed to various forms of consumption to the real economic consumption scenario.

Whether IKEA can expand its shopping center in China, and whether it can win a place in the deep red commercial sea by IKEA brand effect remains to be tested by time.

Prior to that, the IKEA shopping center with IKEA as its main store was cautious in setting up shop. It has been in China for more than five years and has only opened two businesses. In addition to the Beijing gathering, the Wuxi gathering in southern China just opened half a year ago.

According to the plan, the clustered shopping center is expected to reach its maturity in three years. The traffic volume is stable at 30 million passengers per year, plus 5 million of IKEA's home. The total volume of the complex is 35 million.

In December 19th, the clustered shopping center was officially put into operation near IKEA's home in Xihongmen, Beijing.

After opening 5 p.m., passenger flow has exceeded 60 thousand passengers.

The most important point that traditional retail is different from online consumption is the incomparable consumption experience. It is obvious that IKEA is aware of this.

A total of three floors of shopping areas have special design for withdrawal. In order to ensure that consumers can see other floors without obstacles at any level, "Hui Ju" has sacrificed a large commercial area.

Moreover, it is said to be "the largest underground parking lot in Beijing" - 6500 free parking spaces are now completely open and free, and the parking spaces are completely free to residents nearby shopping and living before the demand for the parking spaces is saturated.

Yan Yuejin, a researcher at Shanghai Yi Ju Real Estate Research Institute, said that this can be differentiated from the lack of parking space and matching environment in many domestic projects.

Ding Hui made it clear that this position fully accords with the choice characteristics of target consumer groups, and their target group is an increasing number of people who struggle in Beijing and settle outside the main urban area.

The target customers here are not the so-called "tall" people, but the largest mass consumer groups.

There are no luxuries such as LV here. The consumption here is more popular with the public. It is a concept of "light luxury".

And in the choice of merchants fully combined with the characteristics of the crowd attracted by IKEA, to create "IKEA" unique, unique lifestyle experience.

For example, the bookshops opened here are decorated with IKEA products, and consumers can buy them at any time.

Moreover, among the 400 well-known international and domestic brands that have been gathered in Beijing, there is no shortage of brands entering the market for the first time. This is also an important bargaining chip to attract young and unique tastes of consumers.

For example, OLD NAVY under GAP is a brand line that is more popular than GAP.

There is also a restaurant brand "little love", which is the first hot restaurant chain from Suzhou to enter the Beijing market for the first time.

Behind all this is the attraction of IKEA, supplemented by IKEA's cooperation in location selection, merchant layout and shopping malls design.

Behind the maze shopping route of IKEA's home is the idea of distributing the passenger flow with high-quality resources and realizing the business idea of no corner shopping. IKEA also intends to extend this train of thought.

GAP OLD NAVY before entering the Beijing market, is considering the core shopping area of Beijing resources, but after contact with IKEA, was moved by its multi-dimensional "Super Regional one-stop shopping center" mode, decided to take the first step in the non core area of Beijing five rings.

Compared with the previous businesses' fault in shopping center location selection, the merchants settled here are selected according to IKEA's planning arrangements.

"Hui Ju" shopping center has four main businesses: IKEA, Auchan, Suning Appliance and Jinyi cinema. Among them, IKEA home is located at one end. Auchan, Suning and Jinyi cinema are located at the other end. Besides, there are 4 points of subway entrance and shopping center entrance, and then the rest of the merchants will be interspersed according to the plan.

By balancing resources and passenger flow, agglomeration aims to "operate" business rather than relying on businesses to achieve value alone.

Many brands, which are already mature in Beijing market, are not at all difficult to locate in the process of entry.

Commercial tenancies are all over three years, and seven or eight years are also rare.

Auchan and IKEA signed three projects in China, Wuxi, Beijing and Wuhan.

In the same way as foreign family businesses, the two have had many cooperation abroad before.

North Shanghua Development Manager

Told reporters that IKEA's idea of shopping center has completely extended the shopping centers in Europe, plenty of parking spaces and enough sharing space.

"The current operation is pretty good, and the daily traffic is very large, especially in the weekend, basically the residents nearby will come to spend."

She said.

The location of Xihongmen Hui was once a garbage dump site. It is not difficult for IKEA to build a tall building on a flat ground. The real problem is how it can turn an abandoned place into a country flowing with honey and milk.

At present, IKEA has identified 3 projects in China. Besides the Wuxi and Beijing projects already opened, Wuhan shopping center will be released in the year.

IKEA told reporters that in the future, five to six shopping centers will be built in Beijing, Shanghai.

Change hands

IKEA in 2009

When entering China, Ding Hui's mission was "10 billion yuan and 3 shopping centers".

Xihongmen gathering, plus the Wuxi gathering which was opened half a year ago, his task will be completed soon, but the owner standing behind has changed.

In December 17th, two days before the opening of Xihongmen, IKEA group announced that the group will buy 51% of the remaining 51% of the Inter IKEA Group group (IICG) from the IKEA IKEA group, and form a new IKEA Centres group and wholly owned it, and the British IKEA group will withdraw from the shopping center business.

The paction was completed in December 31, 2014.

Two independent valuation companies took part in the paction process.

IKEA group said that the shopping center is an important support for IKEA's home, and it is also a long-term investment.

The deal will integrate IKEA group's 14 shopping centers in Russia and Intel IKEA shopping center in 31 shopping centers in Europe and China.

All future shopping centers will be dominated by IKEA.

Pe-ter Agnefjall, President and chief executive, said that the combination of shopping center business and retail business provides a unique opportunity for the group to provide a new shopping experience.

IKEA Shopping Center Group will have 45 shopping centers in 11 countries, with a total area of over 3 million square meters, with an annual turnover of over 400 million passengers.

The shopping center will continue to operate under different brands, such as Russia's MEGA and China's LIVAT.

Former president of IKEA John Tegn r r is the new shopping center group's CEO.

In an interview with the Economic Observer newspaper, John Tegn r said there were two considerations in the merger. One is from the IKEA group, the investment in shopping centers will have relatively good financial returns.

At the same time, shopping centers can better support the development of IKEA's home business and bring more passenger flow and sales.

In addition, from the perspective of procurement, it can also save costs.

IKEA group's full revenue figures for 2014 were not released, but it is almost certain that this year's data will show growth as it did last year.

In 2013, the group's revenue exceeded expectations, totaling $28 billion 500 million, an increase of 3.2% over the previous year.

The business of IKEA group and Intel IKEA group in IKEA family has different focuses. IKEA group's main business is sales, and the British IKEA group is investing.

The two groups are independent and have different owners.

The former is responsible for the management of IKEA brand trademark, while the latter is responsible for the expansion of IKEA's home shopping mall.

The licensing authority for all IKEA's products offered by them and franchisees all comes from the Intel IKEA group.

"In fact, the establishment of the IKEA shopping center group is also derived from the attractiveness of IKEA's home shopping mall," said John Tegn R.

At that time, they found that IKEA shopping mall could bring 25% additional passenger flow to the area.

Over time, many IKEA houses have gradually developed some fixed businesses. They have developed the habit of setting up shop around IKEA.

IKEA immediately realized the opportunity.

Subsequently, IKEA group and IKEA group jointly invested in the formation of the Intel IKEA shopping center group, which accounted for 51% and 49% respectively.

In Europe, Intel IKEA regards IKEA as its competitor; in China, Intel IKEA implements a brand residence and fostering the market first.

In terms of market development, the IKEA group, which is familiar with the market, has always chosen the city to enter. The Intel IKEA shopping center group immediately followed up to assess whether the city could build a shopping center.

After the wholly owned IKEA shopping center group, IKEA group will be able to fully develop its business and develop the market in its own way.

As Erik Oster Pedersen, who is responsible for the deal, IKEA group said, "merging into a company will enable us to further strengthen the relationship between tenants and visitors worldwide and improve efficiency."

It is understood that in the future, every shopping center in IKEA will take IKEA home as the main store.

This means that the shopping center, which once belonged to two companies, is now not confused with each other.

Although the "bundled" shopping center project still needs to work slowly, it can finally produce enough attention to deal with China.