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Shopping Centers Today -> June 2003
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IKEA NOT ALWAYS AT EASE WITH ANCHOR ROLE
BY DONNA MITCHELL
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When Ikea took over a space previously occupied by Gap at a Long Island, N.Y., mall, one of the first things it did was seal off the interior entrance to the rest of the center.
The Scandinavian home furnishings giant just isn’t comfortable with the role of conventional anchor, whichever way the malls themselves might view it. Ikea says it likes to consider itself an independent retailer, going wherever there is strong demand for its affordable furniture.
“We see ourselves as a destination,” said Joseph Roth, director of public relations for Ikea Property, the chain’s property division.
But for all Ikea’s reservations, the retail real estate industry has embraced the chain as a reliable traffic generator. A 241,500-square-foot store in Burbank, Calif., opened in November 1990, a year before Media City Center (later renamed the Burbank Town Center) was built around it. The two were developed independently of each other; Ikea owns the store and the land under it, and shares no entrances or exits with the 1.2 million-square-foot Burbank Town Center. But the store does complement the mall, according to Robert A. Michaels, president and COO of Chicago-based General Growth Properties, which manages the property for Crown Realty & Development, Vista, Calif.
“They bring in the family customer,” said Michaels. “That certainly translates into sales productivity. Wherever we’ve had an Ikea as a player on the periphery of a property, it increases traffic and sales.”
This year Mall of America announced that Ikea will be building a 330,000-square-foot anchor site next summer, as part of the Bloomington, Minn., megamall’s second-phase expansion. Ikea is set to buy a 15-acre tract from the mall’s majority owner, Indianapolis-based Simon Property Group, and begin construction this month. And this time there is no ambiguity over Ikea’s status as an anchor: There will be a pedestrian walkway between the two.
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Meanwhile, the owner of Broadway Mall, Hicksville, N.Y., where Ikea blocked the interior exits into the center, has persuaded Ikea to reopen the doors and join the mall, so to speak, reports Tom Riley, a senior leasing representative at Jones Lang LaSalle, which manages and leases the center for its owner, Atlanta-based Gregory Greenfield & Associates. The 245,000-square-foot store occupies a key location, Riley says.
“We believe they are an important anchor for Broadway Mall,” he said. “Customers come from as far as Manhattan and Connecticut. You are talking about a lot of people.”
Eighteen years after opening its first U.S. store, in Plymouth Meeting, Pa., Ikea continues to pull in shoppers by the millions. A 274,000-square-foot unit in Emeryville, Calif., for example, attracts about 3 million shoppers a year, and the chain’s U.S. stores posted $1.86 billion in sales in 2002, up from $1.3 billion in 2001.
Ikea keeps its customers coming back by inspiring trust, says Ivan Saul Cutler, a Greensboro, N.C.Ðbased marketing consultant.
“They show you how to use the furniture to make your life better, as opposed to a blunt ‘here it is’” from typical furniture retailers, said Cutler.
Aside from its ability to drive traffic, there is another reason for shopping center landlords to watch the chain: It plans to open 50 new stores in North America by 2013.
But though the chain has warmed to the idea of working with certain shopping centers, landlords shouldn’t hold their breath. Ikea will never be ubiquitous on shopping center properties, Riley predicts, because the company has its own idea of where stores should be built. And keeping a tight rein on its brand makes the chain seem more exclusive, he adds.
“Basically, that mall or shopping center that falls into their criteria and works into their new market strategy,” he said, “is going to be the lucky one.”
One of those lucky ones, however, is Mega Family Shopping & Entertainment Centre which opened in Moscow in December. But that is hardly surprising: Ikea developed and owns the 1.6 million-square-foot center, which contains 250 stores.
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