What IKEA Found in Brooklyn

IKEA is on its way to Queens. So what is attracting the home goods leader into the boroughs? We dug into its Brooklyn location’s data to find out.

Why Double Down on Lower Traffic?

Looking at data from August 2017 through August 2019 shows a brand that experienced a weaker 2019, than the strong growth it had seen in 2018. While a spike in July helped kick off an upward trend that lasted through August and overall traffic was still high, 2019 did experience a dip.

This might lead you to believe that a borough-based strategy isn’t the strongest. Yet, taking another nearby IKEA (red), but this time focusing on a suburban location and comparing both to their baselines for the period, shows that the same trend was felt there indicating that it dovetailed with a wider shift.

Breaking the Mold in NYC

Even more, digging further emphasizes the unique value that these pushes into more urban environments could offer. The Brooklyn location boasts visits that help the store rank in the 99th percentile for Home Improvement locations in the country. And it isn’t driving visitors in the ‘normal’ way for IKEA. As we broke down in a previous analysis, IKEA generally benefits from visitors who are willing to travel longer distances to come to a location. But the Brooklyn location (blue) operates far differently, seeing the majority of its visitors come from a closer distance. The Brooklyn location sees over 70.5% of visits come from within 7 miles, while the nearby suburban location sees just 26.2% from within that same range.

The impact can also be seen in the size of their True Trade Areas. The Brooklyn location (blue) has a much smaller market that it pulls from, yet it still manages to pull enough visitors to rank as one of the top IKEA locations in the country.

IKEA’s New Path

The ability to utilize a model that differs greatly from the classic strategy IKEA deployed across the US speaks volumes about the company’s continued growth potential. New formats like the ones being utilized in Manhattan or Queens show a brand that is learning to adapt to a changing retail environment. And these moves are especially exciting because they are complementary to existing strategies. 

Learning to dominate in a tighter, more urban environment requires smaller spaces that are more focused on the local audience. If IKEA can supplement its already sophisticated strategy for suburban growth with an ability to better penetrate urban environments, it could unlock an entirely new level for the home goods company.

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