Ikea's giant warehouse points to more stores and online shopping

Monday, 14 August 2023

Swedish furniture giant Ikea has signed a deal to build a warehouse near Auckland Airport.

A logistics expert says the development of Ikea’s 20,000m² mega warehouse signals that the furniture giant is looking to open more stores in New Zealand.

The world’s largest furniture retailer says it will begin the mammoth task of importing stock for its new Auckland warehouse in early 2025, which will support its first store here.

At 34,000m², the Mt Wellington store in Auckland will be bigger than the average sized Ikea store globally. Ikea expects to bring in weekly if not daily shipments of products from Asia as the store’s opening nears.

Supply chain expert Professor David Robb at Auckland University said the size of the distribution centre signalled there were more Ikea stores to come.

To service its first store Robb estimates Ikea would initially need to bring in the equivalent of more than 100 40-foot containers to stock the shelves, and then about a dozen a week to keep shelves filled.

He said the nature of its flat-pack furniture meant it would be able to import more with fewer containers.

The volumes would be significantly lower than the likes of The Warehouse, which brought in on average 25 containers a day to service its network of 115 Warehouse and Warehouse Stationery stores.

Ikea has remained tight-lipped on its long term expansion plans outside its first New Zealand store.

Ikea madness has building in New Zealand for almost three years now. This clip of the announcement that Ikea is committed to New Zealand is from 2021.

The company said it would “look to explore opportunities to expand in a way that makes sense and meets local demand” once it had established its first store.

Robb said number of containers Ikea brought in for one store would be “miniscule” compared to the average daily volume of containers imported to the Port of Auckland, equivalent to about 600 containers.

Ikea typically stores its additional stock in its stores, but Robb said the fact it was investing in a huge warehouse indicated it expected its operations to be significant here eventually.

Last Tuesday Ikea announced it had reached an agreement with Auckland Airport to develop and lease a 20,000m² warehouse at The Landing Business Park in Māngere.

The warehouse site is about 15 kilometres from Sylvia Park, and construction of the purpose-built facility is expected to begin in the next few months. Ikea said the warehouse would be integral to the day-to-day running of the three-level store, currently under construction, and its online shopping platform.

Ikea’s supply chain is said to be its “competitive advantage”, allowing for low manufacturing and shipping costs due to its flat pack nature and good made typically of recycled and sustainable materials.

It has more than 1800 suppliers in 50 countries that it buys raw materials from.

Ikea Australia and New Zealand market expansion manager Fabian Winterbine said for a store the sized planned for Auckland, Ikea typically held anywhere between six and 10 weeks of stock, more for best-selling items such as the popular Billy book cases.

Most stock would come from China or Malaysia, where it was made and the company had distribution centres, Winterbine said.

Container shipments would arrive “almost every day, certainly every week” to service the store.

He would not say how many containers it expected to arrive at Port of Auckland per shipment.

Ikea will import large volumes of stock through Ports of Auckland.

Ikea would not offer online shopping from the warehouse before the physical store opened, he said.

About 200 staff would be employed for the store and up to 40 for the warehouse.

A market manager would be appointed later next year and retail staff hired closer to the opening date.

Artist impression of Ikea's first NZ store, set to open at Auckland's Sylvia Park at the end of 2025.

Winterbine said construction of the store it was running to schedule, with pilling and groundwork expected to be completed over the next six months and building above ground to begin early next year. It was expected to open in time fore Christmas 2025.

Construction on the warehouse was set to begin shortly.

Ikea operates 400 stores worldwide, including 10 in Australia, where it has been operating for almost 50 years.

The Auckland store will be larger than eight of the 10 Australian blue box stores, which range from 23,000m² to 39,000m² in size.

Shoppers have been eagerly awaiting the arrival of Ikea since executives first announced in 2019 that a store would open in Auckland.