An inside look at what’s to come for Ikea’s first New Zealand store

Sunday, 22 December 2024

About 2100 kilometres away from Auckland, across the Tasman, Ikea executives are working around the clock to get Ikea’s Sylvia Park store ready to open next year. The Swedish furniture retailer’s New Zealand debut will kick off with a bang and be a nationwide operation, Aimee Shaw reports.

Walking through Ikea’s Tempe store in Sydney is to catch a glimpse of what is to come for Auckland.

The 39,000m² site employs 300 staff and has an internal retail footprint of about 3.5 km if you walk the entirety of the shop - roughly the same size as the Sylvia Park store under construction in Auckland’s Mt Wellington — Ikea’s first for New Zealand.

Construction began in June last year and is 60% complete. The iconic blue exterior walls went up this week, and the Swedish furniture giant on Tuesday took over its 20,000m² warehouse in Māngere, which will store products for national distribution.

Simultaneously, as construction continues in Auckland, executives overseas are working away on the finer details.

Ikea New Zealand market integration manager Giovanni Rutigliano says construction of the Sylvia Park store is running to schedule and the three-level mega store was still on track for opening during the second-half of next year.

In Sydney, where corporate Ikea is leading work behind the scenes on the New Zealand expansion, executives are meeting daily to discuss details, making decisions and signing off on strategies key to the launch of Ikea Sylvia Park.

It’s all go on getting the store ready for its debut in 10 months’ time.

Management for New Zealand have been hired, the physical spaces to house the Scandi-design product are rising by the day, and test shipments of product have begun and are being analysed.

Sydney’s Ikea Tempe is similar to what the Sylvia Park store will showcase (albeit 10 years older) — showrooms displaying product for every room in the house, sections dedicated for businesses to seek inspiration and ideas to kit out their workplaces, a 550-seat restaurant, a bistro and even a Swedish food market with take-home frozen meatballs and European delicacies.

Ikea Sylvia Park, however, will be highly automated and more modern.

The store sells every type of furniture, lighting, full-size kitchens, slot-in wardrobes, right through to utensils and the weirdest gadgets you didn’t know you need: Mini table top iron boards, pet cubbies, quirky door handles and storage boxes and contraptions galore.

While the Auckland store will sell more than 7600 products, the world’s biggest furniture retailer is promising a store with the scale and capability to service the entire country as soon as its doors open.

A first for Ikea, the new market launch will see online shopping and home delivery turned on country-wide when the store opens, and at least 20 pick-up locations scattered throughout the country.

Rutigliano, who oversees the setting up of the New Zealand business, says that is an unusual move for Ikea, which has typically opened a retail store first and then turned on ecommerce shopping later.

“We want to make it accessible to everybody. We didn't want to enter with the store first and then a year later online, we really want to bring Ikea to New Zealand for all Kiwis,” he says.

“You'll be able to visit the store or shop online or the app or call our colleagues on a video call. We will make it absolutely accessible to every soul in New Zealand as long as you have a phone as a minimum.”

Despite that, Rutigliano says Ikea hasn’t ruled out opening further stores elsewhere in the country.

“That's our starting point but we will keep exploring the market. We need to also understand Kiwis’ preferences and shopping behaviours, but we are by no means stopping at that. We will keep exploring the market and understand what areas present an opportunity.”

Ikea will install logistical automation — a massive vending machine type piece of technology from Swiss Log called Autostore — to pick and pack homeware accessories every time an online order comes in.

That’s something no store in Australia has.

It will also launch an artificial intelligence-powered home design software that will allow shoppers to scan the interior of their homes with a smartphone, and drag and drop any products in its range into each room to visualise what they would look like in their home from a 360 view in real time — everything from furniture down to the linen on the bed.

The technology comes from Californian spatial technology startup GeoMagical which Ikea bought four years ago.

“This will be the first market where we enter with such a wide omni[channnel] experience. New Zealand will be accessing stuff that other countries have received in droplets over years and years.”

Ikea expects the roof to go on in April, and for its teams to start work on fitting out the interior from June. It is promising to bring furniture and homewares to the country at much more affordable prices.

“To fulfill our vision of a better everyday life, our product needs to be affordable. Affordability is the foundation of our proposition. We have no doubts we will be extremely competitive in the market.”

The last time Ikea Sylvia Park owner Ingka Group opened in a new country was Slovenia in 2020. New Zealand is Ingka’s 32nd market, and is the largest franchisee of Inter Ikea.

Out of the 530 Ikea stores around the world, Ingka operates 375 stores.

Ikea was founded in working class Sweden, in Älmhult, in 1943 by local entrepreneur Ingvar Kamprad who wanted to bring affordable furniture to Swedes. It opened its first store in Småland, and grew quickly, expanding into Germany, Poland and Australia — one of its first international markets 50 years ago.

Long road to Ikea Auckland

Interest in bringing Ikea to New Zealand began quite some time ago, says Rutigliano, and exploration for what that could look like started in 2017.

In 2019, it decided to look and acquire a site for the first New Zealand store. Progress was delayed when the Covid-19 pandemic hit, but work resumed and the green light was given in 2022 for the Sylvia Park store and a $400 million expansion into Aotearoa.

A resource consent process followed shortly after and in June 2023 Ikea held its groundbreaking event to mark the start of store construction.

The store will be 34,000m² all up, but Rutigliano says Ikea would have liked a bigger site, and to have ideally had its mega store and support warehouse housed and adjoined on the same property. That wasn’t possible, so instead the warehouse was built in Mangere close to Auckland Airport.

The warehouse will store excess stock and the products Ikea says it knows people buy and get delivered to their homes — for example kitset kitchens.

Sylvia Park will also be the first Ikea store to display a carpeted garage showroom — a quintessential staple in most Kiwi homes used for everything but the car — this was something Ikea found to be unique to New Zealand following its 500 home visits it conducted earlier in the year.

It will have showrooms displaying product and interior design inspiration, along with full-size homes inside the store offering ways to style its products.

“The product range we have is a global product range, but the way we put it together makes it unique for the countries or the cities that our stores operate in. We know that in the garage there seems to be everything else happening but the car being parked — a laundry, a playroom for kids, gym space or a space for a side gig of some sort.

“We know that rooms of the home are called the kitchen, but many activities are happening there that are not making food — working, homework, packaging, so our experts are looking at how our Ikea range can make that activity so much easier or enjoyable. That is a really fun part of the job and hopefully we’ll be able to observe the satisfaction of customers walking through the store and almost recognising their own room in the space.”

Recruitment drive

Ikea has 400 roles to fill to service Ikea Sylvia Park. Of those, it has recruited 12 managers, including market manager Johanna Cederlöf.

The next tranche of jobs will be released in January. By April, it expects to have recruited 60 to 70 people, with the biggest recruitment push expected from May for remaining jobs.

The store is looking for staff to man its showrooms and interior designs units, restaurant and bistro, visual merchandising and warehousing.

For Ikea that’s 400 people for one store, but for many organisations that is often the whole company. Ikea will need a lot of kitchen and restaurant staff for its 460-seat in-store restaurant that will sell breakfast, lunch and dinner meals and snacks.

Ikea has a flat hierarchy system and encourages people to move between departments. It also encourages internal transfers between its markets.

Rutigliano calls work in the stores “a treasure trove of career opportunities”, because often employees start by selling and then find themselves in interior design, or being a commercial restaurant manager, for example.

It expects to begin training new staff at least one month before the store opens. But ongoing and regular training at Ikea is common, he says, as the company believes “when people develop, so does the business”.

Elin Åhlund, Ikea country people and culture manager, says the company wants to hire as many Kiwis as possible. While the company prides itself on its Swedish heritage, it seeks to strike a balance between its Swedishness and relevancy for the local market.

Åhlund says working for Ikea is “high paced and action oriented” and encourages staff to take ownership of their work and be able to voice their suggestions no matter their job or seniority. It expects its staff to be friendly and approachable as a bare minimum, and most importantly knowledgeable about its ranges to help customers with selection and allocating stock.

She says there has been significant demand from job seekers in New Zealand.

Supply chain, logistics

Ikea makes its products all over the world. Glass products come from Italy and its furniture mainly from China and Sweden. Once a product is made, it is typically shipped to its two distribution hubs in China and Malaysia.

Products for New Zealand will come mainly from those two countries. However, some of its best selling products in large quantities will come directly from manufacturers.

Ikea has already begun its test shipments and expects those first 40-foot containers to arrive in a few weeks. “This will tell us, on top of the lead times, how long it takes for boats to come from Shanghai and Malaysia to New Zealand, then how much time we need to add on top for processing.”

The retailer expects product to arrive daily once the store is open, with some goods delivered to the warehouse, others straight to the store.

More than a third of staff Ikea will hire in New Zealand will work in logistics.

Aimee Shaw travelled to Sydney courtesy of Ikea.