Ikea is ready for NZ, but are retailers ready for the flat-pack challenge?

Saturday, 18 October 2025

Swedish furniture giant Ikea is less than two months away from opening its first New Zealand store in Auckland. While shoppers are expected to welcome it with open wallets, not everyone will be as excited about its arrival.

Competitors will be watching - retailers from across a wide range of categories, including hardware and DIY, furniture, homewares and linen stores, and even hospitality operators - to see what the impact will be.

Warehouse Group chief executive Mark Stirton was upbeat when asked what Ikea's arrival in NZ would mean for The Warehouse.

He says it will bring healthy competition and ultimately grow the retail sector.

“To Ikea, kia ora! We welcome competition. Fierce global players like Ikea will make us better, move faster, and learn more. We expect new retailers entering the market to grow the sector, bring fresh consumer interest, and increase foot traffic to Sylvia Park,” Stirton said.

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Stirton says The Warehouse was already reshaping its product offerings to better compete, and scaling the ranges consumers were responding well to.

“As a one-stop shop with something for everyone and a strong store footprint, we’re ready to adapt quickly to new demands and competition.”

Until now most have been quiet about the retailer’s opening, perhaps not wanting to feed the hype. Retail analyst Greg Smith, investment specialist at Generate, says Ikea’s arrival is expected to send ripples across the sector given its extensive product offering.

More competition keeps prices competitive, and Smith suspects Ikea is likely to take business from others; at least in the honeymoon period, or first initial months of opening.

“Ikea is well-known globally for good quality and well-priced merchandise,” says Smith.

“It's certainly going to have an impact.”

With an in-store restaurant, cafe and a child play area equipped with staff to watch kids while parents shop, the appeal is expected to be strong, and the impact similar to what was seen with Costco when it launched in New Zealand in 2022, taking an approximately 20% bite out of supermarket earnings.

Milford analyst Michael Luke also believes Ikea’s arrival in New Zealand would dent the earnings of retailers throughout the industry.

“The Ikea store has been long awaited by consumers and we expect it to perform well, like we saw with the opening of Costco,” says Luke.

“We expect it could add further competitive pressure to retailers selling similar products, like The Warehouse, which has already been doing it tough with the current economic environment.

“Retailers have large fixed costs from operating their stores, so lower sales can have a large impact on earnings.”

In a tough economic environment where the cost of living crisis has impacted most households, Smith says discounting has been what was needed to get shoppers through the door of shops to make a sale.

With the recent interest rate cut to 2.5%, another cut expected to come in October, and about 40% of mortgage holders coming off higher fixed rates in coming months, Smith says there was reason to believe the outlook ahead for retail spending in the lead up to the Christmas holiday period looked brighter.

“The timing for Ikea itself could be good. I wouldn't say consumers [are] back to full fitness, but it might be getting a bit more that way over the coming months.

“Will they be opening up their wallets more than last Christmas? Quite possibly. Cost of living pressures are still very real, prices haven't gone down in terms of the supermarket shop or food prices, but we do see more green shoots emerging over the Christmas, New Year [period].”

Smith says retailers based in Auckland would likely feel the biggest impact from Ikea’s megastore opening, but there would be “spillover effects” wider than that as the retailer will operate 29 order pick up points across the country.

“For other retailers, it’s not great timing to have another headwind added to the mix, when it was already pretty tough to make a sale.

“It might be particularly challenging for The Warehouse. Their home category accounts for about one seventh of red shed sales so that will be particularly relevant to them.

“Kmart has already positioned themselves at the affordability end, with lower price points, so perhaps it is not as vulnerable, but certainly there will be some impact. Those in the mid-range or low to mid-range, particularly in the home category, are going to be most vulnerable and potentially seeing some some impact.”

Mitre 10 and Bunnings sales would also likely be impacted, especially coming into summer when it was typically a busy time for outdoor furniture sales and BBQs, says Smith.

Bunnings declined to comment when asked if it expected its sales or foot traffic to be impacted by the opening of Ikea.

Mitre 10 and Kmart were also contacted for comment.

First Retail Group managing director Chris Wilkinson says Ikea’s arrival with lift the overall quality of products sold in stores across New Zealand.

He believes it will spell good news - and sales - for all in the industry.

“Firstly, it's going to get people back into retail. It's going to get people thinking about retail. It'll make them make a journey and make them jump online, and be inspired.

“People are already using AI to reimagine their home and garden environments, and that is propelling people into home improvement stores, into furnishing stores, re-inspiring people on things like wallpaper, paint colours and home accessories.

“We think Ikea will spur people to start thinking again about what they could be doing with their home environments, economically, and that will have a broad-reaching benefit across the broader retail landscape.”

The Swedish retailer’s impact would be “sizeable”, says Wilkinson.

The “value” aspect of its products would likely be appeal to consumers, who at the moment were “very mindful” of what they were spending, he says.

The sustainability and longevity of its products would also likely encourage retailers to up their game and improve the durability of their goods to avoid losing sales to Ikea, he says.

“The thing about Ikea that separates it is there's a high degree of sustainability in terms of its products and offer, and other businesses in the lower end prices will need to start thinking about how they deliver that sustainability. Ikea’s products are built for a longer life than traditionally a lot of the cheaper choices that people have in New Zealand right now, so it is going to be a game changer in that respect,” Wilkinson says.

“Ikea products have second lives. Often those products follow people around their from their flats to their houses, a longer period than other products.”

Wilkinson believes there will be more pros than cons to its opening.

“There'll be a two-pronged impact. One will be that it will lift the game because people will be inspired, and they won't necessarily be ending their shopping journey at Ikea. The second is people will start orientating towards more sustainable retailers, particularly our younger consumers, who are much more environmentally-focused.”

Wilkinson says he does not believe there will be material financial impact on competing retailers such as Kmart, both of which already operate successfully in the likes of Australia.

What Ikea says

Ikea is under way with the mammoth task of stocking shelves in its 34,000sqm store and will officially open its doors on December 4.

Its range is vast with more than 7000 products across a wide variety of categories, from outdoor and indoor furniture, bedding, children’s toys, pre-made kitchens and wardrobes, to lighting and frozen food.

Ikea has promised to bring competitive prices for its goods, and considerably cheaper than what is available elsewhere in the market.

At the store opening announcement event last month, Johanna Cederlöf, Ikea NZ market manager, told The Post Ikea was working through its pricing for the New Zealand market with the goal to be to be “as affordable as possible”.

Additional special prices and promotions would be available through the Ikea Family loyalty membership programme, she said.

It had 1500 sign ups on the day of its store opening announcement event.

Ikea New Zealand market integration manager Giovanni Rutigliano says Ikea expects a “huge response” from Kiwi consumers to its opening, given the Ikea fan pages, and strong membership sign ups and 20,000 job applications.

Rutigliano anticipates thousands of people will visit Ikea Sylvia Park on its opening day and weekend.

“We are opening a store, but we are also opening e-commerce, the app, our remote customer meeting points, so this isn’t just for the people of Auckland, everybody in New Zealand come the 4th December will be able to show up some how and shop.”