Ikea promotes small-store concept

Ikea Thailand sees potential in its small-store model to expand into unexplored regions, a strategy that could lead to future growth. The company also aims to move its existing Phuket store and open a larger outlet by 2029. Leonie Hoskin, Ikea Thailand and Vietnam's retail business manager, points out that large stores are expensive and time-consuming to develop.

She highlights the benefits of the smaller store concept, as it allows Ikea to establish a minimal presence in new regions with the possibility of expanding to larger stores later. Currently, Ikea operates three small stores in Thailand: one in Chiang Mai (700 square meters), another in Khon Kaen (800 sq m), and one in Phuket (2,000 sq m).

In Bangkok, there's a medium-sized store in Sukhumvit spanning 12,000 sq m, while the flagship stores in Samut Prakan and Nonthaburi have a space of 25,000 sq m each. Ms. Hoskin notes that smaller stores usually lack warehouses, relying on logistics and fulfillment services, which can raise operational costs, necessitating careful management of the fulfillment network.

With the rise of online shopping, large parcels from furniture retailers limit logistics options and items are susceptible to damage during delivery. To address these issues, Ikea plans to introduce a new shipping model with Thailand Post, utilizing collection points for more affordable customer pick-up options. E-commerce accounts for 26-30% of sales, with the company expecting further growth, she added.

Some customers shop both online and in physical stores, preferring to view a product's color or model in person before purchasing online. Physical stores, including smaller branches, can help meet this demand. Ikea Thailand is contemplating relocating its Phuket store to a larger space of 10,000 to 12,000 square meters, though the plan has not been finalized, with a tentative opening target of around 2029.

The company also intends to open a new store within a year or two, though no specifics were provided. Ikea's land in Rangsit could be developed into a third Bangkok store or serve as a nationwide fulfillment center, but such developments are likely years away.