IKEA to Launch Small Urban Format Stores in Canada Beginning in Downtown Toronto 

Date:

Share post:

Swedish home furnishings retailer Ikea plans to open at least one small-format store in downtown Toronto within the next two years as it expands its urban store concepts globally. Given expansions in other parts of the world, other Canadian urban centres are also expected to see similar stores amid the company’s efforts to gain market share. 

The company made the announcement at an event on Wednesday in Toronto where it also announced its most recent sales numbers. Ikea’s Canadian president, Michael Ward, explained how the retailer is making changes to its retail strategy, including targeting urban dwellers who may otherwise not make a trip to the suburbs to shop at an Ikea store. 

Mr. Ward said that downtown Toronto would be first in Canada to see such a store format. Given Ikea’s urban store expansion in markets such as Australia, other Canadian cities with robust high-density cores such as Vancouver and Montreal could also be targets for smaller Ikea showroom concepts. 

SMALL-FORMAT STORE IN MADRID. PHOTO: EL ESPANOL

The Ikea small-format stores include three concepts that range in size from slightly more than 5,000 square feet to more than 50,000 square feet. A store in Manhattan, which spans about 5,400 square feet, focuses primarily on services. A store in central Madrid, featuring showrooms for living rooms and bedrooms, is an example of a store concept which typically spans 25,000 to 30,000 square feet. Another concept dubbed ‘extra small’ spans about 55,000 square feet and showcases a broader range of categories — a store in Paris spanning 54,000 square feet offers a selection of 1,500 decorative accessories and small pieces of furniture that can be purchased immediately, while larger items are available for home delivery. The highly experiential retail space features a restaurant and offers themed workshops. 

Ikea also announced in April of this year that it would introduce its ‘Home Planning Studio’ concept in Australia. In the pilot concept stores, consumers sit down for one-on-one consultations with an Ikea employee to plan and build rooms such as kitchens, bathrooms and bedrooms. Orders can be placed for home delivery or for pick-up at the store. Technology such as tablets are used. Between five and eight of these store concepts are expected to open in the metro Sydney region alone, with other markets including Melbourne, Brisbane and Perth also in line for multiple locations. Each of these will be between 1,100 square feet and 1,600 square feet. 

The retailer has also been testing other smaller city-centre formats, such as a kitchen showroom in Stockholm, as well as a bedroom showroom and accessory space in Madrid. Ikea is also rolling-out order and pick-up points in major markets. 

Several Canadian cities feature high-density urban cores that Ikea is likely to target. Downtown Toronto is a target according to Mr. Ward, and the city could see multiple small-format Ikea stores depending on the retailer’s strategy, including what concepts it deems will work in certain areas. 

Downtown Toronto, which has a population approaching 300,000 residents, is seeing a population boom that could see more than 500,000 people living there within the next 20 years. Retail space is mandated at the base of many buildings constructed on major streets, providing Ikea opportunities to test out small-format concept stores in a variety of sizes. 

THE FIRST OF AS MANY AS 8 SMALL FORMAT IKEA STORES IN SYDNEY, AUSTRALIA. PHOTO: IKEA

Vancouver’s downtown peninsula houses more than 120,000 residents, and the city’s dense core could also be a target for Ikea. As with Toronto, many residents in downtown Vancouver live in small apartment units and may utilize transit or cycling rather than driving a private vehicle. 

Montreal’s downtown core population is about the same as downtown Vancouver’s peninsula, and Montreal is also seeing a building boom that will add several thousand new residents in the coming years. 

Urbanization is taking hold in other cities in Canada as well. Downtown Edmonton and Calgary are seeing new residents as developers build new condominium and apartment towers, and Ottawa and Winnipeg are also seeing increasing urban populations. It’s a trend seen in other cities in North America as downtown cores are increasingly seen as desirable places to live. 

Congestion is also helping fuel demand for downtown housing in major Canadian cities. Toronto was recently ranked as the worst city in North America in terms of commute times, and sixth in the world. The congestion has resulted in households, even families with children, looking to the urban core to be closer to jobs and other amenities. Given the incredible congestion in Toronto, many have chosen to take transit or cycle rather than driving a car, and many new condominium developments limit parking availability. We reported this week on a proposed tower at 80 Bloor Street West in Toronto that would cantilever over Harry Rosen’s flagship store — the tower’s plans show 1,430 condominium units with only 140 parking spaces dedicated to residents. It’s more than likely that parking spaces will only be made available to purchasers of larger units such as penthouses and 2+ bedroom homes. 

Ikea’s move into urban cores is an intelligent move as the younger generations increasingly move downtown. Urban life offers vibrancy as well as ample amenities, and many companies with headquarters in the suburbs have either relocated to downtown locations, or are looking to do so. Many of Ikea’s furniture designs are geared towards small-space living, and the retailer has been testing pop-up concepts in markets such as Toronto for the past several years, drawing crowds. Some are surprised Ikea hasn’t already opened in downtown Toronto after lineups at an Ikea pop-up on King Street West in the spring of 2016. 

A SMALL-FORMAT IKEA STORE IN MADRID. PHOTO: IKEA

At the same time, other furniture concepts are also targeting urban dwellers, and Ikea is no doubt looking to take market share. Winnipeg-based EQ3, which recently opened its first US-based store in Manhattan, has been targeting urban dwellers with home furnishings offerings geared towards tight condominium living. Concepts such as Urban Barn have opened in high-density areas with a focus on urban dwellers. Crate & Barrel-owned CB2 targets urbanites in Toronto and Vancouver with stores housing product similar in style to that of Ikea, and generally at a higher price point. Other disruptors such as mattress-in-a-box brand Casper are expanding into Canadian markets, having opened urban locations in Toronto and Vancouver over the past year. Sleep Country Canada, as well, has a network of urban stores, and many other furniture concepts, ranging from chains to independents, now operate in Canadian urban centres. 

While the cost of living may be high in Canadian cities, young urbanites appear willing to spend money on furniture items which has led to the success of Toronto’s King Street East ‘Design District’, as an example. The flood of new residential units in markets such as Toronto, Montreal and Vancouver means that there’s continued demand for new furniture offerings. Tech booms in all three cities have resulted in young households with high incomes, and retailers are taking notice. 

As Ikea makes its move into urban cores in Canada, it will compete with retailers already targeting urban dwellers. Ikea’s prices are lower than most of the competitors, while at the same time offering furniture designs that appear similar to pricier offerings. If Ikea were to launch a similar expansion by opening multiple locations such as is the plan in Australia, smaller urban-focused furniture retailers could stand to lose significant market share. 

Ikea has already seen success in the Canadian market. At a Wednesday event in Toronto, Ikea provided updates on its financial performance in Canada. For the fiscal year ending August 31st, the company saw sales of a whopping $2.53 billion in Canada, which was a 6.1% increase over the previous year. In-store visits registered at 31 million people, which was a 2.7% increase over the year prior. Ikea’s e-commerce portal Ikea.ca saw 117.2 million visits over the 12 months with sales of $261.2 million, which was 12% higher than the year before. 

The retailer also discussed its eco initiatives with an aim to be climate-positive by 2030. Ikea’s Sell-back program offers store credit for gently-used Ikea products. In May of this year, the retailer phased out plastic straws from its stores amid a global commitment to eliminate single-use plastics by 2020. 

We’ll follow up on this article when Ikea begins opening urban concept stores in Canadian cities, the first of which is targeted for downtown Toronto in either 2020 or 2021. Other areas of the city are also being examined, according to Mr. Ward. At least one ‘extra-small’ Ikea store is expected for the core, which could span in excess of 50,000 square feet. The ‘planning studio’ concept is also being examined for the city amid a global expansion for Ikea’s smaller urban store concepts, which are likely to land in other Canadian cities in the coming years. 

LEAVE A REPLY

Please enter your comment!
Please enter your name here

More From The Author

Opportunities Present to Repurpose Nordstrom Spaces in Canada: Experts Comment

Retail Insider got the opinions of several experts as to what might happen with Nordstrom's Canadian stores after the retailer exits the country.

‘Wild Fork’ Launches in Canada with Plans to Open Storefronts in National Expansion [Interview/Renderings]

The innovative food company that delivers quality meat and seafood will open physical locations across the country.

Australia-Based Laser Clinics Secures Flagship Location in Toronto as it Launches Aggressive Expansion [Interview]

The concept is part of the world's largest cosmetic clinic group, and it will expand rapidly in the Canadian market after launching in Ontario last year.

Toronto-Based Retailer ‘Parpar Boutique’ Planning to Open More Stores with Expansion [Interview]

The retailer is unique in how it brings in new styles daily, creating a buzz and FOMO among customers.

Smaller Packages at Grocery Stores in Canada Amid ‘Shrinkflation’ Could Trigger Taxes at the Checkout [Op-Ed]

Sylvain Charlebois says that even more grocery items are expected to be taxed as brands reduce the size of certain food offerings below government thresholds.

Aberdeen Mall in Kamloops BC Adding New Retailers Including Tenanting Sears Box [Interview]

The popular shopping centre added retailers during the pandemic and continues to strategize its retail mix including remerchandising a former Sears space.

Upscale US-Based Women’s Fashion Brand Veronica Beard Expands into Canada with 1st Store in Toronto

Another international brand has entered the Canadian market, spelling confidence in brick-and-mortar retail in this country.

Luxury Brand Concessions at Nordstrom in Canada Shutter Ahead of Retailer’s Exit

Several major brands leased space within Nordstrom stores and the boutique spaces shuttered over the weekend.

Nordstrom to Exit Canada Discussion: Craig Patterson & Lee Rivett [Podcast]

Craig and Lee talk about the closure announcement of Nordstrom shutting its Canadian stores. Included in the discussion is how we found out, what might be done with Nordstrom's stores in Canada, and why the retailer made the shocking move.

Why Nordstrom Failed in Canada: Interview with Lisa Hutcheson of J.C. Williams Group

The retail industry expert also discusses learnings on retail innovation from EuroShop 2023.

Vancouver-Based Brand DUER to Double Store Count in 2023 [CEO Interview]

Stores act as a community hub for the brand which is seeing rapid growth across its channels.

Uniqlo to Enter Ottawa Market with Ongoing Canadian Store Expansion

The Japanese fast-fashion retailer is targeting major cities across the country as it enters new markets with stores.

SAXX Underwear Launches 1st Immersive Shop-in-Store at Hudson’s Bay Flagship in Toronto [Interview/Photos]

The pandemic put an earlier launch on hold for the brand which is now looking to open more retail locations in Canada.

Holt Renfrew to Relocate Standalone Men’s Store on Toronto’s Bloor Street Back into Flagship

The standalone Holt Renfrew Men opened in 2014 in a former Roots location, about 500 feet west of the 50 Bloor flagship. Big changes are in store according to the retailer.

Canadian Women’s Undergarment Brand Knix Expanding Further with Stores and Significant Growth [Founder Interview]

Joanna Griffiths discusses the expansion of her brand which includes product innovation and physical stores as well as robust e-commerce.

Upscale Women’s Retailer Andrews Relocated Yorkville Village Store to New Space [Interview]

The relocation follows Andrews' opening of a store in Oakville as it curates fashion lines catering to a range of female customers.

CrossIron Mills Near Calgary Sees Strong Leasing Activity with New Tenants Added [Interview]

It's been an incredibly active year according to James Moller of JLL, noting that the next space to deal with is a soon to be vacated Bed Bath & Beyond.

Birks Investing in Stores Including Relocating CF Chinook Centre Location in Calgary [Interview]

CEO Jean-Chrisophe Bédos tells Retail Insider that the jeweller sees an upside to luxury retail in Canada, particularly in five major markets.

Badass Fitness Experience With A FightClub Meets NightClub Vibe [Interview]

Cissy Chen, founder of Rumble Boxing Studio, discusses her growing business at a time when fitness studios struggle following the pandemic.

Zellers Reveals Opening Dates for Alberta and Ontario Stores

Zellers will be opening its first locations in Ontario and Alberta and launching its ecommerce platform later this month.

RECENT RETAIL INSIDER VIDEOS

Advertisment

Subscribe to the Newsletter

RECENT articles

Opportunities Present to Repurpose Nordstrom Spaces in Canada: Experts Comment

Retail Insider got the opinions of several experts as to what might happen with Nordstrom's Canadian stores after the retailer exits the country.

‘Wild Fork’ Launches in Canada with Plans to Open Storefronts in National Expansion [Interview/Renderings]

The innovative food company that delivers quality meat and seafood will open physical locations across the country.

Australia-Based Laser Clinics Secures Flagship Location in Toronto as it Launches Aggressive Expansion [Interview]

The concept is part of the world's largest cosmetic clinic group, and it will expand rapidly in the Canadian market after launching in Ontario last year.

Toronto-Based Retailer ‘Parpar Boutique’ Planning to Open More Stores with Expansion [Interview]

The retailer is unique in how it brings in new styles daily, creating a buzz and FOMO among customers.

Smaller Packages at Grocery Stores in Canada Amid ‘Shrinkflation’ Could Trigger Taxes at the Checkout [Op-Ed]

Sylvain Charlebois says that even more grocery items are expected to be taxed as brands reduce the size of certain food offerings below government thresholds.

Aberdeen Mall in Kamloops BC Adding New Retailers Including Tenanting Sears Box [Interview]

The popular shopping centre added retailers during the pandemic and continues to strategize its retail mix including remerchandising a former Sears space.

Upscale US-Based Women’s Fashion Brand Veronica Beard Expands into Canada with 1st Store in Toronto

Another international brand has entered the Canadian market, spelling confidence in brick-and-mortar retail in this country.

Luxury Brand Concessions at Nordstrom in Canada Shutter Ahead of Retailer’s Exit

Several major brands leased space within Nordstrom stores and the boutique spaces shuttered over the weekend.

Nordstrom to Exit Canada Discussion: Craig Patterson & Lee Rivett [Podcast]

Craig and Lee talk about the closure announcement of Nordstrom shutting its Canadian stores. Included in the discussion is how we found out, what might be done with Nordstrom's stores in Canada, and why the retailer made the shocking move.

Why Nordstrom Failed in Canada: Interview with Lisa Hutcheson of J.C. Williams Group

The retail industry expert also discusses learnings on retail innovation from EuroShop 2023.

Vancouver-Based Brand DUER to Double Store Count in 2023 [CEO Interview]

Stores act as a community hub for the brand which is seeing rapid growth across its channels.

Uniqlo to Enter Ottawa Market with Ongoing Canadian Store Expansion

The Japanese fast-fashion retailer is targeting major cities across the country as it enters new markets with stores.

SAXX Underwear Launches 1st Immersive Shop-in-Store at Hudson’s Bay Flagship in Toronto [Interview/Photos]

The pandemic put an earlier launch on hold for the brand which is now looking to open more retail locations in Canada.

Holt Renfrew to Relocate Standalone Men’s Store on Toronto’s Bloor Street Back into Flagship

The standalone Holt Renfrew Men opened in 2014 in a former Roots location, about 500 feet west of the 50 Bloor flagship. Big changes are in store according to the retailer.

Canadian Women’s Undergarment Brand Knix Expanding Further with Stores and Significant Growth [Founder Interview]

Joanna Griffiths discusses the expansion of her brand which includes product innovation and physical stores as well as robust e-commerce.

Upscale Women’s Retailer Andrews Relocated Yorkville Village Store to New Space [Interview]

The relocation follows Andrews' opening of a store in Oakville as it curates fashion lines catering to a range of female customers.

CrossIron Mills Near Calgary Sees Strong Leasing Activity with New Tenants Added [Interview]

It's been an incredibly active year according to James Moller of JLL, noting that the next space to deal with is a soon to be vacated Bed Bath & Beyond.

Birks Investing in Stores Including Relocating CF Chinook Centre Location in Calgary [Interview]

CEO Jean-Chrisophe Bédos tells Retail Insider that the jeweller sees an upside to luxury retail in Canada, particularly in five major markets.

Badass Fitness Experience With A FightClub Meets NightClub Vibe [Interview]

Cissy Chen, founder of Rumble Boxing Studio, discusses her growing business at a time when fitness studios struggle following the pandemic.

Zellers Reveals Opening Dates for Alberta and Ontario Stores

Zellers will be opening its first locations in Ontario and Alberta and launching its ecommerce platform later this month.