Swedish home furnishings retailer IKEA is opening its first urban format store in Canada in downtown Toronto. The store will be located in the commercial podium of the Aura building in downtown Toronto that recently saw three restaurants vacate the main floor as well as a Bed Bath & Beyond that shut this month on the second level. The IKEA store is set to open in late 2021 or early 2022.
Ingka Centres, which also operates under IKEA’s parent company, struck a deal to acquire the commercial spaces at Aura at 382 Yonge Street following extended negotiations with the landlord. That included buying the commercial spaces as well as 110 parking spaces in the complex in anticipation of opening the urban store. For several weeks, Retail Insider was provided information on the deal while we awaited confirmation from IKEA on the new store opening. We were informed by real estate insiders that Ingka Centres was purchasing the Aura real estate in order to give IKEA a favourable lease rate while also owning the asset.
The new 66,175-square-foot Aura IKEA store will include more than 2,000 products for purchase on the sales floor that can be brought home immediately, while some larger items will be on display but will only be available for home delivery. The company says that the downtown Toronto store will not allow for “self-service furniture”.
A new food concept will be featured in the store as well as “an array of services to support a seamless shopping experience”. IKEA says more details will be released soon.
Ingka Centres acquired the Aura commercial podium from Kingsett Capital’s core strategy CREIF Fund. The podium is at the base of the Aura building — a mixed-use skyscraper co-developed by one of KingSett’s Growth Funds. It also includes a tall residential tower and a stratified basement shopping centre that some say is the worst of its kind in Canada in terms of design. The entire podium is 132,070 square feet of gross leasable area over three floors, with an operational Marshalls store occupying the third level.
“The acquisition of the Aura Retail Podium marks our entry into the Canadian market,” said Cindy Andersen, Ingka Centres Managing Director. “Downtown Toronto is a super connected and dynamic place where people live, work, study and come to meet and have fun. It is in line with our strategic vision to invest in urban locations and to be closer to our customers”.
Some are questioning the choice of location for IKEA in downtown Toronto, including questioning the success of a furniture showroom at that particular location. Ikea’s move into downtown Toronto is part of an effort to gain market share at a time when competitors are also making inroads. Vancouver-based online furniture retailer Article, for example, has seen explosive growth and is known for its design and quality products. Quebec-based Structube as also expanded its operations while offering delivery which has increased sales. Closer to Aura in downtown Toronto, retailers such as TJX’s banners Winners, Marshalls and HomeSense all offer discounted home goods that are at comparable price points and often of better quality than that offered by IKEA.
Downtown Toronto is home to about 300,000 residents and IKEA’s inexpensive furniture offerings may be attractive to budget-conscious students living downtown. That market is expected to return when post-secondary students go back to physical classroom learning. Downtown Toronto is also home to an affluent and upwardly mobile population which may look for a more elevated product than that which IKEA offers. Some also have expressed frustration with building furniture and negative experiences with IKEA partner TaskRabbit have turned some off.
Globally, IKEA has opened 10 smaller IKEA stores in major markets including Paris, Moscow, Shanghai, and most recently, in Queens, NY. The “new city” approach aims to allow customers to shop seamlessly across all channels based on their individual needs and preferences.
IKEA Canada said that it also now offers its customers the ability to pick-up online orders closer to home at eleven Penguin Pick-Up locations across Toronto.
The new IKEA Toronto Downtown store will be IKEA Canada’s fifth store location in the Greater Toronto Area, along with existing stores in Burlington, Etobicoke, North York, and Vaughan. IKEA’s first Toronto location opened in 1977.