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IKEA plans aggressive growth

Andrea Lillo -- Home Textiles Today, February 4, 2002

IKEA, the Swedish retailer with 163 locations in 30 countries, including 15 stores in the United States and eight in Canada, is gearing up to more rapidly expand its North American presence.

Though one or two store openings per year has been typical for IKEA until now, said Clive Cashman, spokesman, IKEA will become more aggressive beginning next year, with plans to open five stores a year for 10 years in North America. The retailer is also searching for an ad agency that will help in this initiative.

The proposed sites for new locations in 2003 are College Park, MD; East Palo Alto, CA; Paramus, NJ; and Montreal. In addition, three stores are relocations within their local markets: Philadelphia (a relocation of the Plymouth Meeting, PA, store); Costa Mesa, CA (a relocation of the Tustin, CA, store); and Covina, CA (a relocation of the City of Industry, CA, store).

In addition, two more distribution centers will open this year to support this growth — one of which already opened in Tejon Ranch, CA, and another in Perryville, MD, slated for this summer or fall. The two new facilities will give the company a total of four in the United States.

New England is one of the targets on IKEA's list, and it just announced its progress on its Somerville, MA, store, which would be the retailer's first store in that region. "Boston is very important to make inroads into New England," said Cashman.

"New England is more than a one-store site," added Patrick Smith, the company's real estate manager for the East Coast. He said that IKEA had been searching for an appropriate site for years and closed on the Somerville property in 1998, which is right over the bridge from downtown Boston.

However, it had to negotiate with the town, which was "uncomfortable" with the size of the store. So the store will be 234,000 square feet, smaller than the typical IKEA, and the side and rear of the building will be of brick, he said, though the store will "still have the main IKEA feel." Smith hoped construction would begin at the end of the year, with the opening slated for late 2003 or early 2004.

The retailer's growth plan is also key to its search for a new ad agency. "We have an unprecedented aggressive expansion plan for IKEA — adding 50 stores in 10 years — and we're looking for a new partner to get us there," said Christian Mattieu, external marketing manager, who said it is looking for "a strong, strategic and creative partner."

IKEA is currently with the agency Carmichael Lynch, though Mattieu stressed that the new search is less a critique of the past than the drive to start fresh with a new partner. He hoped to decide on a new agency by March. "We want to start with a clean slate," he said, adding that even the media mix will be up for review.

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