EXCLUSIVE: New Dublin Fulfilment Centre To Take Ikea From Flat Pack To Fast Lane

Swedish furniture and homewares retail giant Ikea is to open more Plan and Order points, increase collection points and open a major fulfilment centre as it looks to grow in the lucrative Irish market, Bisnow can reveal.

In an exclusive interview with Bisnow, Ikea UK and Ireland Country Customer Fulfilment Manager Jakob Bertilsson said that the company is seeking to shorten delivery times, widen its accessibility to consumers, and open stores and collection points in key customer locations.

Ikea’s ambitious growth plans come after a stellar 12 months to August 2022. Revenues surged to €216.7M at Ikea’s Irish arm, up 13.5%, as pre-tax profits increased to €12.88M, more than triple the €3.76M in the year prior.

The retailer’s flagship large-format store at Ballymun, Dublin, is due to welcome its 40 millionth visitor this year, while more Plan and Order points are expected after the company announced the opening of a fourth outlet at Douglas Village Shopping Centre in Cork, following Drogheda, Naas and the St. Stephen’s Green Centre in Dublin.

A fifth location at Portlaoise will follow, but earlier in 2023, the group made its biggest investment yet, which is set to transform its Irish operations.

Ingka Investments, the investment arm of Ikea owner Ingka Group, acquired Greenogue Logistics Park outside Dublin in April 2023 in what was its inaugural logistics investment anywhere in the world in order to establish an Irish customer distribution centre at the site.

The CDC will service the whole of the country, halving delivery lead times and acting as a major platform for the global furniture and homewares retailer to move toward its stated goal of zero-emission deliveries by 2025.

The move also reflects the company’s ambitions to grow and develop in the Irish market as the retailer rapidly evolves its distribution strategy, especially in urban locations, Bertilsson said.

Ikea announced a collaboration with Tesco to launch a "collect near you" service, enabling customers to pick up Ikea purchases from collection points within a number of Tesco car parks.

The trial has been launched at three sites in Mitchelstown, Drogheda and Naas, with six further pilot sites to be launched later in 2023 in Limerick, Galway, Cork, Waterford, Tipperary and Wexford.

CDC Heartbeat Of Ikea Plans

“The main reason we’re opening the CDC is that we really believe in the market," Bertilsson told Bisnow. "We have made investments in planning and order sites, especially for kitchens, plus collections together with Tesco. So we have a huge belief in growth in the Irish market because customers love Ikea, and that's clear. That's why the central distribution centre plays a huge part. 

“So far, we have imported products for the Irish market from the UK, which has impacted lead times. We foresee the lead times halving from around six days today to three days potentially for all of Ireland as part of our expansion plan. The warehouse is the foundation and the heartbeat behind all of that.”

The distribution centre will take its first inbound deliveries around November and should be operational for January. It will have a capacity for 300,000 orders a year.

In the deal, Ingka acquired two sites, taking a 475K SF building to service the whole of Ireland while subletting the second unit. The deal is part of the company’s ongoing strategy to invest in distribution and logistics real estate in major cities where Ingka Group operates. The buildings are Building Energy Rated A2 with LEED Silver accreditation, including rainwater harvesting and roof-based solar panels.

“At Ikea, we focus on accessibility, which, of course, means reducing lead times and being close to the customer for convenience,” Bertilsson said. “We also want to be sustainable, and this unit will support us with zero-emission deliveries. We have a very strong and clear goal that 100% of what we sell will be delivered 100% zero-emission by 2025. That's a huge ambition, and for that, we need a touchpoint in Ireland, close to customers.

“We have for a long time relied on our store in Dublin, which is a fantastic store and one of the biggest Ikea stores in terms of sales. But Ikea is on a journey to be more accessible, going from brick-and-mortar towards much more customer choice. That's why it's the right time to invest in Ireland.” 

Ikea Real Estate Portfolio

The company would like to open more of its out-of-town large-format stores but has been frustrated that in both the UK and Ireland, planning permission has been problematic and long-winded.

As a result, Ikea has diversified and has turned its attention to opening in urban locations. The first such store was at the Ingka-owned Livat shopping centre in Hammersmith, west London, while a flagship store will open at Oxford Circus, on the site of the former Topshop.

“We would love to have another store down in the south of Ireland somewhere,” Bertilsson said. “But of course, the distribution point is the first step.

“Hopefully sometime in the future, we can see another big store in Ireland, but we are open to invest where the customers are. And then in terms of the urban strategy, it is more just in terms of where the customers are today. They're more likely to be in the city centre. And maybe with respect to the remote locations we've had for our stores in the past, going forward there will be less car ownership. So there are many reasons to be aware and prepared that customers can travel without a car.”

Bertilsson said that although the concept is being applied continentwide, in different areas of Europe, that approach may look different depending on consumer behaviour, while initial footfall at its Plan and Order points has been strong and the interaction with customers “has been brilliant, and we are very happy about that.” 

Customers, whether in Ireland or the UK, want “affordable products, convenience, delivery, flexibility, all of that at speed,” he added. 

“We want to have a faster lead time to deliver quicker and provide convenience, and that's why we launched with Tesco to halve the delivery time,” he said of an Irish consumer base that is increasingly anticipating delivery speeds closer to those in the UK. “There are many ways that we are trying to stop, let's say, inconvenience for customers. Amazon obviously leads a little bit on this. They set the examples to set an expectation.”

In terms of zero-emission deliveries, these account for around 20% of the total but should be boosted significantly when the new distribution centre comes online.

As part of this, Ikea has commissioned Mer to install charging stations at Ikea stores across the UK and Ireland in a £4.5M initiative to add nearly 200 charging stations across its portfolio.

“When we open the CDC in January, we'll be up to 60% of all deliveries zero-emission, and we are making that happen by investing in our own infrastructure in charging and investing in our own vehicles together with our service providers,” Bertilsson said. “And we are building our own prerequisites for success in this to, quite frankly, year after year take big steps to 100%.”