IKEA in Auckland? Yeah right.

There’s been a bit posted on bloggs here and in the media over the last 12 months about IKEA coming to Auckland.

There is a common thread in all the rumour – none of it has anything official from IKEA or the IKEA franchise owner. You’d think that if you actually owned the franchise and were opening one up, you’d be pumping the free publicity for all it was worth.

There have been a number of sites rumoured, from Mount Wellington to Albany, a bit of digging shows that actually none of these were serious. There’s one thing for a developer to say they’d like IKEA to be there (who wouldn’t) or that their site “would be perfect for IKEA”, but that’s entirely different from a franchise holder saying “we are opening an IKEA here”, or someone is “looking at an IKEA for this site” – well I could rock up and say, “hey, this would be a good site for an IKEA”, but in reality that means sod-all doesn’t it?

My understanding of the situation (from someone at IKEA in Homebush) is that the franchise for NZ is held by the individual who hold the franchise in Perth, I guess IKEA must have figured NZ was a insignificant speck and gave it to them at the same time. The franchise holder has apparently shown little interest in NZ because of the commitments in Australia, or to on-selling the franchise.

This makes sense, the catchment areas in Australia service a population levels that match the entire population in NZ, and apparently IKEA have some pretty strict guidelines on the level of population that an IKEA store would need to service it. It is highly likely that at this point Auckland doesn’t achieve this and looking at IKEA’s overseas they always service at least two to three times the population area of greater Auckland (including Hamilton).

Setting up an IKEA is hugely expensive and the low prices obviously depend on a high turnover, you’d want to be sure of that before you made the huge investment required.

My pick is that IKEA is unlikely to arrive here until the population in Auckland hits 2 million.

Don’t despair, you can actually bring in IKEA gear. I have just imported an entire kitchen and bathroom from Homebush IKEA. Doing the sums we got a better looking kitchen and bathroom significantly cheaper than a pretty standard looking kit-set one from the likes of Mitre10 or Placemakers. As it all comes flat packed we got everything on a double pallet which cost about AUD800 to bring in. Even including air fares and a weekend in Sydney, shipping and the crate we saved about $3-4,000+ and got something of comparable or better quality and far better looking that was was available locally. There is a bit of fiddling around as you have to arrange the freight, but there are companies who can arrange the shipping etc and it’s not that bad if you are set on the IKEA option. I know someone else who got a whole container and did their whole house.

We waited a year for IKEA to appear and after doing some digging I discovered that it was unlikely to appear here in the near future so took the second best option. If anyone wants some help or recommendations I’m happy to give them if you want to import your own shipment.

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    • Jade
    • September 1st, 2008

    What was the freight company you used? thks

  1. Hi Jade,

    MGL, check out previous post…

    https://consumeist.wordpress.com/2008/06/20/ikea-in-auckland/

    I have done a few posts on IKEA, just put IKEA into the search widget on the right.

    Cheers

    • Lotts
    • January 15th, 2009

    We have 17 Ikea stores in Sweden and almost 9 million people – you do the math!
    I think one Ikea store in NZ with 4 million people will do great (especially since all furniture stores in NZ are expensive and ugly – except freedom) When Ikea come there will be no competition.

  2. Hi Lotts,

    True, but the freight costs (as a fair bit of the product is still made in the EU region) is a fraction of what it is to ship to NZ and this has a impact on cost of goods vs stock turn.

    People are not going to drive up from Christchurch to shop at IKEA in Auckland. It would be like having an IKEA in Edinburgh (UK) and expecting people to ‘pop up’ from Brighton – you couldn’t run a business on that expectation!

    Best comparison would be Singapore which has one store and it has it’s population similar to the whole of NZ spread compacted into a country the size of Auckland. If you look at Australia they have one store servicing around 3 million people in each region.

    • Stormy
    • March 1st, 2009

    Hey mate,

    I’ve been living in Stockholm and the city has just 800.000 people. If you take into account the greater Stockholm it makes for 1.300.000 people. And they have 2 IKEA shops there, so actually each of them is selling to just 600.000 people.

    Why couldn’t Auckland have it with the same 1.300.000 population?

    • Hi Stormy,

      One major difference. Stockholm is surrounded by hundreds of millions of people living in the EU, so the catchment isn’t 600,000 people.

      Great Auckland (which covers an area similar to LA) has barely 1 million people. The upper North Island almost two million. The population concentration in Stockholm, and indeed the rest of the EU is vastly different from NZ.

      Remember that IKEA specializes in furniture for appartments, and in the EU, like the US people often end out fitting out the entire apartment (kitchen included) unlike in Auckland. Apartment living has only been in Auckland for roughly ten years and it’s concentrated in the CBD maybe covering about 10-20,000 people many of whom are not resident.

      Things will change in NZ and they are as more people spend their lives renting rather than buying houses.

    • Tamira
    • March 28th, 2009

    I thought Ikea was not opening in NZ (right now) because of some court in Auckland did not allow it at the planned spot.
    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10490969
    Wow, it will be strange to move into a country that has no IKEA around…

    • That was a rumour but there wasn’t much actual evidence to back that up and IKEA denies this officially.

    • Lotts
    • November 20th, 2009

    Stormy – I agree with you, Ikea can and will open in NZ and they def have the population to do so and no market competition.

    If all other (imported from china) furniture stores can make money selling their ugly and overprised furniture I think Ikea would do very well in NZ.

    Consumist – I am sorry but you have no idea what you are talking about, give it 10 years and you will see what I mean.

  3. Lotts, the original post was in 2008 in regards to the annual rumours about IKEA being about to open, 2010 is not far away and there have been no more rumours for months.

    I’ve never said that IKEA won’t come here, it’s inevitable that they will, and I’ll be there with bells on to welcome them in. I’m not sure it’ll take 10 years either, but maybe your’e right.

    In the current economic conditions with the population I think it’ll be some time before IKEA do make the move given that the ‘franchise’ holder is Australian based and the opportunities there are greater – bigger/richer population.

    IKEA works on volume, hence it’s sophisticated flat pack designs and massive production based across the globe. NZ has high freight costs from those destinations and the reason IKEA is cheap is it sell volume and ships in bulk. In a small city like Auckland this could present problems at the moment.

    • KiwiDane
    • December 9th, 2009

    Adelaide has an IKEA store and a population of roughly the same as Auckland.

      • muriwai
      • December 15th, 2009

      Sure, but the total population of Australia is over 21 million – so when IKEA is importing stuff, it’s clearly cheaper to do so than importing for an ENTIRE market in NZ that is barely over 4 million. Economies of scale – which is why IKEA is so cheap.

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