STOCKHOLM (Reuters) - IKEA’s shopping center business is spending 170 million pounds ($222 million) to buy and upgrade a London mall in its first foray into Britain, betting it can win over a nation increasingly doing its shopping online.
Ingka Centers, an arm of the world’s biggest furniture retailer, said on Thursday it would put a new format IKEA store at the heart of the 27,000-square meter Kings Mall in London’s Hammersmith district.
It bought the mall from Schroder UK Real Estate Fund.
The move comes as Britain’s store groups struggle, with many outlets closing as shoppers opt to spend more of their money online.
“We believe we can upgrade assets in good locations and Kings Mall is a great example of this,” Ingka Centres CEO Gerard Groener said in a statement.
“Modern physical retail needs to be built around local community needs, a complementary mix of uses, digitalisation and sustainability. We simply have to stay relevant to our customers and understand how people want to spend their time,” he said.
The deal marks Ingka Centers’ entry in Britain. It is also its first acquisition of an existing mall, and will be its first anchored by a new-format smaller IKEA store.
The company’s existing 44 shopping centers in 14 markets are all anchored by a traditional, warehouse-like IKEA store, and it has had them built itself.
To meet the growing challenge from online shopping, IKEA is in the midst of rolling out smaller, but more accessible, inner-city stores with more digital and other services.
Urban mixed-use centers for socializing and shopping such as the revamped Kings Mall will support that strategy, Ingka Centers said.
Reporting by Anna Ringstrom; Editing by Mark Potter