Ikea announces first big UK store closure - will more follow?

Tuesday, 4th February 2020, 3:38 pm
Updated Tuesday, 4th February 2020, 3:39 pm
Coventry Ikea branch to close this summer

Swedish furniture giant Ikea has announced it will close a store in the UK this summer, marking the company’s first major closure of a British outlet.

The Coventry store, one of 22 Ikea stores in the UK, has made “consistent losses” since it opened in 2007 after attracting fewer visitors than expected.

Ikea will now enter a period of consultation with the 352 staff affected by the closure, to discuss the proposals and next steps

Shop workers trade union Usdaw said it was "devastating news" for the staff.

Why is Ikea closing this store?

The store was built over seven levels, which resulted in a significant impact on the operating costs of the business and the shopping experience for customers.

The firm said they had tried a number of initiatives over the years to drive sales growth and make the store more cost efficient, such as moving various business operations to the site. However, these did not resolve the challenges connected to the location and format of the store.

Peter Jelkeby, country retail manager and chief sustainability officer of IKEA UK and Ireland, said the proposed closure of the store was not an easy decision: “We will continue to try and test, investing in stores, fulfilment centres, city centre formats and our digital capabilities to make IKEA even more affordable, convenient and sustainable.”  he said.

What's next for the employees?

Ikea plans to retain as many people as possible within the company and, where this isn’t possible, support them to find new employment.

David Gill, national officer of Udsaw said, “We will now enter into meaningful consultation talks with the company to interrogate the business case for this proposed closure. Our priorities are to seek redeployment opportunities, minimise compulsory redundancies and secure the best deal we can for our members.

After the closure, customers will have to journey to Birmingham, Nottingham or Milton Keynes to find their nearest Ikea branch.

The British high street has been decimated over recent years due to the rise of online retail, so it remains to be seen how changing consumer habits will affect a global company like Ikea.