Thursday, September 14, 2006
[RealEdge] BT : $125m Ikea store to open around year-end
| Published September 14, 2006  | |||
| $125m Ikea store to open around year-end Tampines outlet will be 1 1/2 times the size of Alexandra outfit
By KALPANA RASHIWALA
IKEA is spending $125 million on its second Singapore store, which is due to open towards the end of the year. The home furnishings retailer is seeking at least $100 million annual turnover by the store's fifth year.
The new outlet, located at the edge of the Tampines wafer fab park, will be more than 1 1/2 times the size of the present Ikea store at Alexandra Road, with nearly three times as many carpark lots. There will be a larger children's play area, and a 550-seat restaurant. A double-volume area in the top half of the four-storey building will feature a self-serve warehouse where customers can walk in and pick up large furniture items by themselves - something currently not available on this scale at the Alexandra Road outlet because of space limitation. The new outlet at Tampines is expected to break even (at net profit level) within five years, although it will take 10 years or more before Ikano Pte Ltd manages to recoup its investment, said Ikano general manager Philip Wee. Ikano holds the franchise for Ikea stores in Singapore, Malaysia, Thailand and Jakarta. Mr Wee acknowledged that there will be some 'cannibalisation' with the new outlet. 'Ikea Alexandra, we expect, will take a 30-40 per cent drop in turnover in the first three years when Ikea Tampines opens. We plan to give Ikea Alexandra a good facelift in 2007-08, so we'll end up with two new stores in Singapore. 'As our market will be divided into two within Singapore, we expect that each store will eventually contribute 50 per cent to the company's total turnover here,' said Mr Wee, who oversees Ikano's Singapore operations. The new Tampines outlet will have a customer area of 18,000 square metres compared with 11,200 sq m at Ikea Alexandra. Both stores will offer the 6,500 best-selling items in the Ikea worldwide range - but customers will get a better view of the selection in Tampines as it will have a bigger display area. The biggest difference between the outlets is that the former was designed to fit into the land size and shape available on Alexandra Road. 'Our new store will be a full-concept Ikea outlet, purpose-built using Ikea's ready-made architectural designs prepared for use anywhere worldwide. It will see us through more than 10 years,' Mr Wee said. The first two levels of the four-storey new outlet are entirely for parking. There will be 1,200 carpark lots (up from 420 at Alexandra Road) and 160 motorcycle lots for customers, and 60 carpark lots for Ikea employees at the back of the building. About 40 per cent of the area on level three will be for a market hall featuring home furnishing accessories. A similar area on level four will be for a furniture showroom and restaurant. The remaining 60 per cent of level three will be a double-volume area for a high-ceiling warehouse, self-serve warehouse and 26 checkout counters. After the store closes at night, inventory will be lowered from the upper decks for the night crew to restock merchandise that has been bought by customers in the self-serve warehouse. Ikano is seeking annual shopper traffic of seven million for the two stores by 2011. Ikea Alexandra drew about four million shoppers in the past 12 months. As well as a 550-seat Swedish restaurant at the new store, there will be a cafe selling takeaway snacks, and a Swedish specialty food shop selling cheese, smoked salmon and the like. Ikea's Tampines outlet is being built in collaboration with its two immediate neighbours - a Giant outlet by Dairy Farm and a Courts store. The three of them will be the first to operate under the Economic Development Board's Warehouse Retail Scheme. | |||
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