Why it’s taking so long to open New Zealand’s first Ikea – Stuff

Chris McKeen/Stuff

Ikea madness has building in New Zealand for almost three years now. This clip of the announcement that Ikea is committed to New Zealand is from 2021.

It was announced in 2019 that Auckland is to get New Zealands first Ikea.

But when the ground-breaking ceremony was held last week, it was revealed the shop wont be open until 2025. So why does it take so long to build an Ikea?

Auckland University of Technology professor John Tookey says Covid is a big part of the reason.

Whilst there was a lot of groundwork done prior to the announcement, the impact of Covid has been tremendous, he said.

For a global corporation such as Ikea this was doubly the case. Covid drove retailers like Ikea to totally reevaluate their financial exposure, their supply chains, their total retail floor area 'footprint' as well as the long-term viability of their markets. New Zealand wasn't at that time even in the game.

READ MORE: * Cheat sheet: What you need to know about Ikea's first NZ store * Ikea breaks ground on first New Zealand store * Ikea remains mum about its New Zealand plans

He said everything to do with opening the Swedish furniture giants first shop in New Zealand started from scratch mid-last year. Contracts for construction originally signed would have had to be renegotiated as a result of global inflation.

In terms of the actual construction process, the main issues were pretty standard, he said. It would have had to engage with an architect and contractor. The process of construction would also be long. He suggested it would take about 24 months from breaking ground to commissioning.

This makes late 2025 a pretty predictable outcome.

Tookey predicted it went something like this: Initial specifications would be issued and tenders prepared, outline construction contracts would be issued and designs developed. Consent would then have to be sought for construction at the proposed store location.

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An artists impression of the Auckland Ikea set to open in late 2025.

Ikea would likely have had to prepare original documentation related to traffic management and other logistical issues around the site.

Ikea signed a deal to buy 3.2 hectares of land for a store at Aucklands Sylvia Park shopping mall in 2021, two years after it announced it would look to open a store.

Once consent was issued, preliminary construction would start. A very large concrete slab would need to be prepared.

Steel frame goes up, cladding applied, services installed and then fitted out. Relatively simple structure and process, he said.

Ikea is well-known for its room displays throughout the store, which Tookey said it would have to hire in-house interior designers for. It would have to meet specifications that were globally standard, brought in line with New Zealand building code requirements.

Meanwhile, there would still be significant challenges to set up sustainable supply chains to deliver all the product required, he said.

In 2019 American retailer Costco announced it was going to open its first New Zealand store complete with petrol station in Westgate, Auckland. But due to Covid-19 travel restrictions the construction of the store was delayed in 2020.

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AUT professor of construction John Tookey says 2025 is a predictable outcome for Ikea to be complete.

It finally opened in September last year with customers queueing up overnight to be the first in the door.

Managing director of First Retail Group Chris Wilkinson said it was likely Ikeas overseas market had been put first, which is why things had been quiet after the lockdowns.

For those massive retailers, overseas markets which have larger catchments and where they already have infrastructure have been a priority, he said.

In many markets big brands had been focused on opportunities where there was more room for more locations that could create regional clusters in response to growing populations.

As other marketplaces matured and slowed - including Australia, - in the years prior to Covid, NZ remained relatively buoyant - which focused big players on our marketplace.

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Ikea is being constructed on 3.2 hectares of land at Aucklands Sylvia Park.

Wilkinson said, with New Zealands large geographic spread and sparsely populated areas outside bigger centres such as Auckland and Christchurch, it was tough to achieve scale because the population was not at levels necessary for these brands to develop the store networks, distribution centres and other infrastructure needed.

Aside from scale, operating in NZ is no more onerous than most other countries in terms of legalities, labour laws, recruitment and importing. Larger retailers will run their NZ operations out of Australia or places like Singapore where they some have regional representation.

But when Ikea does finally open in 2025, Wilkinson expected New Zealand consumers will support the brand.

New Zealand consumers are well known for supporting new brands and concepts that come to the country with many seeing record opening days - reflective of our appetite for differentiation and the overseas products and experiences we aspire to have down-under.

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Why it's taking so long to open New Zealand's first Ikea - Stuff