Thursday, December 20, 2018

Is the arrival actually happening?

It’s always a big problematic talking about specific brands in a blog post. On the one hand, people may get the idea the post is sponsored (this one isn’t, by the way), and they may discount what the post says for that reason. Or, the post may help to fuel hype and “buzz” that helps a particular business. But what if the blogger has clearly caused a company to do something? Because obviously I have.

Last week I was talking about the arrival of more American fast food, and I said in passing:
I’m a little meh about [rumours of Amazon opening a distribution centre in New Zealand], though, because we’ve heard for years that Ikea was coming [to New Zealand], and it never has.
Today it was announced that Ikea apparently really is planning on opening in New Zealand, with details to be announced early next year. Tolga Öncü, the retail operations manager for the company that will run the operations here, said, Ingka Group, said, "We are happy to meet the wish from many people for IKEA to open in New Zealand and we aim to make IKEA fully accessible, including stores and ecommerce".

The issue for New Zealand has always been that it’s a small country, and a small market. In some cases, New Zealand customers are served from Australia, with the two countries often treated as a single market. But that won’t work for all companies, especially those known for their physical stores.

In the case of Ikea, one of their requirements is that a store has to have at least one million people within a one hour’s drive. Only Auckland meets that criteria. However, that’s mot necessarily a problem. With Auckland as its main store and distribution centre, it could serve all of New Zealand through online shopping. They could even open smaller stores in smaller markets (Wellington and Christchurch, for example) that could stock their best-sellers and even serve as a spot to order stuff not carried at the small location. Or, they could open more of a specialised store with a very narrow range of products that’s stocked a little more fully in that area.

What direction they choose to go will determine what impact, if any, it has on retail chains in New Zealand that sell similar products. There’s been speculation about its impact on several different companies, with Australian-owned Kmart being seen as particularly vulnerable. I’m sure that’s true, at least, not completely. As I said earlier this month:
I’ve been to Kmarts in both Australia and New Zealand, and they’re very similar. I don’t know about Australia, but here in New Zealand they’re generally positioned as slightly more upmarket than our own The Warehouse chain…, and many of the products they sell are featured in home magazines here. However, in my personal experience, the stuff with the nicest design are often available in their stores closest to more affluent areas or online—Kmarts I’ve been to in less affluent areas tend to carry less of the high design stuff featured in magazines.
All of that is speculative at this point, since we don’t know what they plan to do—how many stores, how large, where, those sorts of things. And, not to be overly blunt but, if the retailers here can’t adapt, that’s their issue alone. In some cases, Kiwi consumers that would be Ikea customers are now choosing things that are “good enough”, though not necessarily what they really want. Consumer demand will determine which retailers survive and which ones don’t—just like always, and even without Ikea.

Having said all that, I’m STILL taking this news with a grain of salt, and I say that because we’ve heard this so very many times over the years that it’s really hard to take this seriously until there’s a specific announcement about a specific location with a specific opening date. Until those are announced, it’s all just so much P.R./marketing puffery.

On the other hand, this announcement was made only about a week after I talked about how rumours of Ikea opening in New Zealand have never come true. So, maybe my casting further doubt on the news will make them hurry up and announce specific plans. Because obviously bloggers can cause a company to do something.



There’s no better example of what can happen when a retailer fails to adapt to changes—in the economy, in consumer demands and tastes, in technology—than Sears. What was once the world’s largest retailer, is spiralling down toward its own grave, and it could have been prevented. Any retailers that might be threatened by the arrival of Ikea would do well to heed the lessons.

This video from CBS Sunday Morning earlier this week tells the tale:

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