Ikea set for huge regional expansion

Swedish furniture giant Ikea is set to step up its presence in the Middle East by opening up to 10 new warehouse outlets across the region over the next five years, Arabian Business can reveal.

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By  Rhys Jones Published  November 20, 2005

Swedish furniture giant Ikea is set to step up its presence in the Middle East by opening up to 10 new warehouse outlets across the region over the next five years, Arabian Business can reveal. “In the Middle East we will open a couple of stores per year for the next five years,” revealed Anders Jonsson, managing director, commercial operations, Ikea. “The region is one of our key emerging markets worldwide and we intend to expand our presence there further and further,” he added. The company’s grand expansion plans come on the back of the opening of its latest outlet in the Dubai Festival City (DFC) retail park last week. The Dubai-based Al Futtaim Group owns the Ikea franchise in the United Arab Emirates and is the developer of DFC. Ikea currently operates five stores in the Middle East —one in Kuwait City, two in the UAE (Dubai and Abu Dhabi) and two in Saudi Arabia (Riyadh and Jeddah) where it is set to add a third branch. “We are opening another store in Dammam in 2007, which will be owned and operated by a local franchise there,” said Jonsson. “We will expand into the regional markets where we already have a presence and will move into new markets as well,” he added. One largely untapped market in which Ikea does not currently have a presence is in fast-developing Qatar. But the Swedish furniture merchant already has plans on the drawing board to move into the Gulf state with its UAE partner. “We are looking to expand into other Gulf countries and Qatar is definitely one of them,” explained Jonsson. “Qatar is given to a franchise and belongs to Al Futtaim and it is in their plans for the future,” he added. The Dubai-based Al Futtaim group is tight-lipped about the Qatar tie-up, however. James McCallum, group director, retail for Al Futtaim would only say “to be a regional partner [with Ikea] would be a great thing to achieve.” Ikea officially opened its new Dubai store last Wednesday with much fanfare. At roughly 25,000 square metres, the DFC branch is four times bigger than the company’s previous store at Deira City Centre and becomes the UAE’s largest retail outlet. “Our business grew too much for us to stay where we were previously located at the City Centre mall, so we couldn’t expand there the way we wanted to,” explained Ikea’s Jonsson. “We had offers to move elsewhere, but we did an evaluation of the market in Dubai and looked at different possibilities [and] chose DFC because it’s a great concept,” he added. As well as the retail park, the 1600-acre DFC development features office towers, waterfront villas, hotels, an 18-hole championship golf course and a 150-berth marina. The project, which runs along four kilometres of the Dubai Creek is bill-ed as the region’s largest privately-funded mixed-use real estate development. Speaking at the opening, Omar Al Futtaim, CEO of the Al Futtaim group said, “At the Al Futtaim Group it has been a tradition to provide our customers with the best brands and services and the new Ikea store endorses that commitment.” The new store features around 6500 products, 54 room-sets, has 1200 parking spaces, a 300-seat restaurant and a Swedish foodmarket. It also has 22-cashier counters as well as a team of 300 staff and becomes the first of many retail outlets within DFC to be opened to the public. Other stores are being opened in the coming weeks. “As well as Ikea, we will have other high-profile anchor stores opening up in DFC,” said Al Futtaim’s McCallum. “We will have the largest Marks & Spencer in the world outside the UK and the largest Toys R Us toy store in the world, outside Times Square in New York,” he added.

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