Ikea opens small-format store in subdued San Francisco downtown

By Marie Mannes

(Reuters) – Swedish flat-pack furniture giant Ikea opened its doors to a new store in downtown San Francisco on Wednesday, bucking the trend of big retailers such as Nordstrom (NYSE:) and Old Navy closing shops amid falling foot traffic and rising crime in the city.

Ikea, known for its suburban warehouse-like stores, is pushing more in-city shops and promoting its online stores, as shoppers buy more from marketplaces such as Amazon.com (NASDAQ:).

The opening, though, comes as San Francisco’s crises of drugs and homelessness have worsened, leading to tourists and business visitors staying away and depleting the ranks of shoppers who once sustained a vibrant downtown.

Large tech companies have laid off workers and many people are still working from home.

Tolga Oncu, head of retail at Ikea store owner Ingka Group, said the company had strategized with security firms on how to position the entry and exit of the store and taken measures to stop crime without the presence of a lot of guards.

The new Ikea small-format store aims by next year to add a food deli, a co-working space, and areas for other retailers to lease. Ingka Group has launched a similar model in Hammersmith, London, with an Ikea store inside an Ingka shopping mall.

“We are feeling very confident in our city approach, it is very complementary to our existing Ikea presence in that market,” Oncu told Reuters.

“We opened a store in shopping mall Gallerian in Stockholm last year, which has contributed to a 50% increase in physical visitation to Ikea in a very mature market,” he said.

Ingka Group, the main franchisee to brand owner Inter IKEA, bought the San Francisco location in 2020 and had planned to open the store in the autumn of 2021. Ingka owns all Ikea stores in the United States and Inter Ikea is in charge of supply.