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07/07/2014
1
Establishing IKEAIKEAs experiences with commercial establishment rules in EuropeBest practices in balancing spatial planning objectives and retail
establishment.
Martin WeiderstrandSimone ManciniIKEA EU Affairs
IKEA Group at a glance
€1.4 billionIKEA Food turnover
IKEA Food is comprised of the IKEA Restaurant, IKEA Bistro, IKEA Swedish Food Market and the IKEA co-worker restaurant
9,500ProductsEvery year we launch about 2,000 new products.
212 millionPrinted cataloguesThe IKEA catalogue app was downloaded 9.7 million times.135,000
Total co-workers
worker restaurant.
303IKEA Group stores
Total IKEA Group co-workers*
* New way of calculating co-workersThe IKEA Group has adopted a new way of calculating the number of co-workers. Previously published numbers for FY12 and FY13 contained temporary andseasonal positions.
Number of IKEA Group stores
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IKEA Group at a glance
TOP 5 SELLINGCOUNTRIES
TOP 5 PURCHASINGCOUNTRIES
SALES PERREGION
PURCHASING PERREGION
EUROPE215 Stores
60% Purchasing value19 Distribution centres
RUSSIA14 Stores
3% Purchasing value1 Distribution centre
3 Trading service offices5 IKEA IndustryProduction units
ASIA19 Stores
Retail, distribution, production:operations in 43 countries
NORTH AMERICA50 Stores
3% Purchasing value6 Distribution centres
1 Trading serviceoffice
1 IKEA Industryproduction
unit
11 Trading service offices36 IKEA IndustryProduction units
33% Purchasing value5 Distribution centres
12 Trading service offices2 IKEA IndustryProduction units
SOUTHAMERICA
1% Purchasingvalue
1 Trading serviceoffices
AUSTRALIA5 Stores
1 Distributioncentre
303IKEA Group stores
Located in 26countries
684Million visitors
to the IKEA Group stores
60%of production takes place in
Europe
1,046home furnishing
SuppliersIn 52 countries
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Agenda
-What is a good balance?-What works and what doesn't-How to bring the best of the Centerand Periphery
What is a good balance?What is the right tool?
Spatial planning-Land use
Service Activity-Commercial establishment
EmploymentSocially good build environment EmploymentCompetitionPrice level/costAttractiveness of locationRange / accessibilitySustainable development-consumer access
Socially good build environmentTraffic environmentAccessibility to goods & servicesAttractiveness of communitySustainable development
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95. To take account of existing retail facilities and impact on existing
67. Restricts localities available for new establishments.
What is a good balance?Restrictions upheld by ECJ as not justified C400/08
-Regulate land use- not traders and the market structure‐not consumer protection
96. Market share report that is unfavorable seen if the market share exceeds a certain value
97. Require applicant of ceilings as regards to market share and the impact on existing retail trade above which is it impossible to
67. Limit sales areas for which such licenses can be obtained
68. Licensing establishments insofar as there will be no effect on existing small traders
69. Procedural routines that have a appreciatable negative effect on the number of applications made or / granted
Regulate land use not retail activity
-Protect the consumer not the economic operators
pestablish large retail establishments
81. Limits max 9% of estimated staple supply or 7% for non staple supply, Maximum area available for Hypermarket is 23600 m2
or / granted
-Don't close the market by rules or procedures
GR 12,3 %ST 45% (9)PP 503.842
GR 28,3 %ST 33% (2)
GR 124,2 %ST 60% (3)PP 1.085.800
GR 73 %ST 40% (2)PP 1.120.400
IKEA market share growth in Europe 07-13
GR 14,8 %ST 13% (6)PP 1.751.043
GR 30,8 %ST 17% (3)PP 3.539.167
GR 38,2 %ST 8% (1)PP 1.520.909
GR 23,5 %ST 33% (2)PP 1.839.167
GR 33,3 %ST 25% (2)PP 4.812.625
GR :Growth 07-13 %ST :Store growth (Actual)PP: Proportion Stores/Population
GR 62,9 %ST 34% (11)PP 2.229.897
GR 28,3 %ST 48% (10)PP 2.993.000
GR 85 %ST 47% (7)PP 3.113.600
GR 84,6 %ST 33% (1)PP 3.534.000
GR 20,8 %ST 0% (0)PP 1.212.571
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Good example – Sweden
GENERAL RULES AND RETAIL GROWTH
Key points- Controls land use (not retail
turnover or range)
What is a good balance?Commercial Establishment regulations
turnover or range)- Assesses key goals for a “good
build environment” such as Traffic, accessibility, competition, environment, esthetics...
- Allows for competition – No absolute caps
- Case by case decisions taking into account local specificitiesF i l di bl li i
Sustainable Growth
- Fairly predictable application routines
- No ENT or measures with equivalent effect
- Municipal retail strategy is key for positive outcomes
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What do studies show?IKEA’s impact on a municipality
+ 20%TO change for seldom purchase goods
+ 17%Job change in the muncipalities seldom purchase goods
+ 10%TO change for retail in the municipality
-2%
What do studies show?IKEA’s impact on neighbouring municipality
TO change for seldom purchase goods
+/- 0%Job change in neighbouring municipalities seldom purchase
IKEA et 2006
municipalities seldom purchase sector
+/- 0%Job change in neighbouring municipalities retail sector
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SE DE EU 28 Linear (SE) Linear (DE) Linear (EU 28)
Retail Sales DevelopmentSE-DE-EU
7
85.
91.2
94.3
96.4
100
100.8
102.8
104.897.9
99.6
100.6
99
101.3
97.6
100
102.7
104.8
106.295.43
97.59
100.35
102.50
102.09
99.81
100.11
99.37
98.26
98.12
76.1
79.7
6
2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: Eurostat, SCB, Destasis. Index base period 2010
Retail stagnation
RULES READY FOR E‐COMMERCE?TOWN PLANNING AND MODERN RETAIL
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Ready for omnichannel?E-Commerce and restrictive regulation20.0
5.0
10.0
15.0
Sweden
United Kingdom
Germany
Italy
Source: Eurostat, Retail sale via mail order houses or via Internet
‐5.0
0.0
2010 2011 2012 2013
• Use service activity as a tool to control competition
Protect or develop?Commercial Establishment regulations
tool to control competition ( to limit purchase power outflow)
• Controls retail range, size etc – what products that can compete (hinterland monopoly)
• Controls where customers should come from
Stagnationshould come from (congruency principle)
• Closed market after economic thresholds are met
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What do studies show?Effects in Germany – City & Periphery
51%Freiburg
Yes, always18
Ulm
51%Of IKEA customers in Freiburg & Ulm that always or sometimes visits the City center stores
+76%
17%
42%
41%Sometimes
No
No answer
18%
26%
56%
180200
Change for fringe assortment in city centerafter IKEA established
+76%Change for fringe assortment in city center Freiburg in 2010
Source: GMA study 2010
100
185 176
020406080
100120140160
1998
2006
2010
Best practice ‐ willingness and efficiency ‐ Italy
ADMINISTRATIVE ROUTINES, TRANSPARENCY AND PREDICTABILITY
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Retail Sales DevelopmentIT
104.00
106.00
94.00
96.00
98.00
100.00
102.00
Italy
Source: Eurostat, Index base period 2010
86.00
88.00
90.00
92.00
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Case study: Pisa Administration: From slow to fast
In the beginning- Eight years process
What made the difference?- Clear rules of Eight years process
Six years of uncertainty Two years of efficient work
- Change of administrative pace and interest
- Starting to see retail as a tool for regional growth
Clear rules of engagement
- Transparent & Cooperative handling of the issue (local–regional)
- Clear decisions and explanation why there are issues or hindrance –issues or hindrance
- Engagement to find solutions
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Direct Impact
Employment
IKEA in SocietyDIRECT AND INDIRECT IMPACT OF IKEA IN ITALY FY13
Tax contributionValue added
6.431 jobs
424 million € 119 million €
Indirect Impact
Total Impact
1. Employment Indirect Impact
Employment
Tax contributionValue added
14.575 Jobs
580 million € 167 million €
p y
3. Tax contribution2. Value added
21.006 Jobs
1 billion Euro
286 million di Euro
Source Ernst & Young study
SUMMARY
GROWTH IN BOTH CENTER AND PERIPHERY
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Key Drivers- Controls land use, (not retail
What is a good balance?Way forward
Barriers- Use service activity as a tool
-Regulate land use- not retail activity, (turnover)
- Assesses key goals for a “good build environment” such as Traffic, accessibility, competition, environment, esthetics...
- Does not close the market for competition
- Predictable application routines- Develop both center and
periphery in cooperationCompetitive cooperation to
Use service activity as a tool to control competition (to limit purchase power outflow)
- Controls retail range, size etc – what products that can compete (hinterland monopoly)
- Controls where customers should come from
activity-Protect the Consumer & Environment, not the economic operators
-Don't close the market by rules - Competitive cooperation to deliver better services to the consumer
- Municipal retail strategy is key for positive outcomes
should come from (congruency principle)
- Closed market after economic thresholds are met
Don t close the market by rules or procedures
-Municipal retail strategy is key for positive outcomes
Demand, Jobs & growth in EU
INTERCONNECTED EUROPE
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© Inter IK
EA S
ystems B
.V. 2007
7-Jul-14 26
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