Meatballs are coming to town: IKEA buys Topshop’s former Oxford Circus flagship store

November 8, 2021

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3 min read

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What's going on here?

The Swedish chain IKEA has bought and moved into Topshop’s former Oxford Street flagship store, signalling a big shift for retail.

What does this mean?

In an unprecedented move which restores faith in the UK’s dying high street, IKEA is set to pay ÂŁ378m for the property at 214 Oxford Street. Arcadia, Topshop’s parent company, is being represented by law firm Freshfields Bruckhaus Deringer, and Reed Smith is acting for Ingka, IKEA’s largest owner. This move is a result of the vacuum left by the collapse of Sir Philip Green’s retail empire and IKEA’s shift in strategy towards a blend of inner and outer city stores. The Oxford Street store will follow IKEA’s smaller store format which is set to have a click-and-collect and click-and-deliver function, planning studios, and a selection of its home furnishing accessories. 

IKEA has already opened inner city stores in Tokyo, Moscow, Madrid, New York and Paris. Krister Mattsson, the managing director of Ingka Investment, said that “this is a very good fit into our strategy” as it brings “IKEA closer to customers”. Although IKEA has had a dramatic surge in online sales post-COVID, it insists that it wants to stick with its brick and mortar roots. Consequently, the furniture giant will depart from the increasing trend to turn to e-commerce and focus more on accessibility, experience and opportunities for its customers.

What's the big picture effect?

As a result of the pandemic, there has been an increase in demand for home furnishings and a decrease in fashion retail orders. The pandemic has altered people’s perceptions on the importance of their physical space at home, and it is unlikely that this change will fade away as hybrid-working is likely to remain. Stores such as H&M, Zara, Anthropologie and John Lewis have all responded to this change by slowly increasing their range of specialist homeware chains in store and online. The homeware market is expected to grow by 9.4% in 2021, and over the following three years, it is expected to continue to grow by 2-3% as predicted by GlobalData.  Alongside the importance of the consumer’s home decor, the consumer is increasingly becoming concerned with sustainability. Therefore, it is likely that IKEA saw Oxford Street as an opportunity to increase accessibility to its inexpensive homeware by allowing shoppers to get there by public transport instead of by car. This move largely contrasts the typical IKEA experience of driving to the store and loading items into a car. However, the Oxford Street store could hypothetically limit people to only buying items that they can carry home on public transport. Nevertheless, allowing customers access to physical stores more readily will allow them to make informed choices regarding more expensive buys, encouraging smarter spending which will keep customers coming back in the long term. If IKEA’s bid on the high street is a success, it is likely that law firms will see an increase in acquisitions by innovative brands for empty retail space in the coming years as society redefines the high street. Whatever the future of the high street, meatballs in zone 1 might be reason enough to take this as a win for Londoners.

Report written by Sofia Antipatis

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