The high street dead? Ikea doesn’t think so.

In response to changing shopping habits, the high street is exactly where the homewares and furniture giant is heading.

Ikea’s store opening strategy is no longer about those famous big blue boxes. Instead, in a change of direction, the plan is to open small branches in urban locations, part of what it calls “a new city centre approach”.

The retailer this week revealed it will launch its first UK city centre store this autumn on London’s Tottenham Court Road.

At a time when many retailers are struggling, even in some flagship high streets, and online retail is growing, Ikea’s decision might at first look surprising.

Admittedly, Tottenham Court Road is not a typical high street. It retains a destination status for furniture and has been reinvigorated by the arrival of a wider range of retailers.

That said, Ikea’s venture is testament to the continued importance of the high street to retail more widely and may show a way forward for other store groups as they seek to adapt to the new environment.

Reasons to shop

First of all, the shop will provide convenience. By their very nature, town centres are accessible. When so many items are merely a click away on Amazon or other etailers, bricks-and-mortar stores need to find new ways of making themselves easily accessible.

Ikea is doing that by making the most of digital opportunity. Through smaller stores, such as that piloted at Westfield Stratford, it can still offer an extended range for collection or delivery.

“At Westfield, Ikea has even managed to make a virtue of the collection queue”

That allows staff to spend time advising customers, differentiating the retailer from many pureplay counterparts.

At Westfield, Ikea has even managed to make a virtue of the collection queue, turning what can be a customer frustration into an opportunity to enhance the in-store experience through digital queue management that has encouraged browsing and additional purchases.

Ikea’s move should be seen as part of a bigger picture too, and that is a population shift. “Urbanisation and inner city living are trends that continue to dominate the market,” said Ikea UK boss Javier Quiñones.

“By launching this new approach and investing in our online offer and services, we are working to ensure that Ikea remains affordable, convenient and sustainable.”

Changing with the times

The same trend was flagged by shopping centre owner Hammerson this week in its interim results. It observed that 78% of the European population is expected to live in cities by 2030.

The shift will change the retail landscape. Hammerson said: “Large cities are differentiated by the relative wealth and density of their catchment and significant transport and digital infrastructure.

“Greater urbanisation has the potential to transform the built environment surrounding our assets, for example, creating more mixed-use lifestyle venues or reducing car park requirements.”

“Ikea’s blue boxes were pioneering in their day, so it’s a brave decision to refocus on a different type of store”

The ongoing changes in living and consumption habits, alongside the high costs of doing business through stores, is one of the biggest challenges facing many city and town centres and the retailers that operate there.

But initiatives such as Ikea’s, which demonstrate a willingness to radically adapt an established business model to reflect contemporary consumer habits, should provide inspiration for other retailers.

Ikea’s blue boxes were pioneering in their day, so it’s a brave decision to refocus on a different type of store.

Retail has always been about the ability to reflect and anticipate consumer needs and preferences.

Ikea’s new format may be unproven at the moment, but such fresh thinking is essential as old ways of doing business prove increasingly outmoded for many retailers, reflected in the number of company collapses.

But if retailers can complement bricks with clicks to come up with profitable new propositions then those reports of the death of the high street may yet prove to be exaggerated.