At the end of March, IKEA announced the development of Toppen Shopping Centre, comprising 1.1 mil sq ft shopping centre seamlessly integrated with IKEA Tebrau in Johor. Asian Property Review had a chat with Christian Rojkjaer, Managing Director of IKEA Southeast Asia on its expansion plans and its sustainability and technology aspirations.
Where else in Southeast Asia is IKEA SEA expanding next after Penang and the Philippines?
We are investigating the market potential in Vietnam and have applied to our franchisor for the rights, so our ambition is strong but we have no firm plans at this time.
IKEA takes seriously ‘people and planet’ issues – please share what are some of these issues?
We make sustainability a natural part of our everyday business – taking responsibility for the impact we have on the environment and all the people touched by our business (including coworkers and suppliers.)
We introduce the IKEA code of ethics, called IWAY, to all suppliers and work with them to ensure respect for human rights and fair working conditions for the many people who work for us through contracted companies.
Our sustainability principles are also embedded in the way we design our buildings, the materials we choose for construction and the features we include to help us conserve water, generate renewable energy, manage waste and more.
At our IKEA stores, we recycle an average of 70% of all the waste we produce and we help customers recycle, too.
We have installed rain water harvesting systems at all our shopping centres and most IKEA stores.
We track energy consumption and outfitted all our IKEA stores and our shopping centres with LED lights, which consume 80% less energy than traditional incandescent bulbs.
We now have more than 16,000 solar panels on rooftops of our IKEA stores and our shopping centres in the region, generating more than 5.5 million megawatt hours of renewable energy during 2017 alone.
At our Toppen Shopping Centre, Johor, we will be introducing kitchen macerators (decompose food with solvent) underneath the sinks at all our Food & Beverage outlets to minimise the amount of food waste going to landfill.
We also take social responsibility by developing long-term partnerships with non-profit groups in the communities where we operate and, during 2017, donated a total of SGD1.6 million to good causes. All our co-workers are entitled to a day of paid leave to donate their time to a charitable cause.
In terms of IKEA’s sustainability aspirations, would doing away with plastic products be one of its eventual goals?
This has been something we have been working together with our partners, tenants, and even manufacturers of our IKEA products. This includes minimizing waste in our value chain and turning it into a resource by using it to make new products.
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What are the projects in the pipeline in Malaysia (after Penang)?
Our vision is to create a better everyday life for the many people and, as retailers, we want to make it is as easy as possible for many Malaysians to access our great range of functional, affordable home furnishings. So, we are working on extending e-commerce to all of Malaysia and intend to launch a web shop later this year.
Please share examples of other ‘residential, office and other types of real estate’ that Ikea will go into?
In Penang, we partner with Aspen Group to realise the vision for Aspen Vision City – a development that will, in addition to our IKEA store and shopping centre, include shop houses, apartments, hotels, a school and more. We invest in such types of real estate to maximise the value of the land we develop and to create walkable communities where people can live, work, shop and play.
Meanwhile, the team at Mega Bangna in Bangkok also opened its doors to other developers as they aim to realise the vision of Megacity – a modern community anchored by our retail destination. The development will add hotels, office towers, residential and other types of real estate to the area surrounding our mall.
Would you say Aspen Vision City and Megacity residential housing component would be in the affordable range in line with Ikea’s vision of ‘creating a better everyday life for the many people’?
IKEA Southeast Asia is first and foremost a retailer. It is our primary goal to create better everyday life for the many people through both IKEA’s wide-range of well-designed, functional home furnishing products; and anchored-by-IKEA shopping centres that work both as a retail destination and a meeting space for the community. As for Aspen Vision City and Megacity, we are currently working with experienced partners and professional developers to bring it to life in the best and most integrated way possible. At the end of the day, we are building this for the community to live and work in.
How would these mixed developments be able to differentiate from other similar mixed developments in those areas – what are your USPs?
Our shopping centres and IKEA stores will become the centre piece of a modern community. It will be an integrated development where people can live and work within easy reach of places to shop, meet, play and socialize.
Would the hotels in both mixed developments be managed by an in-house team or established hotel operators?
We will be engaging established hotel operators as well as residential developers.
Why does every mall attached to IKEA have a different name e.g. IPC, Toppen, MyTown?
We pride ourselves by positioning our malls as being “local with a Scandinavian touch”; we believe that all our shopping centres are uniquely appealing to the local community without foregoing our roots hence the differentiation. We have deliberately implemented a ‘House of Brands’ brand architecture for our shopping centres, as we want our strong, robust brands to resonate with the local community and catchment area. This is in line with our brand story building centres – ‘Made with Swedish charm and a local touch’. This ‘house of brands’ strategy allows each and every brand to be unique in its own right, with flexibility to adapt to the needs of the surrounding local community. While we might have different brands, we share common visions and values for each shopping centre, chief of which is our vision of ‘creating a better everyday life for the many people.’
The other key thread that unites our different shopping centres is the strong focus on the customer experience and journey at every touch point, enabling us to deliver, with IKEA, a fun and inspiring full day out for the whole community.
What are the new tech that’s going to be integrated into the retail shopping experience e.g. AR (Ikea’s Place app), AI, free home design service, pop-up garden at home, human-first interfaces, smart veg growing, etc?
When it comes to technology, we always look at how we can incorporate tech and create a fun and unique shopping experience. One of our most recent creations is for one of our shopping centres – IPC Shopping Centre. We created a shopping centre app that goes beyond the usual store guide. We worked with Spotify, one of the biggest music streaming apps, to create a food and mood matching tool within the IPC app that allows users to find their perfect restaurant based on their mood.
Could you briefly describe some of the new tech adopted in IKEA’s retail destinations around the world?
Urbanisation and digitalisation is pushing us to meet the needs of a new generation of shoppers. The IKEA PLACE app launched in the US, is an important milestone in IKEA digital transformation strategy. The app lets people confidently experience, experiment and share how good design transforms any space, such as a home, office, school or studio. We recently launched e-commerce in Singapore and within less than 4 months, it contributed 5% of total sales. We are bringing this to both Malaysia and Thailand next. As for the rest of the tech, we are slowly but surely adapting it in our everyday business. Embracing the digital world is one of the many things we look at to ensure we are constantly meeting the demands of the ever-changing world.