Stuff Digital Edition

Covid cause of Ikea’s delay

Brianna Mcilraith

It was announced in 2019 that Auckland is to get New Zealand’s first Ikea.

But when the ground-breaking ceremony was held last week, it was revealed the shop won’t be open until 2025. So why does it take so long to build an Ikea?

Auckland University of Technology professor John Tookey says Covid is a big part of the reason.

‘‘Whilst there was a lot of groundwork done prior to the announcement, the impact of Covid has been tremendous,’’ he said. ‘‘For a global corporation such as Ikea this was doubly the case. Covid drove retailers like Ikea to totally re-evaluate their financial exposure, their supply chains, their total retail floor area ‘footprint’ as well as the long-term viability of their markets. New Zealand wasn’t at that time even in the game.’’

He said everything to do with opening the Swedish furniture giant’s first shop in New Zealand started from scratch mid-last year. Contracts for construction originally signed would have had to be renegotiated as a result of global inflation.

In terms of the actual construction process, the main issues were pretty standard, he said. It would have had to engage with an architect and contractor. The process of construction would also be long. He suggested it would take about 24 months from breaking ground to commissioning.

‘‘This makes late 2025 a pretty predictable outcome.’’

Tookey predicted it went something like this: Initial specifications would be issued and tenders prepared, outline construction contracts would be issued and designs developed. Consent would then have to be sought for construction at the proposed store location.

Ikea would likely have had to prepare original documentation related to traffic management and other logistical issues around the site.

Ikea signed a deal to buy 3.2 hectares of land for a store at Auckland’s Sylvia Park shopping mall in 2021, two years after it announced it would look to open a store.

Once consent was issued, preliminary construction would start. A very large concrete slab would need to be prepared.

‘‘Steel frame goes up, cladding applied, services installed and then fitted out. Relatively simple structure and process,’’ he said.

Ikea is well-known for its room displays throughout the store, which Tookey said it would have to hire in-house interior designers for. It would have to meet specifications that were globally standard, brought in line with New Zealand building code requirements.

Meanwhile, there would still be ‘‘significant’’ challenges to set up sustainable supply chains to deliver all the product required, he said.

In 2019, American retailer Costco announced it was going to open its first New Zealand store complete with petrol station in Westgate, Auckland. But due to Covid-19 travel restrictions the construction of the store was delayed in 2020.

It finally opened in September last year with customers queueing up overnight to be the first in the door.

Managing director of First Retail Group Chris Wilkinson said it was likely Ikea’s overseas market had been put first, which is why things had been quiet after the lockdowns.

‘‘For those massive retailers, overseas markets which have larger catchments and where they already have infrastructure have been a priority.’’

In many markets big brands had been focused on opportunities where there was more room for more locations that could create regional clusters in response to growing populations.

‘‘As other marketplaces matured and slowed – including Australia, – in the years prior to Covid, New Zealand remained relatively buoyant – which focused big players on our marketplace.’’

Business

en-nz

2023-06-08T07:00:00.0000000Z

2023-06-08T07:00:00.0000000Z

https://fairfaxmedia.pressreader.com/article/281724093947177

Stuff Limited