Ikea Cen­tres to in­crease mega­malls in China

China Daily (Hong Kong) - - BUSINESS - By WANG YING in Shang­hai wang_y­ing@chi­nadaily.com.cn

Ikea Cen­tres China, Ikea Group’s mega­malls unit that en­tered the coun­try in 2009, is firm­ing up plans to repli­cate its suc­cess in three Chi­nese cities across the coun­try.

Be­gin­ning 2020, it will open one mega­mall per year.

Typ­i­cally, a mega­mall is a shop­ping mall with an Ikea store, and the fu­ture ones may also have apart­ments, ho­tel or of­fices.

The mega­malls de­vel­oped by Ikea Cen­tres China are also known as Li­vat shop­ping cen­ters.

In China, its mega­malls are lo­cated in Beijing, Wuxi in Jiangsu prov­ince and Wuhan in Hubei prov­ince. They in­volved in­vest­ment of 10 bil­lion yuan ($1.44 bil­lion).

Ding Hui, pres­i­dent of Ikea Cen­tres China, said the three cen­ters have been like tests, and pro­duced en­cour­ag­ing re­sults. Hence, Ikea has de­cided to ex­pand across China.

New shop­ping cen­ters may come up in ma­jor cities such as Beijing, Shang­hai, Shen­zhen and Guangzhou, as well as in sec­ond-tier cities such as Chongqing, Xi’an, Wuhan, Hangzhou, Nan­jing and Qing­dao.

The fourth in the coun­try, which will en­tail an in­vest­ment of about 4 bil­lion yuan, will be a com­mer­cial com­plex in Chang­sha of Hu­nan prov­ince, Cen­tral China, ac­cord­ing to Ding.

“It’ ll have a shop­ping mall, Ikea store, apart­ments, a ho­tel as well as of­fices. It will be the first of its kind as other cen­ters don’t house apart­ments, ho­tel or of­fices,” Ding said.

The Wuxi cen­ter, the first Li­vat ven­ture in the Chi­nese main­land, opened in June 2014. Ac­cord­ing to Ding, over the past two fis­cal years, it saw a 32 per­cent growth in rev­enue and 27 per­cent growth in guest flow to 14.1 mil­lion.

The three shop­ping cen­ters reg­is­tered 52.6 mil­lion vis­its in Ikea’s fis­cal year be­tween Septem­ber 2015 and Au­gust 2016. Com­bined sales were up 36 per­cent at 7 bil­lion yuan.

“Through the last year’s bud­get, Ikea Cen­tres China fun­neled 25 bil­lion yuan into the devel­op­ment of shop­ping cen­ters. This will con­tinue un­til 2025, to en­sure one new pro­ject comes up per year from 2020,” said Ding.

“Land deals and pro­ject sales can no longer gen­er­ate sus­tain­able prof­its. So, the com­pe­ti­tion be­tween shop­ping malls will be­come even fiercer in the fore­see­able fu­ture. This will be a good op­por­tu­nity for com­pa­nies such as Ikea Cen­tres China,” said Ding.

Fur­ni­ture gi­ant Ikea’s malls foray sig­ni­fies how iconic com­pa­nies are di­ver­si­fy­ing for long-term sus­tain­abil­ity.

The Nikkei Asian Re­view re­cently re­ported that rail­way and hos­pi­tal­ity group Odakyu Elec­tric Rail­way is join­ing forces with the op­er­a­tor of Muji stores to open a ho­tel next year in China.

“In the past few years, Chi­nese con­glom­er­ates di­ver­si­fied suc­cess­fully in China. Now, in­ter­na­tional brands like Ikea and Muji are try­ing to do the same for bet­ter lo­cal­iza­tion,” said Chen Sheng, pres­i­dent of the China Real Es­tate Data Academy.

Li­vat shop­ping cen­ters in China will house com­pa­nies and brands like Ikea Re­tail, Auchan Hyper­mar­ket, Sun­ing Elec­tron­ics, Jinyi Cin­ema, De­cathlon, Zara, Mango, H&M, C&A, Gap, Uniqlo. Be­sides, there will be food and bev­er­age fa­cil­i­ties, and en­ter­tain­ment ar­eas for chil­dren.

“Ikea Cen­tres China is in talks with lead­ing in­ter­na­tional ho­tel brands, in­clud­ing Mar­riot, In­terCon­ti­nen­tal and Hil­ton for the ho­tel space,” said Ding.

Ac­cord­ing to him, the ho­tels will be of three-star va­ri­ety, but will pro­vide fourstar ho­tel ex­pe­ri­ence to cus­tomers like mid­dle-in­come fam­i­lies and busi­ness trav­el­ers.

Taste­fully done up flats com­plete in all re­spects will tar­get young work­ing pro­fes­sion­als and newly-weds.

Of­fices will of­fer shared spa­ces like pantry, meet­ing rooms and con­fer­ence cham­bers to ten­ant com­pa­nies.

Land deals and pro­ject sales can no longer gen­er­ate sus­tain­able prof­its. So, the com­pe­ti­tion be­tween shop­ping malls will be­come even fiercer.” Ding Hui, pres­i­dent of Ikea Cen­tres China

MIAO JIAN / FOR CHINA DAILY

The Li­vat shop­ping cen­ter, de­vel­oped by Ikea Cen­tres China, in Wuhan, Hubei prov­ince, is a pop­u­lar des­ti­na­tion for lo­cal con­sumers.

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