These new plans come from a company that is already the country’s biggest shopping center operator. The company is part of the IKEA Group and currently has 14 centers across Russia, attracting 275 million visitors each year.
To get the full details on the accelerator idea and other projects we met with the company’s General Director, Armin Michaely, recently.
We started off by asking whether he thought that European retailers would be ready to move into Russia in the next few years. He said that “those who have experience” are committed to investing more easily than those who have never been there. He then went on to say that it takes “quite some effort” to attract new retailers to the country.
Michaely then told us that they have recently attracted some Turkish brands to Russia, which is a move that is “working quite well”. Indeed, 5 stores from the LC Waikiki fashion brand were recently added to their centers. He also confirmed there “there is interest” from retailers in moving into Russia from Europe, even if it isn’t quite a boom period right now in this respect.
The conversation then turned to the new IKEA projects in Russia. Michaely confirmed that they are in the “phase of finalizing” the details for new malls, some of which have already been announced in press releases.
As we spoke about their use of new technologies, Michaely told us that the “retail environment will change” in the future due to new technology opportunities. If the company wants to be relevant and interesting in the industry then he believes that they need to be “the market leader in developing the future”. He added that only “to think about the brick and mortars probably isn’t good enough in the future”.
This kind of thinking has led to IKEA looking to see “what kind of technology could add something to the customer experience”, in order to boost the customer experience and make their visitors feel more involved. He also believes that technology is “an interesting sphere” and that innovative topics fit well with IKEA as a brand. This could mean taking care of the needs of the customer and using the technology that is there to enhance the customer experience.
Michaely told us there is no sense in having technology if it isn’t adding to the customer experience in a positive way. They want to achieve the “customer experience of the future” using technology, education, dining or any other possible method. Overall, IKEA want to prove that they can “be more than just a shopping center”. He also pointed out that adding the likes of educational value also contributes to the neighborhood, to society and to the development of people of all ages. He sees their malls as being “good neighbors” with “useful and helpful facilities” for people, as well as being a meeting place rather than just somewhere to go shopping.
As Michaely believes that actual shopping may only talk up around 50% of trips to their malls in the future, we asked about the plans for increasing the entertainment and dining options at the company’s centers, as well as their other upcoming plans.
To start off, he talked about the plans for Mega Khimki, which is a project in which they will “support local producers” to sell directly to clients, cutting out the retailer in the middle. The space involved is close to 800 square meters and Michaely believes that it is a “very nice concept”. It is due to open in December. He also described as a “very good development” the fact that the move to locate quality restaurants in their malls has been working out well so far. Among the centers to benefit from a better range of food options will be the one in Tepliy Stan, which should be ready by the end of the year.
After this, the company will look to add extensions to their centers, to add an “education part and community and society part”. This led us to ask for his ideas on how to create communities around their shopping malls. In response, Michaely told that they he believes that they have to give the “space and facilities”, for people use to use in the way that best suits them.
He then talked about how they could offer “100 events a year or more” to give people the entertainment they want, as well as the possibility of offering music classes. He told us that they are in discussions about the idea of adding a sports center to the mall at Adygea, offering classes and with local soccer clubs perhaps also using the facilities for training.
The conversation then turned to how IKEA could help their retailers with the likes of e-commerce solutions. Michaely confirmed that they are looking into the type of platform they could use for an on-line shopping solution.
We then asked about the main goals for the IKEA Mega Accelerator scheme. He said that the overall idea is to understand the potential of new technologies and how they can use them a lot better than they currently do. He feels that they can do this by getting ideas from young start-ups to make life easier for their retailers and customers.
The concept involves IKEA working for a long time with the winner, financing them to develop the idea further. He feels that using “external competence” like this gives the start-up winner the chance to gain confidence and experience, while also helping the company. This should lead to what Michaely called a “win-win situation” for all parties.
At this point, we asked Michaely about the prospects of IKEA diversifying and becoming an internet and e-commerce company with the likes of digital development among their specialties. He responded that the big question is how they would add to the market value of what they and their retailers already do, suggesting that it comes down to the customer needs of the future and how they want to do their shopping. He then said that he would “be happy if we would be the best online and offline center in Russia”.
As for the upcoming innovations that we can expect to see from IKEA in the next year, Michaely said that they are “testing locally a couple of things” but that it is too early to say much about them. They want to deliver “good products and good service” by testing out their new ideas in local pilots before fully rolling them out.
