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IKEA gets a new home at Tottenham Court Road

14 September 2018 by Lizzie Bollada

IKEA, the Swedish furniture retailer is commonly known for three things: argument-inducing flat pack furniture, Swedish meatballs with some rather questionable ingredients and its large out-of-town showrooms where customers can immerse themselves in the possible and walk through well put together kitchens, bedrooms and nurseries. It is this last point which is of interest to LDC, as IKEA is (for the very first time) opening an in town location. Using LDC data I am going to look at their selection of Tottenham Court road for this new site.

IkeaFigure 1Figure 1: Vacancy Rate Percentages for Tottenham Court Road July 2010-July 2018 (Source: LDC)

Tottenham Court Road - an overview

Since July 2010, both the retail vacancy rate and all vacancy rate (retail and leisure units combined) at Tottenham Court Road have been trending downwards - with the exception of July 2013 and July 2016, which saw a larger and slightly smaller peak. The 2013 peak may have been influenced by the beginning of talks surrounding the redevelopment of Tottenham Court Road and its station. This  £35m redevelopment is designed to deliver safer and greener streets to attract, sustain and boost local businesses (Source: West End Project). The development specifically on Tottenham Court Road involves bus and cyclist only traffic Monday to Saturday, wider footpaths, increased crossings and new public spaces and parks. The huge investment planned in this area could be a factor that led IKEA to consider it for a new store opening

Looking at the 12 month period from July 2017 to July 18, the only change in the retail mix in the area was a decline in two leisure (food and beverage) units which were replaced by two service retailers (hairdressers, nail salons, beauty salons etc). The Comparison Goods ( books, homewares and clothes) and Leisure classifications are the most popular in this area, accounting for 38% and 34% respectively of total stores on Tottenham Court Road.

Figure 2-1Figure 2: Total Number of Units per Classification comparing July 2017 to July 2018 (Source: LDC)

When breaking the analysis down into subcategories, the three most popular in terms of number of stores are Cafes & Fast Food (19%), Furniture, Carpets, Textiles, Bathrooms & Kitchens (11%), and Electrical Goods & Home Entertainment (9%).

IkeaFigure 3Figure 3: Percentages of chosen categories out of total units - Comparison with GB town centres as of July 2018 (Source: LDC)

Competitors of IKEA would mainly sit under the categories: 'Furniture, Carpets, Textiles, Bathrooms & Kitchens', 'DIY, Hardware, Builders’ Merchants & Household Goods', and Electrical Goods & Home Entertainment. For ease, I will refer to these three categories together as ‘household goods’. Tottenham Court Road proves a popular destination for household goods retailers, given the higher than average presence here compared with the GB average for town centres. However, one point to note is that although electrical goods and home entertainment stores individually are over-supplied compared to the average, a high number of these are mobile phone retailers, including two Carphone Warehouse stores, an EE, an O2, and others.

Out-of-town occupiers

The differences in saturation levels of household goods for Tottenham Court Road compared to the GB average  may be due to the fact that multiples within these categories typically gravitate towards out-of-town units or retail parks. The chart below shows all multiples located on Tottenham Court Road as well as IKEA, and the percentage of their portfolio that is located in retail park or out of town locations.

Ikea Figure 4Figure 5: Percentage of Total Portfolio located in Retail Parks or Other for companies located on Tottenham Court Road (with 10+ stores) and IKEA as at July 2018 (Source: LDC)

As can be seen in figure 5, the majority of retailers have a high presence in these location types, making Tottenham Court Road an unusual choice. However, the large number of these companies that have opened on Tottenham Court Road despite this may go some way to explain why it was considered as a new location for IKEA, who have a similar location strategy for their portfolio. Often these types of retailers will cluster together, providing a convenient group of stores for consumers on a specific type of shopping mission, mainly around DIY or home improvements.

Store comparison – Bletchley, Milton Keynes

In order to understand the selection of Tottenham Court Road better, we compared this location to an existing IKEA site in Bletchley, Milton Keynes. An approximate 3-mile radius surrounding the Bletchley store was used to consider likely driving distance of customers (see figure 6).

Ikea Figure 5 Figure 6: Map of approximate 3-mile radius used (Source: LDC)

Figure 7 shows that stores within the Household Goods category make up a larger proportion of both stores that sit under Comparison Goods Retail and the total units at Tottenham Court Road compared to the 3-mile radius surrounding the Bletchley site. Tottenham Court Road has a higher percentage of these stores compared to the other units in the area and could potentially explain why IKEA selected this location to open a new store.

Ikea Figure 6
Figure 7: Comparing the Percentage of Household Goods stores as of July 2018 (Source: LDC)


In summary, IKEA may have chosen this location for its increasing attractiveness and cluster of household goods, as a destination for those looking to complete some home improvements. However, IKEA, being well-known for both its food court and its maze of showrooms will consider the transition to this style of location carefully. Although competitors with similar location strategies to IKEA have a presence here, their move could be seen to be easier due to the different customer experience within their stores. IKEA already has locations in shopping centres and high streets called ‘Order and Collection Points’, where stores are much smaller and focus on the collection of  pre-ordered products.

 IKEA Birmingham
IKEA Order and Collection point in Birmingham. (Source: LDC)

Depending on whether this new location on Tottenham Court Road will be used as a similar collection point, or more as a showroom of products to be ordered in-store or online for home delivery, this will raise important considerations. The soon-to-be pedestrianised Tottenham Court Road will lend better to the latter idea of a showroom, as collection may become difficult in the area due to lack of access for cars and vans. In 2017, 15% of IKEA’s sales were made online (Source: Internet Retailing, 2017), and therefore the likely increase in online sales as a result of this new store type will increase the importance of home delivery and logistics. A store of this nature could define how the household goods market uses a combination of smaller physical space and online retailing to optimise sales and create excellent customer experiences.

To learn more about how we use our proprietary data to support clients' location strategy formation, get in touch with the team at or call us on 0203 111 4393.

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