IKEA’s shopping malls business, one of the world’s biggest, said its expansion plans remained on track with visitors quickly returning to its premises after the lifting of coronavirus-related lockdowns which had forced stores to close.
Ingka Centres, which has 45 malls anchored by IKEA stores across Europe, Russia and China and plans to enter the United States in 2021, said footfall in the 12 months through August had fallen by almost a quarter and tenant sales had dropped 16% to 5.4 billion euros ($6.4 billion).
“Our results this year represent a robust performance under the circumstances we have witnessed,” Managing Director Gerard Groener told Reuters. “The pandemic is not over yet, and we are likely to face more near-term challenges. But we believe we are well placed to handle these.”
Malls closed fully or partially for a few weeks in 13 of 15 markets early in the pandemic.
The company said in an emailed statement that occupancy was stable at 95% in the fiscal year, and Groener said work to nearly double the number of malls in the coming years was on track.
Alongside IKEA, Ingka Centres is shifting focus from out-of-town to smaller inner-city locations as it adapts to digitalisation and changing consumer behaviours. It is hunting for property in some 40 major cities, and in 2020 inked its first acquisitions, in London and San Francisco.
“Whatever the so-called ‘new normal’ looks like, retail and leisure is adaptable and human society is geared to socialise,” Groener said.
He said after COVID-19 restrictions were lifted in the spring, visitors quickly returned to the company’s malls, which it refers to as meeting places.
Malls had a roughly unchanged total leasable area of 4 million square metres in the year, with 7,000 stores.
“The vast majority of our tenants are committed to our meeting places,” Groener said.
However, the move towards smaller urban malls, and a shift toward uses other than retail – ranging from playgrounds to community event spaces – will mean fewer stores, he noted.
Many retail chains are looking to reduce their overall net store count as their customers increasingly shop online.
Ingka Centres however said Adidas ADSGn.DE, H&M HMb.ST and Inditex-owned ITX.MC Zara were among brands adding stores in its malls during the year. In all, around 500 stores opened.
Ingka Centres is owned by Ingka Group which also owns most IKEA stores. The malls operate under brands such as MEGA in biggest market Russia, and LIVAT in China.