Howdy folks, and welcome back to HHR. Today, we’re trying to preserve some photos of what I’m guessing will not be a permanent partnership, the alliance between Best Buy and IKEA. We’re taking a look at the Best Buy in Humble. This location was one of ten selected last year to try out this crossover. The basic version of this is that IKEA has set up plan and order centers at a handful of Best Buy locations. IKEA does not directly retail anything from these stores. Rather, they have a decent number of example cabinets, organizers, and material samples for you to use to custom-order furniture. So what does Best Buy get out of the deal? Presumably, a decent rent check from IKEA and the opportunity to promote a few of their appliances. The IKEA store within a store also provides IKEA employees to help consult and plan furniture purchases. So why do I think this partnership won’t last long?
Well, it’s two-fold; first, neither side seems to be getting too much out of this. As I mentioned, Best Buy probably only gets the rent checks and maybe some sort of commission, but one can’t imagine that too many people are rushing into Best Buy to purchase IKEA furniture. Next, IKEA is experimenting with smaller-format stores that seem to be taking off. IKEA has already tried adding plan and order locations across Houston, but has more recently announced that they’re expanding into building “medium format” locations that stock commonly purchased items, and allow order and pickup of anything else. This concept has proved popular enough that IKEA has decided to give Houston about 1.5 IKEAs’ worth of stores, with a new medium-format location under construction in Webster at the moment. In the long run, we’ll have to wait and see how this all turns out, but I don’t think IKEA’s store-within-a-store will be a long-term player.
