Why IKEA Chose a Downtown Mall Over a Warehouse Megastore

Logistics & Supply Chain Strategy Briefing

STREAMLINE: Why IKEA Chose a Downtown Mall Over a Warehouse Megastore

(May 20, 2025)

A Case Study in Omnichannel Strategy: IKEA’s New Urban Store in Gangdong, Seoul

The conventional image of IKEA—massive warehouse-style stores in suburban areas—has been disrupted. On May 17, IKEA opened its first-ever urban store in Seoul, located on the 1st and 2nd floors of the Gangdong I-Park The River Mall in the city’s eastern district.

The store is smaller, with only half of the displayed items available for immediate purchase. Most notably, the iconic self-serve warehouse zone has been dramatically scaled back.
Why such a bold shift?
The answer lies in two strategic goals: expanding customer touchpoints in urban areas and optimizing logistics for online fulfillment.

❶ Point of View | Why IKEA Abandoned the Warehouse Model—For Now

Until now, IKEA’s footprint in Korea consisted of large-format “blue box” stores in the suburbs—Gwangmyeong, Goyang, Giheung, and Dongbusan. But the new Gangdong location breaks this mold.

Instead of a massive standalone site, IKEA Gangdong is a smaller urban concept store integrated within a shopping mall.
The warehouse-style “self-serve” area is minimized, while customer experience zones like cafés and restaurants are significantly expanded.

Of 7,400 items on display, only 3,700 are available for in-store purchase.
This location functions less as a point of sale and more as a brand experience hub—a physical anchor for driving online conversions.

❷ Inside the Move | IKEA Gangdong’s Strategic Shift

○ Enhanced Accessibility
Located near Subway Line 5 and key expressways (Olympic-daero, Seoul Ring Expressway), Gangdong is more accessible via public transport than previous locations.

○ Experience-First Layout
The store features a 600-seat restaurant and a 50-seat café—the largest café in IKEA Korea. The space encourages longer visits focused on browsing and relaxing.

○ Free-Flowing Store Layout
Unlike traditional IKEA stores with pre-set walking paths, the urban layout allows multiple entry points and open access from the mall’s interior.

○ Omnichannel Integration
IKEA Korea CEO Isabelle Puig called Gangdong “a physical hub for our omnichannel strategy,” linking offline engagement with online fulfillment.

○ Capex Efficiency
The Gangdong store follows a broader shift: IKEA Korea recently canceled new megastore plans in Daegu and Gyeryong, and shelved a logistics center in Pyeongtaek.

※ Editor’s Note: IKEA’s “less warehouse, more café” model may well be one of the clearest signals of retail’s evolving logic today.

❸ Business Playbook | How the Urban Store + Online Funnel Works

Strategic Element	Description
🧭 Location	Urban transit hub + access to built-in mall traffic
🪑 Layout	Experience-led showroom + F&B center + downsized warehouse zone
🛒 Purchase Flow	In-store browsing → Online ordering encouraged
📦 Logistics Model	Fulfillment shared with Goyang Store + linehaul coverage
📱 Omnichannel	Seamless online-offline integration
📈 Strategic Role	Maximize offline exposure → Convert to online revenue

❹ Market Impact | What Do Shoppers Think?

For years, IKEA shopping meant driving out to the suburbs and loading furniture into the trunk.
Gangdong breaks this habit. Parking is shared, on-site purchases are limited, and the store is not built for heavy-load transport.

And yet, this new model fits perfectly with modern urban lifestyles:
“See it in-store, enjoy a coffee, and get it delivered to your door.”

For residents of eastern Seoul and surrounding areas like Hanam, Seongnam, and Guri, this will be their first close encounter with IKEA.
In short, IKEA isn’t trying to replace the blue box—it’s anchoring online sales through offline discovery.

❺ Competitor Matrix | IKEA’s Traditional vs. Urban Format

Feature	Blue Box Model (Gwangmyeong, etc.)	Gangdong Urban Store
Location	Suburban standalone lots	Inside a city mall
Size	Over 20,000㎡	A few thousand ㎡
Warehouse Zone	Full-scale self-service area	Minimized or hidden
Purchase Mode	Buy on site	Browse → order online
Dwell Space	Minimal cafés or bistros	Full-scale café + restaurant
Logistics Model	On-site fulfillment + storage	Shared with Goyang HQ
Omnichannel Role	Limited	Core strategy

❻ Beyond the Numbers | Efficiency Over Expansion

○ IKEA Korea’s 2024 Performance

- Revenue: ₩625.8B (+4.1%)

- Operating Profit: ₩18.6B (+644%)

Despite this rebound, IKEA canceled major capex plans—including a logistics hub and new megastores.
Instead, the company is pursuing a leaner, more efficient footprint.

Gangdong is compact, but

○ lower in operating costs,

○ high in visibility, and

○ strategically positioned for online conversion.

According to global retail studies, omnichannel customers show 30% higher lifetime value than single-channel shoppers.
In that sense, IKEA Gangdong is not just a store—it’s a prototype of the “Urban IKEA Model.”

❼ Summary Insight | Why Now, and Why Here?

IKEA is no longer building just warehouses—it’s building customer touchpoints.
Gangdong is not a sales hub. It’s a brand amplifier and an anchor for digital revenue.

A shopper may not walk out with a sofa—but they might walk away convinced to order one.
If successful, this “Urban IKEA Model” could be replicated across major cities in Korea and beyond.

This is IKEA’s latest experiment in fusing offline experience with online efficiency.