retail

Ikea buys former Topshop Oxford Circus flagship


Ikea is buying the former flagship Topshop store on Oxford Circus for its latest city-centre shop in what the world’s largest furniture group branded a long-term vote of confidence in retail in London and the UK.

The group is paying £378m for 214 Oxford Street and will have its own store with accessories, some furniture and planning studios in about a third of the 22,200 sq m space over seven floors.

“This is a top, top location and we very much believe in London and the UK in the long, long term . . . The UK is also interesting after Brexit. In the long run, we think it’s going to land in a good way here,” Krister Mattsson, managing director of Ingka Investments, the arm of Ikea buying the property, told the Financial Times.

A string of brands that once dominated Oxford Street have fallen victim to Covid-19, clearing space on London’s most famous shopping street for a new type of occupier.

The collapse into administration last year of department store chain Debenhams and Sir Philip Green’s retail empire Arcadia — the owner of Burton, Dorothy Perkins and a number of other fashion brands as well as Topshop — has left gaps in high streets around the UK.

Ikea is increasingly moving away from only having big-box stores on the outskirts of big cities and is experimenting with different types of city-centre outlets from kitchen-planning studios and click-and-collect points to locations holding thousands of different products such as one in Paris.

Its Oxford Circus store will not open until 2023 but will follow one in Hammersmith due to open in the next few months. The Oxford Street shop will have click-and-collect as well as click-and-deliver functions and planning studios, typically for kitchens and wardrobes, according to Mattsson. Long-term tenants including Nike and Vans will continue their operations in the building.

The former Topshop site, which was home to the flagship UK store in Green’s Arcadia empire, had been pledged as security for the defunct group’s defined benefit pension scheme under an agreement reached with the trustees and the UK Pension Regulator in 2019.

There is also a £300m loan secured against the property, implying that the pension fund will cover £78m before any transaction costs and accrued interest. The property had been valued at more than £400m before the Covid-19 pandemic drastically reduced visitor numbers to London’s West End.

Mattsson said that despite a “quite dramatic increase” in online sales at Ikea, which rose from 7 per cent of total revenues in 2019 to 30 per cent this year, “we are still very linked to our bricks and mortar”, stressing that shops were where customers could see the full product range and gain inspiration.

“We will not switch too much into ecommerce. Oxford Street is much more accessible and is [a] way to widen the opportunities of customers to meet Ikea retail,” he added.

Ikea, which has scoured London for city-centre locations for years, including a previous attempt to open on Oxford Street in 2015, has closed some stores in the UK in recent years, including one in central Coventry and two trial shops in London, and now has 23 outlets. It will have 23 outlets in the UK when the Oxford Circus store opens.



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