Factors Considered by IKEA in Choosing Store Locations: A Case Study on Elizabeth, New Jersey
When IKEA selects the location for its stores, including the one in Elizabeth, New Jersey, the company carefully evaluates several key factors to ensure the chosen site aligns with market demand, accessibility, competition, site characteristics, and more. Understanding these evaluation criteria helps shed light on why IKEA chose such a unique and industrial location for its retail and warehousing needs.
Market Demand and Demographics
IKEA begins by analyzing the demographics and purchasing power of the local population. This involves a thorough understanding of the socioeconomic status, income levels, and consumer behavior within the target market. For the store in Elizabeth, New Jersey, the demand for IKEA products would have been evaluated based on the purchasing power of the nearby residents and the overall market potential. Even in an industrial area, a strong consumer base interested in home furnishings and products can be indicative of a viable market.
Accessibility and Proximity to Major Highways
Accessibility is a crucial factor for IKEA. The company needs to ensure that the location is easily accessible to a large customer base. This includes proximity to major highways and public transportation options. Elizabeth, New Jersey, offers a strategic location just across the highway from Newark Airport, making it easier for customers to reach the store via car or public transit. While the area is notably industrial, this proximity to major transportation hubs compensates for the less-than-ideal local ambiance.
Site Characteristics and Zoning Regulations
Site characteristics such as size, zoning regulations, and potential for expansion are also taken into account. The site in Elizabeth was presumably large and suitable for both retail and warehousing, which is a perfect fit for IKEA's needs. Zoning laws and building codes were probably considered to ensure that the store could operate legally and without any regulatory obstacles. The opportunity for expansion would also be an attractive feature, given IKEA's growth potential and need for storage space.
Proximity to Distribution Centers
Proximity to distribution centers is critical for IKEA to manage shipping costs effectively and maintain a robust inventory. The site near Port Newark/Elizabeth, where the PA manages the land, likely offered an advantage in this regard. Being close to a major port means that logistics operations can be optimized, reducing the costs associated with shipping products to and from the store.
Local Regulations, Job Creation, and Economic Development
Local regulations, including zoning laws and building codes, are a significant concern for any retail establishment. IKEA would have had to ensure that all necessary permits and compliance requirements were met. Additionally, the store's impact on the local community would have been evaluated, including job creation and economic development. While the area is industrial, the arrival of a retail and warehousing giant like IKEA could boost the local economy, creating numerous job opportunities and stimulating other businesses in the region.
Unique Selling Proposition
The location of the IKEA store in Elizabeth, New Jersey, likely also offered a unique selling proposition. The view of planes taking off from the nearby Newark Airport from the cafeteria area is a one-of-a-kind experience that sets this IKEA store apart from others. While the aesthetic and potential impact on consumer perceptions were not explicitly mentioned by IKEA management, such a unique feature could be a significant draw for customers, potentially increasing foot traffic and sales volume.
Conclusion
In summary, IKEA's decision to locate a store in Elizabeth, New Jersey, was based on a combination of market demand, accessibility, site characteristics, and proximity to distribution centers. The location offered a strategic advantage due to its proximity to major transportation hubs and its potential to create significant job opportunities and economic benefits. While the area is industrial, the unique selling proposition of the view from the cafeteria and the cost-effective land lease deal made the location an attractive choice for IKEA.