Site Selection: Can a big-box store be sustainable?


IKEA is one of the world's largest home furnishing companies. In 2007, IKEA reported sales of 19.8 billion euros ($2.66 billion) to more than 500 million customers worldwide. Its global footprint comprises 285 stores in 36 countries; the average store clocks in at about 300,000 square feet — nearly three times the size of the average Wal-Mart store, a retailer to which IKEA is often compared by both its critics and fans alike.



The comparison with Wal-Mart is not entirely appropriate, however. While Ikea's brand is recognized across many parts of the country, its total size and sales are dwarfed by that of the Fayetteville, Aka.-based retailer. Wal-Mart (NYSE: WMT) has more than 6,000 retail locations worldwide and reported revenue of $404.9 billion in fiscal year 2009.



And, while some studies show that most of the United States has access to a Wal-Mart within 60 miles, Ikea stores are located in clusters around the country. Part of Ikea's siting strategy has to do with its low-cost approach: the company selects locations that have access to ports or strong rail corridors, which helps to keep over-the-road shipping costs low. That also helps improve the company's own environmental footprint: such sites often qualify for brownfield redevelopment credit, and ocean and rail are some of the least carbon intensive shipping options available. 



However, the carbon impacts from customer travel to such locations have come under increased scrutiny — sites close to industrial ports and railyards aren't typically conveniently located near public transit or in dense, walkable communities. Ikea parking lots on Saturday can rival those of many stadiums in the nation on game day.



To its credit, the company has worked with local governments to expand transit to its locations. Ikea's controversial Red Hook store, in Brooklyn, N.Y., opened despite some vocal neighborhood opposition. One concern raised by locals was increased vehicle traffic — but not only did traffic not increase, some locals say Ikea's presence even helped improve public transit to the area. Crain's New York reports that the store advocated for increased transit access to the area, and today the area benefits from a free ferry to Manhattan, a free shuttle bus to and from downtown Brooklyn subway stations and two bus lines that were extended to reach Ikea's front door.



Beyond Red Hook, the company aims to encourage 15 percent of visitors to its stores to take public transportation; as of the 2007 report, Ikea has reached 9 percent of its customers.