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IKEA reducing operating hours at Memphis store

By Updated: September 19, 2018 12:17 PM CT | Published: September 19, 2018 11:11 AM CT

IKEA will cut its operating hours in Memphis, the retailer’s only U.S. store to reduce store hours.

The 12 percent reduction in operations starts Oct. 1 and could raise questions about the health of the Memphis store’s sales and its payroll obligations to local governments that awarded IKEA substantial tax breaks.

In an emailed response to questions from The Daily Memphian, a spokesperson for the home-furnishings retailer indicated that the issue in Memphis is when Memphis shoppers come to the Cordova store, not how much they shop.

“In the past, we have taken the approach that all stores in the U.S. should maintain the same operating hours,’’ the IKEA spokesperson stated.

“We believe our customers are the best resource to tell us when they want to shop with IKEA and have decided to explore an approach in Memphis that is tailored for local customer needs. We have introduced fall/winter hours in Memphis and will explore if we have a need to open longer hours as we head into spring and summer,’’ the spokesperson said.

The change comes just four months after Sweden-based IKEA confirmed it was aborting plans to build a Nashville-area store, as well as others planned in Cary, North Carolina, and Glendale, Arizona. The company’s new chief executive has said IKEA will put more focus on online sales and smaller stores or showrooms near the center of metropolitan areas.

Brick-and-mortar furniture stores face a stiff challenge from online sales. A June article in “Furniture Today” cites data from One Click Retail that shows Amazon grew the furniture portion of its business by more than 50 percent in 2016 to become the No. 1 or No. 2 furniture retailer in the U.S.

The IKEA Memphis website states: “NEW Fall Hours Beginning 10/1/2018.’’

None of the websites for IKEA’s other 47 stores in the U.S. has posted plans for reducing hours, except for a few holiday adjustments later in the year.

The big-box store near the southwest corner of Interstate 40 and North Germantown Parkway opened with fanfare in December 2016. The store has been operating 76 hours a week:  10 a.m. to 9 p.m. Monday through Saturdays and 10 a.m. to 8 p.m. Sundays.

The reduced hours will total 67 hours weekly, 11 a.m. to 8 p.m. Sunday through Thursday and 10 a.m. to 9 p.m. Friday and Saturday.

More than for other retailers, the health of the IKEA store is a public issue in Memphis.

In an extraordinary action, the local governments in 2015 gave IKEA a tax break that could save the company $9.5 million over 11 years. The incentive was the first ever given to a retailer by the Economic Development Growth Engine (EDGE) for Memphis & Shelby County.

Memphis and Shelby County awarded the tax break in part because of the retail panache that IKEA was perceived to bring to Memphis. The city even renamed the street leading to the store to IKEA Way.

IKEA features relatively high-design, assemble-at-home furniture at relatively inexpensive prices.

The blue-and-yellow stores are iconic and promote an hours-long shopping experience, complete with cafeterias featuring Swedish meatballs and play areas that provide child care for shopping parents.

Memphis is the first and only Tennessee community with an IKEA, and there are only 48 stores nationwide.

In return for the tax break, IKEA committed to spending $65 million building the 270,000-square-foot store on 35 acres at 7900 IKEA Way.

The company also committed to creating 175 jobs that pay $41,000 on average.

The impact of the reduced hours on employee payroll was unclear.

The store also was seen as a tourism boost since it is the only IKEA serving not only Tennessee, but Mississippi and Arkansas as well. IKEA officials projected that one-third of the customers would travel from outside the Memphis area.

And the store would generate $17.6 million in local tax revenue over the 11-year term of the tax incentive, the EDGE staff calculated.

IKEA Memphis employees were informed by management that the store hours are being reduced because fall is the store’s slowest time.

Topics

Ikea Economic Development Growth Engine
Tom Bailey

Tom Bailey

Tom Bailey covers business news for The Daily Memphian. A Tupelo, Mississippi, native, he graduated from Mississippi State University. He's worked in journalism for 40 years and has lived in Midtown for 36 years.


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