Ikea’s new concept and fresh $1 item will stir up food scene
Furniture giant Ikea is plotting a path into the food delivery business, hoping to have its range of meatballs and hotdogs on the road by the end of the year.
The Swedish retailer once had a basic menu offer for consumers to enjoy a cheap meal at the end of their shop but the range has continued to expand.
Today, it has launched its $1 veggie hotdogs but the plant-based range will be expanded by another six products in the next 12 months.
Ikea's affordable furniture has become a popular destination within the Australian retail landscape but the global brand also spruiks itself as the biggest hotdog vendor in the world.
Its food division currently serves about 13 million customers a year in Australia, selling 2.2 million of its meat-based hotdogs. And it anticipates it will sell 1.3 million of its veggie variety.
The push into the food delivery market is part of the company's ambition to rapidly expand its online operation.
Ikea's Australia division has previously signalled to news.com.au it believes home-delivered meals would be particularly strong in inner city markets including the Richmond store in Melbourne and Tempe in Sydney.
Food commercial manager Nicole Kurtz confirmed the furniture giant is "definitely looking into" getting its meals on the road.
"Globally they see that as the future for Ikea food so we will wait and see what the next six months brings," she told news.com.au.
"We're seeing changes within the furniture business with delivery so it makes sense that the rest of the business and the food business would follow."
The expanding plant-based menu is a wider initiative for Ikea which wants to improve its sustainability and environmental impact - described by food range boss Alexandra Herbert as a "jump up and down moment".
The company is also aiming to improve the quality of its meat products by focusing on supplying free-range alternatives.
"When we talk about sustainability it's not just in the plant-based economy, which is great, but it's also making sure those people who do wish to partake in an animal diet know there are options that have been carefully thought about," she said.
On the surface, the push into the food delivery market seems ambitious for the furniture supplier but Queensland University of Technology retail expert Professor Gary Mortimer said the coronavirus pandemic has created the need for companies to diversify operations.
"As a result of these challenging times we've been faced with, businesses have looked at different ways to pivot and adapt their businesses to look for alternative sources of revenue," he said.
"I don't think it's going to be a very large revenue stream. Ultimately they're going into competition with Coles and Woolworths who have very strong and full online offers."
The unique trading conditions as a result of the pandemic-induced lockdown inspired Ikea to bring forward its plans to increase its online operation.
The chain's Australian boss Jan Gardberg said he was caught off guard by the willingness of consumers to shop from home, allowing the furniture giant to stress test alternative ways of doing business.
This was boosted through deliveries, online workshops and its contactless click and collect where shoppers drive through the stores and shop assistants place purchased items in their cars.
"We have been talking about omnichannel development in retail and the big surprise was we've almost tripled our uptake in our online business over this two-month period," he told news.com.au.
"We are in the midst of planning for next financial year and in many ways we are rewriting a lot of the strategies, bringing them forward quicker than we initially had planned."
Before the pandemic shook the economy, about 14 per cent of Ikea's sales in Australia were through online channels and it is now on track to lift this segment to a quarter of all business.
Ikea's veggie hot dogs are now available in the NSW based Tempe, Rhodes and Marsden Park stores as well as the ACT. They will then be rolled out across the country in the next few months.
They're available for $1 in store or through a take-home pack of 10 for $6.
Originally published as Ikea's new $1 item to cause frenzy