In this Thursday Nov. 22, 2018 photo, a customer looks at furniture in a new Ikea store, in Warsaw, Poland. The store, recently opened in a city shopping mall, is part of a global strategy by the Swedish furniture chain to adapt to a changing consumer environment by opening small, accessible stores in city centers to complement the traditional large out-of-town store stores. (AP Photo/Alik Keplicz)
Bargain hunting: Ikea is expanding its presence in city centres © AP

Ikea is set to shut its first store in the UK with the furniture retailer blaming a “substantially lower” number of visitors than originally expected for the rare closure of one of its outlets.

The Swedish group said on Tuesday that the multi-storey store in Coventry had made consistent losses since it opened in 2007, adding that shoppers had preferred to visit retail parks or go online.

“Although this isn’t an easy decision, this is the right decision for the long-term success of Ikea in the UK,” said Peter Jelkeby, country retail manager and chief sustainability officer of the group’s UK and Ireland division.

The 352 affected members of staff will enter into consultation with the retailer, which said it would try to internally relocate “as many people as possible”. The store will close in the summer.

Ikea is in the midst of one of its biggest transformations since it was founded 77 years ago. The group is shifting away from a model where customers travel to warehouses on the outskirts of cities to collect and assemble their furniture and is instead making a bet on smaller city-centre stores.

Last year it opened smaller outlets in central Paris and Moscow that have proved a success, with 1.3m people visiting the La Madeleine shop in the 1st arrondissement of the French capital during its first five months.

The Coventry store was originally part of Ikea’s exploration of different retail formats, although its seven storeys still put the outlet on a bigger scale. Ikea said it had considered downsizing but “the nature of the site [meant this was] not a realistic option”.

Overall the group’s UK business, which has 22 stores including the Coventry site, reported sales of £2.1bn in the year to August.

Ingka Centres, the real estate division of Ikea’s parent company Ingka Group, said in January it had bought a shopping centre in west London’s Hammersmith in which to build its first “small-format city store” in the UK.

The retail group has also made a push into ecommerce. Online sales grew 43 per cent in the year to August, equivalent to 7 per cent of its overall €41.3bn in revenue. The group’s global pre-tax profits were €1.8bn.

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