With Solar Power, Ikea Breathes New Life into Brick-and-Mortar Retail

The rise of e-commerce has spelled doom for a growing number of brick-and-mortar retail outlets, and that can have an impact on local communities by cutting off opportunities for employment, career development, and civic engagement. Fortunately, some strategies are emerging that can help stem the tide. Among them are such clean technologies as solar power, an area in which Ikea has staked out an effective model to follow.

Brick-and-mortar doesn’t have to die

Last August, Aaron Cheris and Marc-André Kamel of the firm Bain & Company presented a detailed analysis in which they described how the COVID-19 pandemic has exacerbated the decline of brick-and-mortar retail, while also taking note of emerging strategies for sustaining operations.

They catalogued four options, one of which is the now-familiar practice of offering curbside transactions, including an “omnichannel hub” approach in which customers order their items online.

However, they also make the case that the pandemic has heightened consumer appreciation for in-store experiences related to community, convenience, trust and empathy. As a second strategy, they suggest that retailers update the in-store experience to deploy new technologies that echo the conveniences of e-commerce.

“Consumers still value a curated offering of products and services, and there is time for at least some department stores to update and digitalize their curation formula. Their use of physical space will need to change radically, mixing products with experiences and entertainment,” they write.

A third area addresses the challenge of scaling up beyond local traffic. Smaller retailers may not have the wherewithal to establish their own e-commerce systems, but they could explore the potential for collaborating with Amazon and other leaders in the field.

Finally, the authors underscore the “tactile advantage” enjoyed by brick-and-mortar operations.

“Consumers and brands benefit when shoppers can test or try on a product in person (that’s why brands still pay for stores within stores), they explain. “Executive teams need to find ways to preserve that tactile advantage while keeping customers safe from COVID-19,” they explain.

The retail store as a community resource

The authors also recommend shedding locations when necessary, but the overall theme is that brick-and-mortar must leverage new technologies to adapt to changing times and manage crises, while also building onto the traditional strengths of the in-store experience.

One of those strengths is to function as a community resource. Some malls, for example, accommodate seniors and other local residents looking for a safe, comfortable space for walking exercise.

The Texas power crisis demonstrates the community resource angle under more dramatic circumstances, as personified by Texas businessman Jim “Mattress Mack” McIngvale. Responding to a February cold snap and statewide power outages, McIngvale opened his furniture stores as warming shelters for local residents, as he has done during several weather-related emergencies in recent years.

The benefits of clean technology for brick-and-mortar retail

With the February Texas power crisis in mind, retail stores could expand their technology adaptation strategies beyond e-commerce, to include new clean technologies as a community resource.

Retailers are already beginning to recognize that they can engage customers by offering free charging for handheld electronic devices. A similar trend for electric vehicle charging is emerging as the electric vehicle market grows.

The advent of low-cost energy storage expands the opportunities for brick and mortar stores to provide emergency and non-emergency charging services for local residents.

That could be in the works for Ikea. Through its parent firm Ingka Group, the company has already emerged as a renewable energy leader, with investments in far-flung wind farms as well as rooftop solar power installations atop its stores. Last week the company announced a new group of solar power projects in the U.S., including completion of a solar car park at its store in Baltimore along with plans for seven additional parking and rooftop solar projects: College Park in Maryland, and Burbank, Costa Mesa, East Palo Alto, Emeryville, San Diego and West Sacramento in California.

Altogether, the eight installations will produce almost 11 gigawatt-hours of electricity annually. Five of the eight new projects will also include energy storage systems for a total capacity of 5 megawatt-hours, meaning that electricity generated by solar power systems will be available at night or during bad weather, potentially providing an emergency power source during storms.

Solar power and the bottom line

The new installations will add to Ikea’s existing portfolio of clean tech at its 51 U.S. properties, including wind and geothermal as well as solar power, along with 143 electric vehicle charging stations.

While clean technology does provide new community engagement potential for Ikea’s brick and mortar locations, the driving force is the bottom line. At the new Baltimore location, for example, Ikea has already charted a 57 percent cost savings for the last four months of 2020, the result of an 84 percent drop in the store’s outlays for purchased energy.

With savings like that, it’s little wonder that Ikea expects to achieve a climate-positive energy profile, partly on the strength of its brick-and-mortar operations.

The rooftop solar power and energy storage options may be out of reach for many retailers, often because the store sits in rented property. However, the advent of community solar power programs can provide retail tenants with opportunities to support new clean technology in their community, and continue to adapt the in-store experience to the changing times.

Image credit: Alexander Isreb/Pexels