Ikea chief sees green future for Dublin store

While baffled by planning delays for the 30,000sq m Ballymun outlet, Peter Hogsted is intent on creating 500 jobs in a store run on sustainable energy, writes Claire Shoesmith.

With its do-it-yourself approach to selling furniture and home furnishings and the budget travel arrangements of its executives, Swedish retail giant Ikea could be described as the Ryanair of the retail world. One major difference is that Ikea has so far failed to make it in Ireland, the home of Ryanair.

This issue is currently the bane of Peter Hogsted's life. As managing director of Ikea in the UK and regional retail manager for mid-Europe, Hogsted's empire stretches to Slovakia, Poland and Hungary in the east and should include Ireland in the west. In fact, it does include Northern Ireland: it's just the Republic that is causing problems.

"We have been looking at Ireland as an interesting market to establish ourselves in for a long long time," says Hogsted, pointing out that, until recently, planning restrictions had prevented the group - which requires a minimum of 24,000sq m (258,000sq ft) for its stores - from coming to Dublin. However, following the lifting of these restrictions in six specified zones around Dublin, Ikea announced in February plans to build a 30,000sq m store in the Ballymun regeneration zone.

"That was really positive for us," says Hogsted, adding that, right now, the outlook doesn't look quite so rosy.

In October the company was granted planning permission, with certain concessions, for the site, but it was contested on the grounds of increased traffic congestion on the M50 and in the surrounding area.

As a result Hogsted and his team are waiting on tenterhooks until An Bord Pleanála makes its final ruling.

Hogsted points out that, not only is the Government sending mixed messages by first approving the application and then agreeing to reassess it, it is also saying that the current €1 billion upgrade of the M50 has the potential to be driven off course by a furniture store. "That's all we are, a simple furniture retailer," says the Dane, who's spent the past 11 years working for Ikea, first in Denmark and now at the group's headquarters in north London.

That's not the only issue at stake here. There's also the fact that, in building the store as planned, Ikea will be investing about €150 million in the Ballymun area - one much in need of some sort of regeneration - including €5 million improving the local roads to cater for the increased traffic that the National Roads Authority is so concerned about, and providing employment for some local people.

The earliest date any Ballymun outlet could now open is December 2008, by which time the Belfast store, which was announced at the same time as the Dublin one, should have been trading for more than a year. "What we don't want is for us to be having to bus people from Dublin to Belfast just to come to Ikea," says Hogsted, pointing out that, if this happens, all the VAT from any sales will be going to the British government instead of the Irish.

While the benefits of an Ikea in Dublin to the Government are debatable, the potential consumer gains are more obvious. Despite the horror stories of customers dying in a stampede at an Ikea store in Saudi Arabia, being injured at the opening of a new store outside London and car tailbacks for miles approaching stores around the UK, the fact that the company had sales of €17.3 billion in the year to the end of August shows it must be doing something right.

Known for its flatpack furniture, the Swedish retailer - a private company founded in 1943 by Ingvar Kamprad - has proved a hit with homeowners around the world and now has 247 stores in 34 countries. It sells the same ranges all over the world and the buying procedure is the same wherever you are, whether you're in Slovakia or Japan. "We do half and you do half and together we save money," says Hogsted of the company's DIY approach to shopping.

An Ikea customer is initially faced with an aesthetically pleasing tour of potential combinations of Ikea's 9,850 unique products - it sells a further 150 that aren't unique such as tea lights, napkins and cheap frying pans - set up as life-size kitchens, living rooms and bedrooms; he or she, having noted the items they wish to purchase, then typically descends to the lower floor where all the previously-seen items are available for purchase, that is after they have been located in the warehouse.

"We design, buy big, produce big, pack it flat so you don't transport air and we price low," says Hogsted, who joined Ikea as an HR manager in 1995. "As a customer you select by yourself, you choose and find by yourself in the warehouse, you bring it home yourself and you assemble it yourself."

This, according to Hogsted, is the reason Ikea is as affordable as it is, and affordability, he says, is one of the keys to the group's success. "Our vision is to create a better everyday life for many people by providing a range of home furnishings at such low prices that the majority of people are able to buy them," he says.

"What we are looking for is a share of your wallet. In the end we are competing for your disposable income in the same way as any other lifestyle items such as holidays, health and beauty and fashion."

If all goes to plan and Ikea gets the go-ahead to build the store in Ballymun, it will be a first for the company as well as for the Republic. That's because of the advanced sustainable energy concepts that have been designed into the building. While all of Ikea's stores are focused on sustainable energy, the ground-source heating and cooling system proposed for the Ballymun building will run on 45 per cent renewable energy. It will have a 65 per cent reduction in carbon emissions, equal to 123,000kgs of carbon a year, or the energy consumption of 300 households.

"This is unique in Ireland and the first test for ourselves," says Hogsted, adding that Ikea has made a commitment that by 2010, all of its stores will run on 100 per cent renewable energy. While this seems like a distant challenge in the context of Irish energy policy and more akin with the group's Scandinavian roots, even without having a store here, the Republic has already made one contribution to Ikea's environmentally friendly stance.

"We stole the plastic bag initiative from Ireland," says Hogsted. In the three months since Ikea started charging for plastic bags in Britain, consumption has declined by 97 per cent. If Hogsted and his team get their way this won't be the only contribution the Irish make to Ikea's environmental policy.

As well as employing about 500 people at the Ballymun site, with 300 of those from the immediate area, another 100 to 150 jobs are expected to be created in ancillary businesses such as home delivery and cleaning. The home delivery business, which will be put out to tender for local firms, will be expected to use low-emission trucks.

Hogsted refuses to be drawn on how many customers he expects would visit the Ballymun store should it get the go-ahead - though with a large grin on his face admits he would be very pleased if the 2.8 million visitors being speculated in the Irish media were to be correct.

He also declines to comment on how important the Irish market will be in the context of the overall group - Britain currently accounts for about 9 per cent of total sales. He does point out, however, that Ireland and Japan are the only new markets the company is working in at the moment, though a further development in Asia is expected soon.

So while it is currently uncertain whether Ikea's prepacked houses (already infamous though they haven't even gone on sale yet) will be sold in the Republic, one thing is for sure: when Ballymun gets its Ikea, it will also get Swedish hotdogs and meatballs - what more can you ask for?

Factfile

Name:Peter Hogsted

Age:37

Position:Managing director Ikea UK and regional retail manager for mid-Europe

Nationality:Danish

Family:Married, no children

Hobbies:Travel, design, architecture and music

Why he is in the news:Ikea announced in February plans to build a 30,000sq m (323,000sq ft) store in Ballymun, Dublin, its first, and likely only site in the Republic. However, following objections from the National Roads Authority, An Bord Pleanála is now reassessing the planning permission that had already been granted and Ikea is waiting to find out whether it can go ahead with €150 million development, which would employ 500 people, 300 from the local area.