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Old Big Box Stores Live On, Some Too Long

It has been 15 years since St. Louis-based Venture stores closed.

The chain was founded in 1968 when Target founder John F. Geisse went to work for May Department Stores. Under an antitrust settlement reached with the Department of Justice, May was unable to acquire any more retail chains at the time, and the department store company needed a way to compete against the emerging discount store chains. When May’s Executive Vice President Dave Babcock learned that Geisse had resigned from Target Stores, he spoke with Geisse about starting a new discount retailer, resulting in the founding of Venture.

The first Venture store opened in 1970 in the St. Louis suburb of Overland (after Venture closed, the location became a Kmart, which later closed & was demolished for the current Home Depot). In 1976, Geisse retired and left Venture Stores, which had by that time expanded to 20 units. (Wikipedia)

When I was a kid, following the failure of the Woolco discount chain, Venture expanded into Oklahoma City (source). A Woolco/Venture was very close to my parent’s house, I biked there often to buy 45s & later cassingles.

Last week, as I stepped into a former Venture store at 5401 Collinsville Rd in Fairmont City, IL, I recalled biking to Venture as a kid and even visiting a Venture after moving to St. Louis.

Venture sign
Venture sign remains
This Venture store is now Gateway Classic Cars, click image for website
This Venture store is now Gateway Classic Cars, click image for website
The old Venture name is covered by the current sign
The old Venture name is covered by the current sign
The interior is very original, complete with the paint scheme of the walls.
The interior is very original, complete with the paint scheme of the walls.

When a building gets built we should assume it’ll be around for at least half a century. Often this longevity is a good thing, but not always. I took a picture of the men’s restroom but I decided to spare you that sight.

Older structures do provide good low-rent options for businesses, while not making a positive contribution to the area’s image. This is a good example of why we need to think beyond the original depreciation schedule when building.

— Steve Patterson


Distribution Key To IKEA’s Midwest Expansion

IKEA sells simple looking modern furniture but its hardly a simple company. It is often misunderstood or misrepresented. Even simple facts are often wrong, which get repeated. For example:

The company has 285 stores in more than 20 countries and designs its own product which is then produced by more than 1,000 suppliers in 50-plus countries. With only 38 stores in the United States boasting an Ikea is regarded by many cities as a retail status symbol.  (nextSTL.com)

The number of locations/countries was repeated by two local mainstream news sources:

The furniture company has 38 stores in the U.S, part of a total of 285 stores in more than 20 countries. (STL Biz Journal)

IKEA has 38 stores in the United States and 285 locations in more than 20 countries. (KMOV)

Unfortunately this repeated information is inaccurate. From a February 26, 2013 IKEA press release:

Currently there are more than 298 IKEA Group stores in 26 countries, including 50 in North America (11 in Canada; 38 in the US; 1 in the Dominican Republic). IKEA has six distribution centers in North America. The IKEA Group employs 131,000 coworkers and had 655 million visitors in FY 11. (IKEA)

So these reports were short 13 stores and 6 countries, but did get the number of US stores correct at 38. True, 26 is “more than 20.” But even that doesn’t give the complete picture, there are 333 IKEA stores in total:

In January a Swedish documentary revealed that Interogo, a Liechtenstein foundation controlled by the Kamprad family, owns Inter IKEA Holding, which earns its money from the franchise agreements Inter IKEA Systems has with each IKEA store. These are lucrative: IKEA says that all franchisees pay 3% of sales as a royalty. The IKEA Group is the biggest franchisee; other franchisees run the remaining 35 stores, mainly in the Middle East and Asia. One store in the Netherlands is run directly by Inter IKEA Systems. (The Economist

Yes, all 333 IKEA stores franchise the concept. Complicated…

Click image to view cartoonist’s website.

IKEA first entered North America in 1976 with a store outside of Vancouver Toronto in Richmond BC. IKEA didn’t open a US store until nearly a decade later in 1985. My first visit to an IKEA was the Woodbridge VA location in August 1990. Since then I’ve shopped at five more locations.

In 28 years IKEA has gone from zero US stores to 38. Founded in Sweden in 1943, IKEA is a retail giant. After 70 years 333 stores exist. How does this compare to other retailers?

Apple opened its first retail store in Tyson’s Corner VA in May 2001. It now has, according to Wikipedia, 400 stores in 14 countries with 250 of those in the US. Obviously Apple is opening locations at a much faster rate than IKEA. But they’re in different segments, what about a more comparable company? Like Crate & Barrel:

By 1985, the chain had grown to 17 stores, and has continued to grow. In March 1995, it opened its first New York location (its 59th location), in Manhattan. After selling a majority stake to German mail order company the Otto Group in 1998, the company had financing to increase its rate of expansion. By 2002, it had grown to approximately 100 locations, and over 135 locations by late 2004.

Today there are over 170 stores in the United States. (Wikipedia)

Crate & Barrel, like Apple, is far more aggressive about opening locations. The point? IKEA takes its time. From March 2007:

Ikea, the world’s largest home furniture retailer, plans to acquire land in Joliet for a new distribution center that could eventually be as large as 1.4 million square feet.

The Swedish company has been searching for a site in the region for about a year, and recently signed a contract for a 72-acre tract in Joliet southwest of Interstate 80 and Illinois Highway 53, according to sources familiar with the matter. (Crain’s Chicago Business

The Joliet distribution center was supposed to open in 2009 but at this point it hasn’t yet.

Map showing IKEA's six existing, and one future, distribution centers in North America. Click image to see PDF from IKEA on distribution channels.
Map showing IKEA’s six existing, and one future, distribution centers in North America. Click image to see PDF from IKEA on distribution channels.

From the PDF linked above:

To meet the growing demand for products at the 48 IKEA stores in North America, IKEA locates its distribution centers in regions of the country in the United States and Canada where the company can optimize delivery of home furnishing products to the nearest IKEA stores.

In the U.S., this effort is aimed at developing a network that includes regional distribution centers in the East, Midwest, Northwest, South, and Southwest – as well as in Canada – for serving existing and future stores.

I’ve found no press release about the Joliet DC other than the original from March 2007. I’d guess once that facility is opened we’ll have a better shot at landing a store in the St. Louis region.

— Steve Patterson


Enough With The IKEA Rumors

Having worked in real estate I learned not to spend the sales commission until after the deal was closed. Blogging is similar.

ABOVE: Ikea in Bolingbrook, IL
ABOVE: Ikea in Bolingbrook, IL was built in 2006 on a 23 acre site

On Sunday nextSTL.com got many St. Louis IKEA fans excited:

Several WhoLou sources are alleging that highly-coveted Swedish-based furniture chain Ikea intends to develop their first St. Louis store close to the campus of St. Louis University. The 300,000 sq. ft. store will allegedly be built near the Laclede Gas and Salvation Army Adult Rehabilitation Center complexes on Forest Park Ave. between Sarah Street and Vandeventer Ave.

While IKEA does have some inner-city locations, most are in suburban sprawl. IKEA contributes to sprawl.

The next day the Post-Dispatch had a story saying the rumor was untrue:

Responding to the nextstl.com post, [Ikea spokesman] Roth said Monday: “We still have not committed to a time frame, let alone a specific site.” The chain has not listed St. Louis among the cities where it plans to open a store. “Nothing has changed,” Roth said. “We continue to evaluate opportunities in the market,” he said. (stltoday.com)

Online many were excited when they saw the original rumor, repeated on KMOV, Fox2, KPLR, but disappointed when IKEA officials said no deal to build a St. Louis store.

I have no doubt that local commercial real estate brokers are talking to every big retail chain to try to lure them to various sites. These retailers might even show some initial interest in one site or another. But until something is signed I feel it’s too premature to report.

— Steve Patterson


OK, Kanas City Region To Get An Ikea Before St. Louis

October 4, 2012 Big Box, Featured, Retail 19 Comments
ABOVE: Ikea in Bolingbrook, IL, January 2009

The Kansas City region is getting an Ikea store and we’re not:

The home furnishings company, which has 38 stores in the U.S., is announcing at a press conference this morning that it is putting a store in Merriam, Kan. The store is expected to open in fall 2014.

So what does that mean for the prospects of a much desired store in St. Louis?

Joseph Roth, an Ikea spokesman, said the Kansas City store does not diminish St. Louis’ chances.

“They are completely separate trade areas in our mind,” he said. “We still recognize the customer base that exists for us in St. Louis. We just have not committed to a time frame yet or found the perfect site.” (stltoday.com)

This is pretty logical if you think about it, the nearest Ikea to the St. Louis region is the Bolingbrook, IL location in the Chicago region — that’s 273 miles from St. Louis. The closest Ikea to Kansas City, MO is Bloomington MN at 431 miles (Bolingbrook, IL is 486 miles from KC).

I know numerous people here that have driven to the Bolingbrook Ikea in the morning, shopped, and driven back to St. Louis that night, others have stayed in a nearby hotel overnight. Either way, we have much better access to Ikea than people in the Kansas City region do — for now. And once the Kansas City Ikea opens in Merriam, KS two years from now it’ll be roughly 15 miles closer to St. Louis than the Bolingbrook, IL Ikea. A change of pace for those who usually head north on I-55 for flat-packed furniture.

This summer many thought an Ikea was going to come to Richmond Heights because a developer had proposed it. Based on the 6 Ikea locations I’ve visited over the last+ 22 years I doubt we would see an idea within 15 niles of downtown St. Louis. They are a big box retailer that locates along wide exurban arterials on sites highly visible from the highway.

For my last big order I shopped through one of the two local companies that make regular trips to Bolingbrook — I had them bring back items I’d never be able to transport anyway.

My hope is the Kansas City location will be close enough to civilization that it will be on a bus route so I can visit without having to rent a car — a perfect way to make sure I don’t buy too much.

— Steve Patterson


Please Shop Local Small Businesses On Saturday

November 26, 2010 Big Box, Economy, Retail, STL Region 2 Comments

If you are like many people you are going out to a mall and/or big box store today, Black Friday.  I’m not going to try to talk you out of it, but I am going to suggest you patronize locally owned small businesses in your area tomorrow,  November 27, 2010 – aka Small Business Saturday.

sbslogoFrom the FAQ page:

What is Small Business Saturday?
More than a dozen advocacy, public, and private organizations are joining American Express OPEN, the company’s small business unit, in declaring the Saturday after Thanksgiving as Small Business Saturday. This year, Small Business Saturday is November 27, 2010.

Is Small Business Saturday designed to get people to stop shopping at larger businesses or online?
Absolutely not. Small Business Saturday recognizes the importance of small businesses to the overall economy and local communities. It’s a day to support the small, independently owned businesses we can’t live without.Who can get involved in Small Business Saturday?
Anybody. Anywhere. Now through Small Business Saturday, November 27.

How can I get involved in Small Business Saturday?
There are a number of ways for you to get involved. First and foremost, it’s about helping raise awareness about the importance of small business to our communities. For example, you can visit www.facebook.com/smallbusinesssaturday where you ca”like” Small Business Saturday and syndicate news feeds about the day to your personal, virtual networks. There, you can also spread the word about the day and your favorite businesses by giving a shout-out to your favorite local shops and restaurants via Facebook and Twitter.

You can also support Small Business Saturday by patronizing the local, independently owned small businesses in your neighborhood. That could mean anything from having dinner on your way home from the mall during the holiday shopping season or reserving a part of your holiday gift budget to spend at a local small business.

The event is sponsored by American Express which isn’t a small business.  But I think they realize the importance of small businesses.

sbs1sbs2sbs3sbs4A good places to start are local advertisers helping to support this blog and BUILD St. Louis’ members.

-Steve Patterson