IKEA looks to fill the gap

As it continues to build out its North American distribution network, home furnishings giant IKEA has departed from its usual strategy.

In the past, IKEA has stuck to the coasts when choosing sites for its DCs—it has built (or is building) five DCs on the East Coast and three on the West Coast. But as it moves forward with plans for its ninth DC, it's targeting America's heartland.

In March, the retailer unveiled plans to construct a giant DC in Joliet, Ill., just south of Chicago. The 1.4 million-square-foot facility will be built on 72 acres at the Laraway Crossings Business Park—a site that offers easy access to the interstate highway system as well as to rail service, via a nearby intermodal facility in Elwood, Ill. "This location's proximity to a rail line offers the long-term capacity, infrastructure, and geography that we were seeking to complement our distribution presence in North America, and to ensure our stores can continue to offer well designed … home furnishings at affordable prices," says Keith Keller, president of IKEA North America's Distribution Services.

Though the Joliet DC will primarily serve the company's stores in the Midwest, it will also be able to supply other stores across the country as needed. In addition, the new DC will provide the means for transporting goods across the country via rail so merchandise from Europe can be received on the East Coast and be distributed to western stores and vice versa with goods arriving from Asia.

IKEA currently operates stores in 34 countries, including 40 in North America. It has DCs in Bristol, Pa.; Brossard, Quebec; Perryville, Md.; and Westampton, N.J., on the East Coast, and Tejon, Calif., and Vancouver, British Columbia, on the West Coast. Another two DCs—one in Savannah, Ga., and one in Tacoma, Wash.—are currently under construction.