In Italy, The Leaning Power Of Ikea. Swedish Furniture Store Blocked Again
After big plans in Pisa for a new Ikea store were scrapped, the Swedish furniture mega store has run into another local administrative wall outside of Turin. The price of entering the Italian market remains frustratingly high.
TURIN – First it was Pisa. Now Turin. From both a consumer and employment point of view, this looks like a lose-lose situation. The labyrinthine of local regulation is making the opening of new Ikea furniture outlets in Italy almost impossible. After facing endless troubles, the Swedish mega-store company is now saying it may give up.
Ikea planned to open its second store on the outskirts of Turin, which was due to occupy 160,000 square meters in the towns of La Loggia and Moncalieri. But after five years of paperwork and countless meetings with public administrators, urban planners, politicians, and representatives from local associations, the project is falling apart. Turin's provincial government has just vetoed it.
The local politicians say the proposed land is zoned for agriculture, and should not be dedicated to another mega store. "We cannot waste this land," explained one local official. Ikea is being encouraged to choose from vacant industrial and commercial land in the area. But the company had picked the farmland for the store because it is much less expensive than commercial property.
The seemingly dead-end project has already cost the Swedish company roughly 1 million euros. "Rather than changing the location, we'll give up on the entire investment," one Ikea manager said.
Giving up on the project would mean renouncing a 60 million dollar investment, which would have created 250 new jobs. It would also send another negative signal to international investors who already consider Italy a country where doing business is too cumbersome. In comparison, nearby Slovenia gives away land almost for free.
Ikea has already experienced this unnerving process in Italy. The company worked on a plan for a new store close to Pisa, in Tuscany, for four years, before the project collapsed in the face of administrative resistance. Ikea was more successful with a store in Padua, in northern Italy: it took only nine years to open it.
The story of La Loggia store outside of Turin is a perfect example of how investing in Italy can be a hair-pulling process. Ikea's project needed an 80,000 square-meter area. In 2006, the company spoke with Mercedes Bresso, then the governor of the Piedmont region. "The region wanted us to add a park to the project. ‘Ok, no problem," we said," says Giorgio Rocchia, an Ikea consultant who is in charge of dealing with the local administrations in Italy.
There were eight alternatives. But one was too small, another was too congested, others were plagued by asbestos contamination or flood risks. The piece of land between La Loggia and Moncalieri seemed the best, at a cost of 50 euros per square meter. Ikea was willing to spend 8 million euros for the land and another 8 million euros for the necessary infrastructures.
Nevertheless, local administrations were worried that the huge furniture store would have put in jeopardy local furniture producers. Ikea promised it would take care of these satellite industries. La Loggia Mayor Salvatore Gerace appreciated the gesture. Could work finally start? Not at all.
Meetings kept going on. There were some doubts, but nothing seemed irresolvable. A deal seemed close. On July 6, all the managers and administrators involved in the deal met. Only the representatives of Turin provincial administration excused themselves saying they were busy. Then, abruptly, the president of the provincial administration, Antonio Saitta, accused Ikea of property speculation. "The land is our resource. If Ikea is really environmentally friendly, it should pick another area," Saitta said. On July 22, the provincial administration vetoed the project.
Now, the regional administration is working on a compromise. "We are willing to meet Ikea managers to see if it's possible to overcome the obstacles," said current regional governor Roberto Cota. But by now, Ikea has learned that in Italy, everyone can be your friend, but everyone can also wield veto power.
Read the original article in Italian
Photo – Seth W.