GEORIGA PORTS EDT 2006 - IKEA’s planned DC offers big potential for Port of Savannah

By: | at 07:00 PM | Channel(s): Ports & Terminals  

By Karen E. Thuermer, AJOTTo some, IKEA is a lifestyle home furnishings cult, but to the Port of Savannah, it’s a really big win. That’s because when the Swedish retailer of household items announced in December its purchase of 115 acres of land four miles from the port to build a 1.7 million-square-foot distribution center, port officials knew this would mean steady, long term business for the port. The goods received through the port will include the nearly 10,000 exclusively designed items sold at IKEA stores.
Plans call for constructing the distribution center in two parts. Phase One will encompass a 785,000 square foot facility which IKEA anticipates will be operational by summer 2007. Phase Two construction should commence immediately upon Phase One becoming operational, and will be approximately 975,000 square feet in size. The Savannah Distribution Center will be located four miles from the Garden City Terminal at the Port of Savannah.
“We are thrilled about the opportunity to locate our Southeastern Distribution Center at the Savannah River International Trade Park,” says Keith Keller, IKEA North America’s Distribution Services president. “As one of the fastest growing ports in the country, Savannah offers the long-term capacity, infrastructure and geography that we were seeking to complement our distribution presence in North America. A Savannah-based distribution center will help IKEA ensure our stores continue to offer well designed and functional home furnishings at affordable prices.”
While IKEA is a newcomer to the US Southeast, the home furnishings retailer has been in business for six decades since opening shop in a small farming village in Sweden. According to Joseph Roth, spokesman for IKEA’s North American Distribution Services, most folks in the South had never heard of IKEA prior to the company’s opening a retail outlet in Atlanta. Southern shoppers are quickly learning, however, that IKEA, with its signature blue and yellow buildings reminiscent of the Swedish flag, offers affordable products that are child-friendly. Offerings cover the needs of the whole family, young and old.
The company’s philosophy is based on a partnership with its customers. IKEA designers work with manufacturers to find smart ways to make furniture using existing production processes. Then its buyers look all over the world for good suppliers with the most suitable raw materials. Next, IKEA purchases its items in bulk - on a global scale - so that the company can get the best deals, and its customers can enjoy the lowest price.
“Then you—the shoppers—do your part,” corporate executives say. “Using the IKEA catalog and visiting the store, you choose the furniture yourself and pick it up at the self-serve warehouse. Because most items are packed flat, you can get them home easily, and assemble them yourself.”
The IKEA concept has plenty of room to grow. The retailer accounts for just five to ten percent of the furniture market in each country in which it operates. More important, says CEO Anders Dahlvig, is that “awareness of our brand is much bigger than the size of our company.” IKEA sells a lifestyle which customers around the world embrace.
Site selection process
The decision to locate its distribution center in Savannah came after a hard look at locations throughout the Southeast, from Virginia to Texas.
The Port of Virginia, one contender, has successfully attracted a host of major distribution centers. Roth points out that IKEA already operates a DC in Cecil County, MD.
“When we started looking for a more centralized location, we evaluated the fact we will be serving Florida, Atlanta, and stores in Texas,” he says. “We decided Savannah was a good central point for us.”
A number of factors on IKEA’s site selection criteria list ranked Savannah tops: a well run port with capacity, growth potential, and readily available land nearby. Also important were Interstate 95 and Interstate 16 that intersect near the site. The Savannah Distribution Center will pr

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American Journal of Transportation