IKEA neighborhood to be built in London

IKEA is planning to build a sizeable east London neighborhood in the next few years:

The new district, Strand East, will include 1,200 homes, of which about 40 percent will have three or more bedrooms. Strand East will also have a 350-room Courtyard by Marriott hotel, 480,000 square feet of offices, shops, cafes, restaurants, a school, a nursery, and a health-care facility, allowing residents to accomplish daily errands and needs without having to drive.

The 26-acre neighborhood-in-progress is being designed to include car-free pedestrian zones, courtyards and landscaped grounds, while the planned underground parking means vehicles will be stowed tidily out of sight. The parcel is bordered on two of three sides by waterways, so the community might take on a Venice-like feel, with a water taxi service, a floating cocktail bar, and moorings that will be available for residents’ use…

Although some planning approvals are pending, construction is planned to begin in 2013 — after the Olympics — and is expected to take about five years. However, one section, Dane’s Yard (pictured at top) has been approved. It will feature a 40-meter-high (131-foot) illuminated sculpture in its public square, and a Grayson’s restaurant that will focus on ethically and locally sourced foods. It will also retain renovated versions of some of the historic buildings.

“We will turn it around for sure,” says Müller. “Not being arrogant, but for sure it will be a new hotspot in London.”

This isn’t IKEA’s first time pursuing something like this: the article suggests they have had “similar developments in Poland, the Baltics and Romania.” It is too bad the article doesn’t tell us more about those projects.

The redevelopment project itself doesn’t sound too startling; it sounds like they want to create a new vibrant neighborhood that will take advantage of some of the settings for the site which includes water access. What I assume will catch people’s attention is that the development company is part of IKEA. Does this immediately change the perceptions about the project? Compare this to Celebration, Florida – is it better or worse to have IKEA versus Disney build a neighborhood/town? How involved will IKEA be with the neighborhood after the neighborhood is constructed? What would happen if other retail companies, say Target or Walmart or Costco, decided to build neighborhoods?

I wonder how many jokes could be made about this. Do residents have to assemble their own homes out of a box? Will the design all be Scandinavian minimalism…?

Assembling your own furniture benefits you through “the Ikea effect”

Ikea may be able to have lower prices because consumers have to put together their own furniture but there could be another benefit as well for consumers: they will value their assembled purchased product more.

“When labor leads to love,” a paper in the Journal of Consumer Psychology experimentally tests “the Ikea effect” that leads to people valuing things that they assemble, customize or build themselves more highly than premade, finished goods. We’ve all heard the story of how cake-mixes didn’t sell until they were reformulated to require the “cook” to stir in a fresh egg, but most of what we know about this effect is marketing lore, not research. It’s fascinating stuff.

The abstract of the paper:

In four studies in which consumers assembled IKEA boxes, folded origami, and built sets of Legos, we demonstrate and investigate boundary conditions for the IKEA effect—the increase in valuation of self-made products. Participants saw their amateurish creations as similar in value to experts’ creations, and expected others to share their opinions. We show that labor leads to love only when labor results in successful completion of tasks; when participants built and then destroyed their creations, or failed to complete them, the IKEA effect dissipated. Finally, we show that labor increases valuation for both “do-it-yourselfers” and novices.

I suspected there may not be much positive effect when the consumer can’t assemble their purchase.

While this is interesting in itself, it leads me to another question: were companies like Ikea and others aware of this effect and therefore required assembly for more items so that consumers would have more positive feelings for certain products?