File photo shows an IKEA store in Beijing. Photo: Xinhua

IKEA, the world's biggest furniture brand, has agreed to buy the iconic former flagship store of British fashion chain Topshop in central London from the administrators of bankrupt owner Arcadia Group, part of its push to open inner-city outlets.

Krister Mattsson, head of the investment arm of Ingka Group, which owns most IKEA stores, told Reuters that three floors of the seven-story building on Oxford Street, which it is buying for 378 million pounds ($520 million), would be turned into an IKEA store due to open in the summer or autumn of 2023.

"This is a very good fit into our strategy. This is a meeting place -- it's one of the best spots for visitation in Europe, with amazing numbers of people passing by every week," Mattsson, managing director of Ingka Investment, said in an interview.

IKEA has tweaked its strategy in recent years toward adding inner-city store formats besides its giant out-of-town warehouse stores to reflect changing shopping behavior.

It opened its first inner-city full-range store in Paris in 2019. Its first centrally located store in London is due to open in the coming months.

"The investment supports the transformation of Ingka Group's retail business, bringing IKEA closer to customers," Ingka Investments said in a statement.

Mattsson said the Oxford Street store would be IKEA's biggest inner-city format store to date.

Ingka Investments and IKEA's shopping malls arm Ingka Centres are scouting for suitable centrally located properties across major cities in Europe and North America. Milano, Rome and Berlin are high on the agenda for Ingka Investments, Mattsson said.

He said there had been several bidders for the Oxford Street property. Overall in the segment where IKEA is looking to buy, interest from both institutional investors and other retailers was increasing alongside consumers' return to stores, he said.

Reuters