Ikea’s parent company will spend € 2 billion ($2.2 billion) over the next three years to expand in the United States, the largest investment in a single country in the history of the Swedish furniture company.
3 considerations before your company takes a stance
The store is betting big on the American market, looking to compete with Walmart and Wayfair by offering affordable yet upscale feeling furniture and home goods. Its aggressive investment comes amid a downturn in the retail industry, with companies like Bed Bath & Beyond hovering near bankruptcy.
Tolga Öncü, the head of the retail division at Ingka Group, the holding company that owns most Ikea stores, said he sees opportunities for growth in US regions like the American South. Historically, Ikea has focused on the East Coast in its US expansion, with its first-ever American store opening in Philadelphia in 1985.
The expansion will create 2,000 new jobs, according to Öncü, increasing the number of storefronts by about a third.
The plan includes nine new “plan and order points”—stores without warehouses, where customers can get advice on their interior design plans and receive assistance in ordering furniture.
Quotable:
“There are locations available that have not been available before, there are opportunities for us to speed up investments in acquiring land and existing locations to bring IKEA closer to the many people.” —Tolga Öncü announcing the new investment in the US.
Ikea in the US: by the digits
53: The total number of Ikea stores in the US currently; 51 of the stores have an attached warehouse.
€5.5 billion ($6 billion): US sales reported by Ikea in the last fiscal year.
320,000 sq feet: Average size of an Ikea store.
110 million: Number of Billy bookshelves, Ikea’s most popular product, that have been sold in the company’s history. The company says one sells every five seconds.
Ikea sent $10 million worth of products to Ukraine
Ikea, working alongside the United Nations High Commission for Refugees, donated items worth €9 million ($9.9 million) to people displaced by the invasion of Ukraine.
The donation included more than 71,000 mattresses, 86,000 blankets, and 205,000 pillows. Marcin Majchrzak, in charge of customer fulfillment for Ingka Group, said that Ikea’s infrastructure allowed it to effectively deliver needed supplies to Ukrainian refugees.
“We made a decision very early to support the victims of the war, and we knew we could utilize our supply chain and fulfillment strengths,” Majchrzak said.
Ikea decided to close all of its retail locations in Russia shortly after the country invaded Ukraine, announcing that it would also stop sourcing any materials from the country. The company has one store in Ukraine, just outside of Kyiv.
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Ikea, the Swedish furniture giant, is taking yet another big step in the American furniture market. The company recently announced plans to invest $2.2 billion into the U.S. market over the next three years.
This is Ikea’s latest bid to increase its share in the furniture market. The move is part of its 2023 strategic business plan, which includes the expansion of existing stores and the creation of more than 20 additional stores across the United States. Ikea is also looking to invest in digital capabilities, with a stronger focus on ecommerce and digitized purchasing.
Ikea’s CEO, Jesper Brodin, said that the investment can help create more than 17,000 jobs in the United States. The company’s expansion plans will bring more than $29 billion in economic activity for the country. “The United States is a very important market for Ikea,” Brodin said in a statement. “This investment will allow us to further develop our customer focused offering and accelerate our transformation to an all-channel retail business.”
The company has a strong customer base in the United States. Nearly one in three American households has an Ikea item in their home. With the investment, Ikea is hoping to build on its success in the American furniture market. The company also plans to continue its commitment to sustainably sourced materials and following its Scandinavian design ethic.
Ikea’s latest move reflects the growing trend of European furniture companies investing in the American market. Companies like Home Depot, Target, and Walmart have seen major success in the market with their own lines of furniture. By making a significant investment in the U.S market, Ikea is positioning itself to follow the lead of other successful companies.
With its $2.2 billion investment, Ikea is showing that it is doubling down on the American furniture market. The company’s focus on digital capabilities, sustainable materials, and its unique Swedish design aesthetic should help it gain an even bigger foothold in the market.
