Dive Brief:
- To fuel its omnichannel growth strategy in the U.S., Ikea on Thursday announced it would invest over $2.2 billion over the next three years.
- The investment, which is Ikea’s largest over the past four decades of operating in the U.S., will be used to open new locations and strengthen its fulfillment network, according to a company press release.
- The home furnishings retailer said it plans to open eight new stores, nine plan and order points and 900 pickup locations. The investments will create over 2,000 jobs, the company said in its announcement.
Dive Insight:
The $2.2 billion investment will support Ikea’s growth in the United States, which is one of the most important markets for the Swedish-founded retailer, according to Tolga Öncü, head of Ikea Retail at Ingka Group (Ikea’s largest franchisee).
The investment will help modernize the retailer’s existing stores to support both in-store and online shopping by increasing its handling capacity for parcel deliveries from stores. The company is also working to transform its last-mile fulfillment to provide faster and more sustainable deliveries.
“We know U.S. customers have a strong desire for more ways to shop and experience IKEA, and this growth plan will allow us to meet that need,” Javier Quiñones, CEO and chief sustainability officer at IKEA U.S., said in a statement. “We are committed to continuing to grow in this market with our thousands of co-workers and millions of customers who look to IKEA for home furnishing inspiration and solutions at an affordable price. Our priority is to become more accessible, while staying as affordable as possible for the many people, which is especially important given the increasing costs of living.”
The store strategy comes as Ikea works toward becoming climate positive by 2030. The retailer said it will increase solar and geothermal technology in locations when possible, transition to electric vehicle trucks and reduce waste. Earlier this month, the company launched its As-is online service, which allows Ikea Family members to reserve gently used products online to pick up in stores.
Over the past year, Ikea U.S. has opened 15 pickup locations and two plan and order points, and it has also planned new locations in San Francisco and Arlington, Virginia, which are set to open this summer, according to Thursday’s announcement.
Last May, Ingka Group announced a separate investment of more than 3 billion euros — or about $3.2 billion at the time — in new and existing physical stores. The plan would cover all of Ingka’s markets, including the U.S., France, Finland, Canada, Germany and Spain.
Ikea’s investment in the U.S. may also potentially pose a risk to other home furnishing retailers in the market, according to GlobalData Managing Director Neil Saunders.
“As the largest furniture retailer in the world, Ikea has economies of scale and volumes that allow it to offer value that few others can match. The expansion is a potential threat to Wayfair, At Home and other many mass market players,” Saunders said in emailed comments.