Plans to open eight new large and nine smaller stores over three years
The Swedish company is looking to gain market share in the US as low-income consumers look for more affordable products.
IKEA will invest more than $2.2 billion over the next three years to expand in the US, marking the Swedish furniture company's biggest investment push since it opened in the Americas nearly 40 years ago. Omnichannel retail experiences are becoming increasingly popular in light of the “explosion” of online shopping caused by the pandemic.
Its roots predate the pandemic: In the US, the trend was fueled by Amazon's acquisition of Whole Foods in 2017, which incorporated a number of technological advances into the brick-and-mortar shopping experience. Soon, major retail chains such as Walmart and Target followed suit. The company's $2.2 billion investment will include new stores and pick-up points, and aims to improve accessibility while keeping products affordable. Havi Quinones, managing director and chief sustainability officer of IKEA U.S., told CNBC.
Sweden's IKEA, which opened its first US store in 1985 in Philadelphia, is seeking to gain market share in the US as low-income consumers seek more affordable products. “In all US states we see opportunities, but I would say especially in the South, where there is a lot of demand that we haven't been able to meet so far,” said Tolga Onkiu, head of IKEA Retail at Ingka Group. The group, which “runs” the IKEA stores, announced that it plans to open eight new large and nine smaller IKEA stores, as well as upgrade existing stores in the US, which is the company's second largest market after Germany.
Meanwhile, as consumers cut back on spending, major retailers Walmart and online furniture retailer Wayfair are cutting jobs and closing stores, creating an opportunity for IKEA to buy cheaper store and warehouse space . The IKEA expansion will create 2,000 jobs, Ingka said.
