Ikea To Spend $2.2B Opening New U.S. Stores And E-Commerce Hubs

The international purveyor of self-assembled furniture and Swedish meatballs is printing out instructions for a growth spurt in the U.S. over the next three years.

Ikea plans to spend $2.2B over the next three years opening eight new home furnishings stores, along with nine smaller-format stores and 900 pickup locations, the Dutch-owned company announced Thursday.

The investment, which Ikea called the largest in its nearly four-decade history of operating in the U.S., would also include enhancing its distribution and last-mile delivery networks to reduce delivery costs for customers, according to the press release. In all, the company expects to hire 2,000 new workers for the expansion.

“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,” Ikea U.S. CEO Javier Quiñones said in the release. “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.”

The move comes as its big-box competitors like Walmart and online furniture retailer Wayfair have looked to cut jobs and shutter stores, giving Ikea an opportunity to gain market share and real estate at a cheaper cost, Reuters reported.

Ikea also plans to invest capital in updating its older stores to hold a wider variety of items and more easily ship products to customers from the stores. While most of the new store locations haven’t been announced, the retailer already is moving forward with smaller-format locations, dubbed Plan and Order points, in San Francisco and Arlington, Virginia, which are set to open this summer. Those stores aren’t included in the nine future Plan and Order points announced Thursday.

The retailer first entered the U.S. with a store outside of Philadelphia in 1985 and now operates 51 stores, which include its popular cafeteria that serves Swedish cuisine, in the U.S.

“The U.S. is one of our most important markets, and we see endless opportunities to grow there and get closer to the many Americans with affordable products and services,” Ikea Retail Operations Manager Tolga Öncü said in the release.

Öncü told Reuters that Ikea sees growth opportunities throughout the U.S., “but I would say in particular the South, where we see big demand that we have not so far been able to respond to.”

Consumer spending has slowed as inflation has continued to impact the global economy. Consumers also added a record $85B to their credit card debt in the final quarter of 2022, the largest jump in a single quarter on record, according to WalletHub. Roughly half of U.S. consumers earning $100K a year or more are paring back their spending in preparation for a recession, according to a poll conducted by Morning Consult and reported by The Hill.

Source: www.bisnow.com