IKEA To Add Eight U.S. Stores As Part Of A $2 Billion, Multichannel Expansion Plan

IKEA is planning to open eight new stores in the United States and to greatly expand its omnichannel fulfillment network in its biggest investment ever in the U.S. market.

IKEA announced today that it plans to invest $2.2 billion over the next three years to further its U.S. omnichannel growth strategy.

The Swedish furniture chain is bucking the store closing trend of other big retailers. With only 51 U.S. stores currently, it believes it still has plenty of room for growth in this market.

IKEA has had a “love relationship” with the U.S. since it opened its first store here in 1985, Javier Quinones, IKEA US CEO and Chief Sustainability Officer, said in an interview. It now wants to take that relationship to the next level, Quinones said.

“The U.S. is a prioritized market for IKEA,” Quinones said. “The U.S. is a mature market and it is at the forefront of retail innovation. We believe it is the right time to invest and get closer to many more Americans, which is what this investment tries to do.”

IKEA has not yet announced where all eight of the new stores will be located. A new IKEA is scheduled to open in downtown San Francisco in late spring or summer of this year.

The eight stores will be large-format IKEA stores “with the whole menu of the IKEA experience”, Quinones said.

IKEA also will open nine Plan & Order locations, places where shoppers can get advice and help with large or complicated projects such as kitchen or bathro0m installations, or other interior design consultations.

Nine hundred new pickup locations for online orders are also in the works, to make pickups easier for customers who don’t live close to a store.

IKEA expects to add over 2,000 jobs in the expansion.

IKEA will also invest in its fulfillment capabilities for its existing stores, with the goal being to ”make it faster, to make it more affordable, and make it more sustainable,” Quinones said.

Additionally, IKEA will continue to invest in digital innovations, Quinones said, such as the online interior design service it launched earlier this month.

Since opening its first U.S. store in Plymouth Meeting, PA in 1985, IKEA has proceeded cautiously in terms of store openings for much of its 38 years here. That gives it the confidence that there still is room for growth, Quinones said. Going forward, the stores will be the centerpiece of the omnichannel shopping experience, he said.

“The stores are going to be the most beautiful place to get inspired on home furnishing,” he said. “We will do that more, and even better, in the future, but we will add fulfillment capabilities, so they will play a dual role in this omnichannel world,” he said. “That is why it is important that we keep investing in the stores.”

Analysts at investment bank UBS, in a report earlier this month, predicted that home furnishing stores would be one of the sectors hit hardest by a wave of store closings that UBS expects to occur between now and the end of 2027.

UBS is forecasting 4,000 home furnishing stores could be among more than 50,000 expected store closings in coming years because of tightening credit and consumer spending shifts.

IKEA in December announced that it was closing one of its newer stores, in Queens, N.Y.

Quinones said that closing shouldn’t be seen as a sign that IKEA was planning to trim existing U.S. stores.

The Queens store, which opened in early 2021, was part of a global test of smaller format stores, he said. That store “really helped us to learn what the future of IKEA looks like,” he said.

IKEA U.S. reported in January that it had sales of $5.9 billion in fiscal 2022, with 69 million visitors in its stores and 494 million online visits.

This investment in the U.S. market is designed to give U.S. consumers, more, and easier ways to shop IKEA, Quinones said, with physical stores and online offerings working together seamlessly.

Currently, online sales make up about one-third of U.S. sales, but online is the fastest growing channel,” Quinones said.

IKEA reported in January that e-commerce sales grew 18.8% in fiscal 2022.

Quinones said he expects store and online sales eventually to be roughly 50-50, but added that “more and more it’s, less important where it [shopping] happens.”

“We know that many people, before buying online, will visit our IKEA stores,” he said. “They look at the products, they experience the IKEA brand, and then they buy online. We want to be where the consumer and the customers are, and to make the whole experience as seamless as possible.”

IKEA’s U.S. investment will include continued support of the company’s efforts in clean energy, with initiatives such as electric delivery vans; the circular economy with sustainably produced products, and resale and buy-back options; and fair housing advocacy.