When the first Ikea store opened in 1985 in a suburb outside of Philadelphia, the Swedish furniture giant was growing fast in Europe but largely unfamiliar to U.S. shoppers.
The cheap prices and easy assembly of furniture staples like the Billy bookcase and the Strandmon wing chair were what ultimately won over shoppers. By 2022, the U.S. market accounted for 14% of the 44.6 billion euros ($48.97 billion USD) that Ikea brought in at the end of the year.
DON'T MISS: Ikea Raising Prices By an Average of 9%
With Germany bringing in 14.4% of the sales and France and the United Kingdom following with a respective 8.3% and 6.6%, the United States is Ikea's second-biggest market — and one which it plans to expand even further.
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You'll Soon See Ikea Stores and Pick-Up Points in These States
On April 20, Ikea parent company Ingka Group announced that it would spend two billion euros ($2.2 billion USD) to expand its U.S. presence.
These funds will go toward opening eight of its signature warehouse-style stores, nine smaller locations selling kitchen, bedroom and living room items as well as 900 online pick-up points across the country.
The exact locations of the stores have not yet been announced but the goal is to bring Ikea to parts of the country where Ikea does not yet have a presence as well as make it easy to obtain in places without a physical store — the furniture company is hinting toward a greater presence in the South.
"It is in all the states across the U.S. where we see opportunities, but I would say in particular the South, where we see big demand that we have not so far been able to respond to," Ikea's Retail Operations Manager Tolga Öncü told Reuters.
The furniture giant is already opening new locations in San Francisco and Arlington, Virginia in the summer of 2023 — the latter will be a new concept in which mall shoppers can meet with an Ikea representative to discuss their home design plans and place an order.
These two locations were planned independently of the new $2.2 billion investment.
Ikea's Expansion Could Deal A Blow To Walmart And Wayfair
The "fast fashion" of furniture, Ikea has always pulled in customers with its rock-bottom prices that small furniture sellers are not able to offer. While online furniture platform Wayfair (W) has been creating competition since its launch in 2002, Walmart (WMT) has recently also tried to move into the space through a number of partnerships with furniture companies in recent years.
But as customers hesitate to spend money on any "extras" amid an uncertain economic outlook, where customers choose to shop is becoming increasingly important.
Since the start of 2023, Walmart has laid off over 3,000 warehouse workers. Wayfair has also cut 10% of its workforce in January as a cost-cutting measure.
While IKEA stressed the fact that the new locations will create upwards of 2,000 jobs, it has recently also eliminated 7,500 positions mostly across smaller stores around the world. This represents 5% of Ikea's global workforce while the new stores and pick-up points will increase Ikea's presence in the U.S. by more than a third.
"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," Öncü said.
