Since entering the US 39 years ago, Swedish furniture giant Ikea has come to dominate the furniture and home goods market with its wide array of accessibly priced products, unique store layouts and dedication to providing top-tier customer service. Recently, Ikea has been seeing major gains in its US business, increasing its market share by 13.6 per cent in the past five years. This growth is largely thanks to the company’s more than US$2.2 billion investment in its omnichannel strategy.
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Ahead of the brand’s 40th anniversary of operating in the US, Ikea is further stepping up its customer service game with several new store openings featuring new customer service offerings, enhanced e-commerce capabilities, an impassioned focus on sustainability and more.
In a public release, Javier Quiñones, CEO and chief sustainability officer of Ikea US, stated, “Our strategy continues to prioritise our customer’s needs, and in FY24, we continued to make everyday living more accessible, especially during a time when we know economic challenges are leading to a decrease in disposable income for many Americans. As we gear up for the 40th anniversary of Ikea US in 2025, we’re committed to reaching even more customers where they are.”
Inside Retail connected with Ikea’s US chief operating officer Rob Olson to get the full scoop on what the furniture retail giant has in store for 2025.
Building a more accessible Ikea
Olson told Inside Retail that one of the company’s main priorities right now is to create accessibility for American consumers across the US.
“Besides the normal blue box that I’m sure the American consumer has already seen and shopped in, we have started to create pickup points across the US,” the COO said.
Ikea has opened over 21,000 FedEx pickup points across the US over the past few years, enabling consumers to order their goods and pick them up at a lower cost than having them shipped to their homes, Olson explained.
Another aspect of Ikea’s strategy to enhance accessibility is the retailer’s plan to open eight new store locations, including seven new ‘plan and order’ points with pickup in Cherry Hill, Pennsylvania; Hunt Valley, Maryland; Beaverton, Oregon; Scottsdale, Arizona; and three locations in California – Thousand Oaks, Ontario, and Colma. It has also opened a new pickup point in Santa Monica, California.
While the retailer has existing customer bases in all of these markets, Olson explained that it can often be difficult for consumers to reach Ikea’s larger format stores, often having to travel to the next town or two over from their own to do so.
In addition to the creation of new physical shopping and pickup sites, Ikea has been working to improve its e-commerce offering through initiatives, such as launching a Spanish-language website in July 2024 for the Hispanic population across the US.
Olson reported that, with the addition of a secondary language feature and other system updates, Ikea has experienced a 5.6 per cent increase in remote sales compared to the year prior.
Keeping product prices affordable
Over the past few years, Ikea has been diligent in ensuring that its products remain attainable to the increasingly cash-conscious consumer.
For example, in November 2023, Ikea reintroduced New Lower Price, which saw the retailer reduce prices on hundreds of beloved Ikea products across the entire range in all US stores and on Ikea.com.
This initiative led to a 2.7 per cent increase in the number of pieces purchased per basket compared to the year prior, as Ikea’s annual report revealed.
Olson explained that moves such as this are driven by Ikea’s two-tier mission.
“One is the vision to create a better everyday life for the many people,” the Ikea executive explained.
“Wiith that, it’s very important to to make sure that we have affordable products, so we are constantly working on how to improve the pricing. Some of that is through our franchisor, where they’re working with the product range to see how can we ship items at a lower cost or how can we improve efficiencies of production and so on,” Olson elaborated.
On the operations side, the COO epxlained that the company is constantly analyzing how it can lower cost structure to, in turn, lower prices or, as Olson referred to it, “the twins” of low price and low cost.
“We really see it as a self-fulfilling prophecy, if you will,” Olson stated, “to operate at the lowest possible cost in our units and in our operations, so that we can then lower the prices to the customer and make a more affordable range and truly create a better everyday life [for] many people from that aspect, especially right now.
“As you know, the wallets across the US are very tight. Disposable income is low, and it’s up to us to really make sure we continue to try to make it more affordable to improve your life at home,” Olson emphasised.
What’s next in store for Ikea?
In addition to the changes mentioned, Ikea plans to launch a large-scale store in the heart of New York City’s luxury precinct.
In 2024, Ikea operator Ingka Investments purchased a prime retail site, spanning 80,000 square feet, at 570 Fifth Avenue, although Olson admitted it will be a while before the store will be able to welcome customers.
“Unfortunately, it’s going to take some time, Olson told Inside Retail, noting that the construction site is “all gravel” at the moment.
“We do have a few years before that location is going to be open,” the COO said.
“We’re really excited to see how we interact with the downtown New York consumer and the tourist traffic that will also be in that same area, but that’s going to be a really exciting location.”