Flat packing in the USA: Ikea invests £1.7bn in stateside arm
Ikea will invest €2bn (£1.7bn) into the US market, its biggest investment into a single market to date, as the home furnishings giant looks to capitalise on the current economic climate.
The flat pack retailer said it plans to open eight new sites in the US alongside nine planning studios and order points, The Financial Times reports.
Ikea, which already has 52 sites in the US, said that it expects the American market to outperform Germany as its largest country bringing in sales in the coming years.
Tolga Öncü, head of Ikea Retail, told the outlet that not being on the stock market gives the business a “big opportunity to accelerate when maybe others are slowing down.
“In times of economic turmoil when there are challenges in the economy, we usually see the opportunities that this brings,” Öncü said.
At the end of August 2022 Ikea reported annual sales of €5.5bn (£4.86bn) in its US market with Öncü describing its growth plans in the region as “a toddler trying to get to the next stage of life”.
“We still have such potential in the US that it’s not the moment to worry about what others are doing,” he told the outlet.
John Coldham is a retail partner at the law firm, Gowling WLG, said: “This is a timely move by Ikea that should see it benefit, as an increase in consideration around more affordable products scales up globally in the face of the cost of living crisis.
“Inflation issues in the last quarter of 2022 saw the retailer’s profits dip by a fifth, so this ambitious approach to offsetting its UK and European sales is timely – with the issues being faced by their closest US competitors also making this an ideal time to gain valuable US market share.
“However, it will be interesting to see how much of its budget for this is dedicated to tightening costs and implementing the right global supply chain tactics to allow it to deliver on US demand.”