LONDON, UNITED KINGDOM – 2019/09/22: IKEA sign outside its showroom in London. (Photo by Dinendra Haria/SOPA Images/LightRocket via Getty Images)
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Ikea will invest more than $2.2 billion in its US omnichannel growth strategy over the next three years, marking the Swedish home and furniture company’s largest investment push since it opened in the US almost 40 years ago.
Omnichannel retail experiences, where online and in-store shopping experiences complement each other, are growing in popularity amid a pandemic-driven online shopping boom.
Its roots predate the pandemic: In the US, the trend was fueled by Amazon’s 2017 purchase of Whole Foods, which integrated a variety of technological advances into the personal shopping experience. Big retailers like Walmart and Target soon followed.
Ikea, already known for the carefully curated showrooms and show homes in its flagship stores, has already begun to take steps toward such a strategy. In recent years, the company has routinely rolled out updates to its augmented reality at-home preview tools. And as a home and furniture company, there’s an added appeal to combining in-store and online shopping, as customers need to envision how the products will fit into their existing homes.
The retailer’s $2.2 billion investment will be used for a variety of efforts, including expanding new business models and pickup locations, and aims to improve accessibility while keeping products affordable, Javi Quiñones said , CEO and chief sustainability officer at Ikea US, told CNBC.
“This is also an indication of how important the US market is for Ikea,” said Quiñones. “We started here in the US almost 40 years ago and this is the biggest [investment] we ever did.”
An exact breakdown of how the multibillion-dollar investment goes into Ikea’s specific omnichannel efforts isn’t yet available, an Ikea spokesman said.
As part of the investment, the company will open nine “Plan & Order Points,” an expansion of the company’s existing “planning studios,” where customers can receive personalized help with larger home projects such as kitchen or bathroom remodeling.
Plan & Order Points will work in the same way as the company’s previous planning studios: after consultation with the Ikea studio planners, customers can order items that are delivered directly to their homes. In fact, the planning studios do not stock any items for sale.
The chain opened its first planning studio on New York’s Upper East Side in 2019, calling it its first “downtown” location. She has since opened several other storefronts, but she closed her New York store in January 2022, saying it was planning to relocate.
These alternative personal shopping options are intended to complement, not replace, Ikea’s flagship stores, Quiñones said.
The company is currently examining “absolutely all options” when it comes to the ideal placement of these different store models, he added. The first Plan & Order location to open this year will be in Arlington, Virginia, according to Quiñones, with many more in the pipeline.
Later, some could open in locations that already have an Ikea store nearby, while others may open in cities with no Ikea presence. “The whole intent here is to be closer to a lot more Americans,” Quiñones said.
As part of this effort, Ikea’s new investment will also include eight new stores, adding to its existing selection of US stores. To date, there are 51 stores in the United States. Combined with the Plan & Order points, the addition of those eight stores will usher in 2,000 new jobs at the company, Ikea said.
Ikea is also adding 900 new pickup locations to its list, allowing customers to pick up ordered goods from cheaper locations. Like omnichannel retail more broadly, order pickup options have thrived at a variety of retailers during the pandemic.
The majority of Ikea’s pickup locations will be tied to Ikea stores, and some stores will have multiple pickup locations, Quiñones said. In some cases, when there’s no Ikea store near a pickup location, orders are delivered from a distribution center instead, he added.
As Ikea invests in expanding its pickup options, Quiñones emphasized the company’s continued commitment to its larger locations, saying that “the full Ikea experience” happens when customers walk into an Ikea store. “Pickup points will be there to make things more convenient for customers,” he said.
Ikea’s investment will also fund continued efforts to modernize existing stores, in part through improvements in energy efficiency, the installation of solar panels and the fleet of electric vehicles, Quiñones said.
These efforts will be critical to the company’s climate goals: by 2025, Ikea plans to have its home deliveries arrive exclusively via electric vehicles, a key part of its larger plan to reduce greenhouse gas emissions.