Ikea is investing $2.2 billion in new US store models and pickup locations

LONDON, UK – 09/22/2019: An IKEA sign is seen 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 over the next three years in its multi-channel growth strategy in the US, marking the Swedish home and furniture company’s biggest investment boost since it opened in the US nearly 40 years ago.

Omnichannel retail experiences, where online and in-store shopping experiences complement each other, are becoming increasingly popular in light of the online shopping boom spurred by the pandemic.

Its roots predate the pandemic: In the US, this trend was cemented by Amazon’s purchase of Whole Foods in 2017, which integrated a host of technological advances into the personal shopping experience. Soon, big retailers like Walmart and Target Affiliated lawsuit.

Ikea, already known for its carefully curated showrooms and modular apartments in its flagship stores, has already started making moves towards such a strategy. In recent years, the company has routinely rolled updates to augmented reality preview tools at home. And as a home and furniture company, there is the added appeal of integrating in-store and online shopping, as customers need to visualize how the products will fit into their existing homes.

Javi Quiñones, CEO and chief sustainability officer of Ikea US, told CNBC that the retailer’s $2.2 billion investment will be used for a variety of efforts, including expanding new store models and pickup locations, and aims to improve accessibility while maintaining prices. Products within everyone’s reach.

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“It’s also an indication of how important the American market is to IKEA,” Quinones said. “We started here in the US nearly 40 years ago, and this is the biggest [investment] We’ve done that before.”

An Ikea spokesperson said an exact analysis of how the multibillion-dollar investment is going toward any of Ikea’s specific omnichannel efforts isn’t yet available.

As part of the investment, the company will open nine “planning and ordering points”, an extension of the company’s existing “planning studios”, Where clients can get personal help with larger home projects, like kitchen or bathroom remodels.

The planning and ordering points will work just as the company’s planning studios have done so far: After consulting with Ikea’s in-studio planners, customers can order items to be shipped directly to their home. There are no items already in stock for purchase in the planning studios.

The chain opened its first planning studio on New York’s Upper East Side in 2019, calling it its first “downtown” location, and has since gone on to open several other storefronts, but She closed her store in New York in January 2022, saying she is looking forward to relocating.

Quiñones said these alternative personal shopping options are meant to complement flagship IKEA stores, not replace them.

He added that the company is currently “exploring absolutely every option” when it comes to the ideal location for these different store models. The first planning and ordering point set to open this year will be in Arlington, Virginia, and more are in the pipeline, according to Quiñones.

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Down the road, some may open in locations that already have an Ikea store nearby, while others may open in cities without any Ikea presence. “The whole intention here is to be closer to more Americans,” Quinyones said.

As part of this effort, Ikea’s new investment will also see the addition of eight new stores to its existing portfolio of US stores. To date, there are 51 stores in the United States. When combined with Plan & Order points, the addition of those eight stores will create 2,000 new jobs at the company, Ikea said.

Ikea is also adding 900 new pickup locations to its list, allowing customers to retrieve ordered goods from more convenient locations. Like multi-channel retail more broadly, order pickup options have boomed at a variety of retailers throughout the pandemic.

Quiñones said the majority of Ikea’s pickup locations will be associated with Ikea stores, and some stores will have multiple pickup locations. He added that in some cases, if there is no Ikea store near the pickup location, orders will be delivered from the distribution center instead.

While Ikea is investing in expanding its pickup options, Quiñones emphasized that the company remains committed to its larger locations, saying that the “full Ikea experience” happens when customers enter an Ikea store. “The pick-up points will be there just to make things more convenient for customers,” he said.

Quinones said the IKEA investment will also fund an ongoing effort to modernize existing stores, in part through energy efficiency improvements, solar panel installations and electric vehicle fleets.

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These efforts will be crucial to the company’s climate goals: By 2025, Ikea plans to deliver it to homes It arrives exclusively via electric vehiclesan essential part of The largest plan to reduce greenhouse gas emissions.

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