Swedish furniture mega-store, IKEA, is making a $2.2 billion dollar push toward expanding operations within the United States over the next three years. This massive investment will be the largest in any single country as the retailer targets competition, such as big-box stores like Walmart.
IKEA, owned by Ingka Group, opened its first store in Sweden in 1958, later crossing the Atlantic into Philadelphia in 1985. Currently, the largest concentration of US stores exists within the Northeast, with some stores in large cities such as Chicago, Los Angeles, and Houston. According to head of IKEA Retail, Tolga Öncü, the expansion will set its sights on 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,” he says.
This makes perfect sense. There are a number large metroplexes with large college campuses and thriving young adult demographics that are eagerly seeing affordable and fashionable home furnishings. IKEA also offers walk-through model layouts to show customers how to get the most function out of a small space, which is perfect for apartment dwellers.
While we don’t yet have information on where the new stores will pop up, we do know that nine “plan and order” stores are being planned. These smaller stores will offer customers the ability to speak to knowledgeable sales staff and place orders to be delivered. We could see these stores working particularly well in college towns, such as Tuscaloosa, Alabama, where University Of Alabama students have gone viral for their meticulously decorated dorm rooms. We could also see the plan and order stores being used as a low-risk benchmark to determine whether customer demand in an area is enough to warrant a massive full-sized location.
IKEA’s expansion is not only exciting for the consumer, but also for the job seeker. While competitors like Walmart and Wayfair are cutting jobs and closing stores, IKEA is looking to create around 2,000 new jobs and possibly pick up newly released warehouse space. “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.
In total, the expansion will increase the total number of IKEA locations in the United States by about 30% in the next 3 years.