IKEA stores owner Ingka Group will spend 2 billion euros ($2.2 billion) expanding in the United States over the next three years, its biggest investment in a single country, in a bet to win American customers as other big-box retailers close stores.
Sweden's IKEA, which opened its first U.S. store in 1985, near Philadelphia, is seeking to win market share in the U.S. as cash-strapped consumers look for more affordable products.
"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," said Tolga Öncü, head of IKEA Retail at Ingka Group.
Ingka plans to open eight new big IKEA stores and nine smaller stores as well as upgrading existing stores in the U.S., which is IKEA's second-biggest market by sales after Germany, the company said on Thursday.
Öncü said specific locations for the stores had not yet been decided. The new stores, including nine "plan and order points," smaller stores where customers can get advice and order furniture for delivery, are in addition to already planned IKEA openings in downtown San Francisco and in Arlington, Virginia.
As consumers spend less, big-box retailers Walmart and online furniture retailer Wayfair are cutting jobs and shutting stores, creating an opportunity for IKEA to pick up cheaper store and warehouse space. The IKEA expansion will create 2,000 jobs, Ingka said.
"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.
The planned stores would increase the number of IKEA locations in the U.S. by around a third, from 51 stores and two "plan and order points." Ingka Group had revenues of 5.5 billion euros ($6.03 billion) in the U.S. in its 2022 financial year. ($1 = 0.9130 euros) ($1 = 0.9126 euros)
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