Ikea is poised to increase its production footprint in the United States as it responds to tariffs imposed by President Donald Trump on foreign furniture and kitchen cabinets. Currently, the Swedish flat-pack retailer produces approximately 15 percent of the products it sells in the US, a stark contrast to the 75 percent local production seen in Europe and 80 percent in Asia. This strategic shift comes as Ikea, which generated $5.5 billion in revenue in the US last year, seeks to adapt to changing trade conditions.
Jon Abrahamsson Ring, the chief executive of Inter Ikea, emphasized the company’s commitment to enhancing its supply setup in North America. “We want to continue to expand in the US and Canada — how do we optimise a good supply set-up where we secure the right access to materials, to components, to production? That’s very long-term work that we’re doing,” he stated in an interview with the Financial Times.
The recent tariffs imposed by Trump, ranging from 10 to 50 percent on imported furniture and wood products, are expected to have a considerable impact on Ikea, which accounts for about 1 percent of total industrial production. Jesper Brodin, CEO of Ingka, which oversees 90 percent of Ikea’s 487 stores, noted the company’s commitment to invest around $2.2 billion in the US in 2023. This investment will focus on new stores and production facilities, emphasizing the company’s forward-looking strategy. “We will continue to look for ways to add new customer points, and expand sourcing and fulfilment in North America, including in the US,” Brodin remarked.
While Ring expressed cautious optimism about the impact of tariffs, noting that Ikea imports most of its products from Europe where the tariffs might be less severe, he acknowledged the challenge of operating in an environment where competitors are often reliant on imports from Asia, which face higher tariff rates.
These developments come on the heels of Ikea’s report of a 1 percent drop in annual revenues to €44.6 billion for the year ending in August. The company attributed this decline to price cuts it implemented following a period of high inflation, though it did report a 3 percent increase in both sales volumes and customer visits in the last year.
Ikea’s plans for expansion in the Americas include new store openings in countries such as Costa Rica and Panama, as well as an outlet in Manhattan’s SoHo district. The retailer is also pursuing an innovative approach by opening kitchen planning studios in ten Best Buy locations across the US to establish a foothold in smaller urban areas.
Additionally, Ikea is experimenting with a new retail format called Lada, designed for smaller towns to provide a more conventional, low-frills shopping experience. These pilot stores, which will operate out of existing retail units to minimize costs, aim to strip back the traditional visual presentation of products while ensuring rapid fulfillment, promising customers that products not available in-store can be delivered within 24 to 48 hours.
Tolga Öncü, Ingka’s retail manager, indicated that a decision about further expanding the Lada format would be made by the end of the year. This move reflects Ikea’s ongoing evolution, as it seeks to reduce its reliance on large out-of-town stores in favor of formats that cater to the convenience of urban consumers.
