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How Ikea is spreading the flat-pack revolution across the globe

Ikea storefront

Ikea is a global franchising success story and stands out as a leader in two strands of the RetailX value chain: operations and product. 12 groups of companies own and operate Ikea sales channels, marketing and selling products in different geographical areas under franchise agreements with Inter Ikea Systems. 

This holding company was incorporated in the Netherlands in 1983. It is also responsible for assigning product development and supply to different companies within the group.

Ikea’s furniture and homewares have become increasingly environmentally sustainable in recent years as the business moves closer to its target of only using renewable or recycled materials by 2030.

Click here to view all coverage about Ikea

In the last year, the company has shifted from pilot stage to the development of a global offer making it easier for customers to extend the lifespan of Ikea products. 

The entire franchise group is working on sustainability targets together.

The group’s climate footprint reduced 12% in absolute terms in the last year, with a “significant increase” in the use of renewable energy in both retail and production along with corporate disclosure of its impact on outdoor air pollution.

Retail sales for the 2022 financial year reached $47.5 billion (€44.6 billion), an increase of 6.5% compared to FY21, but the company has alluded to tough times for consumers.

The mix of store and online sales attest to the changing times and the disruption that the pandemic is still causing. In 2022, Ikea store sales grew 13% compared to FY21, when many stores were closed due to the pandemic. 

Overall, they welcomed 822 million visitors in FY22 compared to 775 million in FY21.

Store sales grew mainly in Europe, where lockdowns were most severe. At the same time, online sales were 10% lower compared to the previous year, though they stabilised at a higher level this spring.

The company’s online channels hosted 4.3 billion visitors, down from five billion last year.

Ikea is looking to new markets for growth, having opened its first bricks-and-mortar store in South America in August 2022.

Further stores are planned for Colombia and Peru in the coming years. In all, 38 new stores opened during the year, including in the Philippines, Estonia, Puerto Rico and Oman.

This company profile originally featured in the RetailX Global Elite Top1000 2023 report, click here to download.

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