London — Ikea, the world’s largest furniture retailer, is facing a dual challenge as global trade policies and shifting consumer demands test its resilience. Jesper Brodin, CEO of Ingka Group, which operates the majority of Ikea stores, has highlighted the pressures tariffs place on the company’s ability to remain affordable—a cornerstone of its brand identity. Speaking in London ahead of a new store launch, Brodin voiced concerns about how U.S. tariffs on Chinese imports could ripple across the global economy, affecting businesses and households alike.
The latest tariffs, announced by the U.S. government, impose an additional 10% levy on Chinese goods as part of a broader effort to curb illegal drug trafficking. While the political motivations behind such policies are debated, the economic impact is undeniable. For Ikea, which sources approximately 30% of its products from Asia, primarily China, the added costs could threaten its ability to maintain competitive prices.
Brodin acknowledged the complexity of the situation, noting that Ikea’s approach is rooted in long-term relationships with its suppliers, some of which span more than a decade. This stability, he explained, is essential to Ikea’s operations and reflects the company’s broader commitment to sustainable business practices. “We stick to long-term relationships, for better or worse,” Brodin stated, emphasizing that Ikea remains focused on collaboration rather than reactionary shifts in its supply chain.
The challenges posed by tariffs are further compounded by inflationary pressures that have squeezed consumers worldwide. In response, Ikea made a bold decision last year to reduce prices on 2,000 products, absorbing over €2 billion ($2.1 billion) in costs to provide relief to its customers. While this move helped Ikea maintain its reputation for affordability, it came at the expense of lower revenue in monetary terms, even as sales volumes increased.
Against this backdrop, Ikea is unveiling its latest innovation in retail: a pop-up shop on Oxford Street in London. The temporary store, called Hus of Frakta, pays tribute to the brand’s iconic blue carrier bags, offering visitors the chance to customize their own and explore a curated collection of Ikea products. This initiative serves as a prelude to the much-anticipated opening of a permanent flagship store on Oxford Street, scheduled for spring next year.
The flagship store will occupy the former Topshop building, a landmark of London’s retail history. Ikea purchased the building for £378 million ($476.6 million) in 2021 and has since undertaken a significant renovation to modernize the space while preserving its historic charm. Spanning three floors, the new store will offer customers a comprehensive Ikea experience, complete with a food hall serving the brand’s renowned Swedish meatballs.
This urban retail strategy marks a departure from Ikea’s traditional focus on large, suburban outlets. By establishing a presence in central London, Ikea aims to meet the needs of urban consumers who value convenience and accessibility. Brodin described the move as part of Ikea’s broader effort to adapt to changing lifestyles while remaining true to its mission of affordability and quality.
Brodin also spoke more broadly about the challenges of navigating a complex global economy. “In general, we don’t believe tariffs will support international companies and international trade,” he said, warning that protectionist measures often have unintended consequences for businesses and consumers alike. Despite these challenges, Ikea continues to prioritize innovation and customer-centric solutions, positioning itself as a leader in the evolving landscape of global retail.
As the world grapples with economic uncertainty, Ikea’s resilience and commitment to its core values remain a source of stability. With its blend of tradition and innovation, the company is poised to navigate the complexities of international trade while maintaining its promise to create a better everyday life for the many.
