IKEA is restructuring its retail operations after two consecutive years of declining sales, with plans for smaller stores, changes to its distribution network and hundreds of job cuts. The furniture retailer is also investing another EUR 1.2 billion in lower prices across Europe, even as weaker demand and rising costs continue to affect manufacturers supplying the furniture industry.<\/p>\n
Worldwide IKEA retail sales fell to EUR 44.6 billion in the 2025 financial year, from EUR 45.1 billion in 2024 and EUR 47.6 billion in 2023. The number of products sold increased by 2.6%, while store visits rose to 915 million from 899 million. Price reductions contributed to higher volumes but also reduced revenue. Further financial details for the new financial year are expected to be released in November 2026.<\/p>\n
The company is revising its store expansion plans, investing in online ordering and reorganising distribution. Its large suburban warehouses remain central to the business, but an increasing share of new locations will be smaller stores serving cities and residential areas.<\/p>\n
IKEA accelerates smaller-store expansion<\/strong><\/p>\n In March 2026, Ingka Group, which operates most IKEA stores, announced plans to open 20 smaller locations across Europe and North America within six months. The programme included France, Germany, Italy, Spain, Portugal and Canada.<\/p>\n In France, IKEA opened a 3,000 m\u00b2 store in Limoges in May, offering a selection of products for immediate purchase and access to the wider range through ordering services. The company plans ten additional locations in France by 2030. Smaller outlets and collection points are also being developed in the United States.<\/p>\n The format differs considerably from IKEA's traditional stores, which combine extensive showrooms with warehouses where customers collect flat-pack furniture themselves. Compact stores carry fewer products and depend on distribution centres to fulfil orders for larger furniture items.<\/p>\n IKEA has been expanding its online business for several years. Digital purchases accounted for 28% of worldwide sales in 2025, compared with 69% generated by physical stores. The growth of online ordering has increased the company's investment in delivery services, collection points and warehouse operations.<\/p>\n Restructuring and management changes<\/strong><\/p>\n The expansion programme is accompanied by reductions in administrative costs. In March, Ingka Group announced organisational changes affecting approximately 800 positions in central functions.<\/p>\n In Sweden, Sara Del Fabbro became chief executive in July after previously holding senior management positions within IKEA, including responsibility for its South East European operations.<\/p>\n In an October interview with Swedish business newspaper Dagens Industri, Del Fabbro discussed the company's difficulties in its home market and plans to restore sales growth.<\/p>\n IKEA Sweden has announced approximately ten smaller stores over the next three years, alongside changes to its distribution network. The restructuring includes transferring part of the goods flow from \u00c4lmhult to Torsvik and reducing positions in some operations.<\/p>\n The company is also investing in digital planning services for kitchens, wardrobes and other furniture categories. Customers can order products through smaller stores without visiting a full-sized IKEA warehouse.<\/p>\n Price cuts weigh on earnings<\/strong><\/p>\n In September, IKEA announced a further EUR 1.2 billion investment in lower prices across Europe, extending reductions introduced during the previous two financial years.<\/p>\n In Germany, more than 1,500 products have been reduced by an average of approximately 20%. Selected ranges in Italy have seen average cuts of 22%.<\/p>\n Ingka Group reported retail sales of EUR 39 billion in 2025, down from EUR 39.6 billion the previous year, despite a 1.6% increase in the number of products sold.<\/p>\n Inter IKEA Group, responsible for product development and wholesale operations, reported revenue of EUR 26.3 billion, compared with EUR 26.5 billion a year earlier. Operating income declined to EUR 1.7 billion from EUR 2.3 billion, partly because of lower wholesale prices. Higher tariff expenses and operating costs also affected the results.<\/p>\n The company is continuing its price reductions while reviewing administrative expenses, logistics and manufacturing costs.<\/p>\n Furniture industry faces weak demand<\/strong><\/p>\n European furniture manufacturers have struggled with weak orders, particularly in Poland, Germany and Italy. Producers of particleboard, MDF and furniture components have also faced high operating costs and limited demand from furniture and interior product manufacturers.<\/p>\n The difficulties have reached sawmills supplying furniture-grade timber. Swedish birch sawmill Vanh\u00e4lls S\u00e5g AB, based in Dalarna and owned by brothers Per St\u00e5hl and Erik St\u00e5hl, is closing after three consecutive years of losses.<\/p>\n Per St\u00e5hl told Swedish agricultural newspaper ATL that the company had been unable to absorb rising birch sawlog prices while demand for finished products weakened.<\/p>\n He also reported substantial job reductions at one of the sawmill's customers, a Polish subcontractor supplying IKEA. According to St\u00e5hl, the company had reduced its workforce from 1,350 to 900 employees and eliminated one production shift.<\/p>\n The subcontractor was not identified in the report, and the employment figures were attributed to St\u00e5hl rather than confirmed directly by IKEA.<\/p>\n Vanh\u00e4lls S\u00e5g has faced increasing competition for birch logs since Russia's invasion of Ukraine disrupted exports of Russian birch. Swedish pulp producers subsequently increased purchases of domestic birch, contributing to higher raw material prices.<\/p>\n St\u00e5hl also raised concerns about administrative requirements imposed on smaller suppliers. He said Vanh\u00e4lls S\u00e5g had received a 40-page EU-related questionnaire from IKEA concerning packaging reporting, adding to the company's certification and traceability workload.<\/p>\n Another Swedish birch processor, Bj\u00f6rktr\u00e4 Timber AB, continues to operate at full capacity despite high sawlog prices. Chief executive Per-Anders Frans\u00e9n told ATL that demand remained strong, although suitable birch logs were difficult to obtain.<\/p>\n The company's procurement area was affected by storm Johannes, which brought down large quantities of conifer timber. Birch supplies remained limited, partly because harvesting crews concentrated on recovering storm-damaged softwood.<\/p>\n Changes for wood-based panel and furniture suppliers<\/strong><\/p>\n IKEA purchases substantial quantities of furniture, components and wood-based materials from European manufacturers. Its plans to expand the retail network and increase sales volumes will be followed by suppliers in Poland, Germany, Italy and other producing countries.<\/p>\n The move towards smaller stores will increase the proportion of orders fulfilled through central distribution centres. Furniture manufacturers supplying IKEA may face changes to packaging, delivery schedules and inventory requirements as the retailer expands these formats.<\/p>\n Product development remains another area of cost reduction. IKEA has long sought to reduce material consumption, simplify furniture construction and improve transport efficiency through flat-pack packaging and standardised components.<\/p>\n For particleboard and MDF manufacturers, changes to furniture specifications can alter material requirements and production planning. IKEA has not announced a general reduction in purchasing prices for wood-based panels as part of its latest European price programme.<\/p>\n The company also faces growing requirements concerning traceability, certification and packaging. These obligations extend through the supply chain, including smaller sawmills and component manufacturers.<\/p>\n Expansion plans outside Europe<\/strong><\/p>\n IKEA is continuing to invest in markets outside Europe, particularly India, where it plans to expand its retail network to approximately 30 locations by 2030.<\/p>\n In Europe, new investment is concentrated on smaller stores, online services and distribution. IKEA already operates an extensive network of large warehouses, while furniture demand has remained subdued following several years of inflation and pressure on household budgets.<\/p>\n The group is retaining its traditional stores while opening smaller locations in cities that previously had limited access to IKEA outlets. It is also reorganising logistics and reducing administrative positions to support the expansion.<\/p>\n The latest financial results show higher product volumes but lower revenues and operating earnings. IKEA is continuing its price reductions and store expansion programme against that background, while European furniture manufacturers and wood suppliers face their own difficulties with raw material costs, production expenses and weak orders.<\/p>","protected":false},"excerpt":{"rendered":" IKEA is restructuring its retail operations after two consecutive years of declining sales, with plans for smaller stores, changes to its distribution network and hundreds of job cuts. The furniture retailer is also investing another EUR 1.2 billion in lower … Continue reading