London — As trade tensions escalate, Ikea finds itself at the intersection of economics and geopolitics, grappling with the implications of new tariffs that threaten to disrupt its operations and, ultimately, its commitment to affordability. Jesper Brodin, CEO of Ingka Group, the principal operator of Ikea stores worldwide, has raised concerns about how protectionist policies could hinder the company’s ability to maintain its hallmark low prices.
Speaking ahead of Ikea’s latest venture—a pop-up shop on London’s bustling Oxford Street—Brodin described tariffs as an unwelcome challenge to international trade. “Tariffs make it more difficult for us to maintain the low prices and be affordable for many people, which in the end is our goal,” he explained. His remarks came in response to the U.S. government’s decision to impose a 10% tariff on Chinese imports, a policy framed as a measure to combat illegal drug trafficking.
With 30% of its products sourced from Asia, predominantly China, Ikea is not immune to the ripple effects of these tariffs. However, the company has chosen not to react by altering its supply chain. Brodin emphasized Ikea’s steadfast commitment to its suppliers, many of whom have been partners for over a decade. “We stick to long-term relationships, for better or worse,” he noted, underscoring the company’s ethical approach to business.
Ikea’s production strategy is rooted in diversity, with 70% of its goods manufactured in Europe and the remainder in Asia. This distribution has enabled the company to weather global disruptions while maintaining a focus on affordability. However, the challenges posed by tariffs are compounded by rising inflation, prompting Ikea to take proactive measures to support its customers. Last year, the company implemented significant price cuts on 2,000 products, a decision that cost over €2 billion ($2.1 billion). This bold move prioritized customer relief over financial gain, even as it led to a decline in revenue in nominal terms.
While grappling with these economic pressures, Ikea is also expanding its footprint in one of the world’s most competitive retail markets. On Thursday, the company will debut a temporary pop-up store on London’s Oxford Street, offering a curated selection of 100 products and a personalized Frakta bag experience. Dubbed Hus of Frakta, the pop-up celebrates Ikea’s iconic blue bags, which have become synonymous with the brand’s global identity.
This initiative sets the stage for the opening of Ikea’s flagship store on Oxford Street next spring. Located in the historic former Topshop building, the new store will occupy three of the structure’s seven floors, providing a comprehensive Ikea experience that includes its renowned Swedish cuisine. Acquired for £378 million ($476.6 million) in 2021, the building has undergone extensive renovations to create a modern shopping environment while preserving its architectural heritage.
Ikea’s decision to open a central London store reflects a broader shift in consumer preferences. As urban shoppers increasingly prioritize convenience, the new store aims to cater to those who may find Ikea’s larger locations in Wembley and Croydon less accessible. This strategic move positions Ikea to capture a growing segment of the urban market while reinforcing its commitment to innovation.
Amid these developments, Brodin offered a sobering perspective on the broader implications of trade policies. “In general, we don’t believe tariffs will support international companies and international trade,” he remarked, warning of the potential economic fallout for businesses and consumers alike. Despite these challenges, Ikea remains committed to its mission of creating a better everyday life for the many, navigating economic uncertainty with resilience and purpose.
