IKEA, the Swedish furniture titan, is shuttering several of its innovative smaller stores as the retail sector faces a brutal reckoning.
According to Daily Mail, the company is closing three Plan & Order Points in the UK and US this month, while planning new openings, reflecting a strategic pivot in a challenging market for retailers.
Launched in 2023, the Plan & Order Points were designed as compact showrooms for personalized design consultations, custom orders, and item pickups. These smaller-format stores aimed to bridge the gaps between IKEA’s massive warehouses and customer needs. But the concept has stumbled against shifting consumer preferences.
IKEA confirmed the closure of two UK locations in Liverpool and Stockport last week. The Long Beach, California, store will follow, shutting its doors this Sunday. These closures mark a retreat from a model that once promised a tailored shopping experience.
According to an IKEA spokesperson speaking to TheStreet, customer demand has veered toward convenience. "There's been a shift toward Click and Collect, smaller accessory shopping, and on-site returns — all of which these compact stores couldn't fully support," they noted.
This mismatch with consumer expectations has forced IKEA to reassess. The company, which had opened 10 Plan & Order Points by the end of 2024, now sees limited alignment with today’s market. Shoppers want less face-to-face interaction and more seamless services.
Despite the closures, IKEA isn’t retreating entirely from the concept. A new Plan & Order Point opened in Pennsylvania last week, and another is slated for Maryland in July. The company also plans larger-format stores in Texas and Arizona between 2025 and 2026.
Globally, IKEA operates around 485 stores, with 74 in the US, generating $5.5 billion in revenue for fiscal year 2024. That’s down from $6.3 billion in 2023, signaling headwinds even for a retail giant. Yet, compared to struggling competitors, IKEA holds a stronger position.
Neil Saunders, managing director at GlobalData, told DailyMail.com that IKEA’s resilience stands out. "While the furnishing market has been under pressure, IKEA is a far stronger retailer than many out there," he said. Saunders highlighted the brand’s enduring appeal due to its value-driven approach.
Saunders also emphasized the role of Plan & Order Points in IKEA’s strategy. "They are very important for high-touch services where people like to meet in person to do things like design kitchens," he explained to DailyMail.com.
Still, other retailers are bleeding out in this brutal environment. Macy’s plans to close up to 150 stores to stave off collapse, while JCPenney, another furniture player, continues mass shutdowns after barely surviving bankruptcy in 2020. At Home, a direct competitor, filed for bankruptcy earlier this month.
IKEA’s challenges are compounded by external pressures like tariffs imposed during President Donald Trump’s tenure, which have squeezed the broader retail sector. Yet, unlike many peers, IKEA’s scale—rooted in its first store opening in Sweden in 1958 and US expansion in 1985—offers a buffer. Its adaptability is a lesson for investors.
For wealth builders, IKEA’s story underscores the importance of agility in business models. Retail is a cutthroat arena where consumer whims and economic policies can upend even the mightiest players. Tariffs and declining revenues are stark reminders of government distortions in free markets.
Still, IKEA’s dual strategy of selective closures and targeted openings signals a pragmatic approach worth emulating. Investors might consider exposure to resilient retailers with global footprints, balancing value and innovation. Keep an eye on how IKEA navigates this shakeup—its next moves could hint at broader sector trends.