London — The specter of rising costs looms over global consumers as Ikea, the Swedish furniture giant, joins a growing list of companies warning about the economic ripple effects of tariffs. Jesper Brodin, CEO of Ingka Group, the entity responsible for most Ikea stores worldwide, voiced his concerns about the challenges posed by trade barriers, particularly those linked to the United States’ tariff policies under former President Donald Trump.
In a candid discussion with CNN ahead of the launch of a temporary pop-up store in London’s iconic Oxford Street, Brodin emphasized the financial strain that tariffs impose, both on businesses and end consumers. “Tariffs make it more difficult for us to maintain low prices and remain affordable to the many,” he explained, reflecting Ikea’s foundational mission to provide accessible, quality furniture for people worldwide. “At the end of the day, such costs risk being passed onto customers,” Brodin warned.
The United States recently announced plans to implement an additional 10% tariff on Chinese imports. This move, aimed at curbing the flow of illegal drugs into the U.S., has sparked widespread criticism from business leaders and international governments alike. Despite these challenges, Ikea has opted not to uproot its supply chain. Brodin highlighted the company’s commitment to its partners, many of whom have worked with Ikea for over a decade. “We stick to long-term relationships, for better or worse,” he remarked.
Ikea’s current production model reflects a diverse supply chain, with 70% of its products manufactured in Europe and the remaining 30% in Asia, primarily China. While the company has not disclosed plans to relocate its production base, Brodin’s remarks suggest an intention to adapt to global shifts without compromising its partnerships.
The tariff issue isn’t Ikea’s only strategy concern. To support consumers struggling with inflation, Ikea recently slashed prices on approximately 2,000 products, incurring a significant cost of over €2 billion ($2.1 billion). This bold move prioritized affordability, even as it led to a decline in annual revenue in value terms, though the company saw an increase in the volume of items sold.
A New Era for Ikea in London
As the debate over tariffs continues, Ikea is forging ahead with a significant expansion in central London. The launch of a temporary pop-up store, whimsically named Hus of Frakta, pays homage to the brand’s signature blue carrier bags. Visitors can personalize their own Frakta bags and browse a curated selection of about 100 Ikea products, offering a taste of what’s to come.
This pop-up shop serves as a prelude to the grand opening of a permanent Ikea store on Oxford Street, scheduled for spring next year. Housed in the former Topshop building, the seven-story, century-old structure has undergone a £378 million ($476.6 million) transformation. Once operational, the store will span three floors, delivering what Brodin described as “more or less the full Ikea experience,” complete with the brand’s iconic Swedish meatballs.
The strategic choice to establish a central London store reflects Ikea’s understanding of evolving consumer behavior. Unlike its sprawling locations in Wembley and Croydon, this city-center outlet aims to attract urban shoppers who prefer convenience and accessibility over traveling to suburban locations.
Global Business and Local Realities
Brodin’s remarks also touched on broader economic implications. “In general, we don’t believe tariffs support international companies or trade,” he noted, underscoring Ikea’s view that such policies often backfire by stifling cooperation and innovation. His comments align with concerns raised by business and trade associations, including the Consumer Brands Association in the U.S., which has called tariffs a “clear and present danger” to economic stability.
International leaders have echoed these sentiments. Mexico’s President Claudia Sheinbaum recently warned of retaliatory measures, emphasizing the risk of escalating trade wars. “One tariff will be followed by another until we jeopardize common enterprises,” she said during a press conference.
For Ikea, adapting to these shifting dynamics is both a challenge and an opportunity. As Brodin aptly put it, “We will need to understand and adapt.” With its enduring commitment to affordability, innovation, and customer-centric strategies, the company is navigating a complex global landscape while staying true to its mission of creating a better everyday life for the many.