How IKEA Manages to Balance Sustainability and Affordability
Amid economic turbulence, Ingka Group, the largest IKEA retailer, has reaffirmed its dual commitment to affordability and sustainability, recording US$44.1bn in revenue for fiscal year 2024 (FY24). This marked a 5.5% decrease compared to the previous year but was driven by a deliberate strategy to invest over US$2.2bn in reducing prices, ensuring IKEA products remain accessible to customers during a time of financial uncertainty.
"It was a year of courageously investing in the future to make IKEA more affordable, accessible, and sustainable," says Juvencio Maeztu, Deputy CEO and CFO of Ingka Group. "For us, it has never been more important to side with the many people."
The decision to prioritise affordability was paired with a broader strategy to enhance resilience, as Ingka witnessed a 3.3% increase in store visits and a 28% surge in online traffic. Online orders also climbed by 9%, reflecting changing consumer behaviours and the success of its omnichannel approach.
Sustainability at the core of long-term goals
While affordability drove immediate business strategies, sustainability remained central to Ingka’s long-term vision. The company has set ambitious goals, including reducing operational emissions by 85% by 2030 and achieving net zero emissions across its value chain by 2050.
Key to these efforts is Ingka’s US$7.9bn investment in renewable energy, of which US$4.4bn has been deployed. These investments have made Ingka a mid-sized renewable energy producer, supporting its own operations while contributing to broader energy transitions. In FY24, eleven IKEA units in seven countries were retrofitted with renewable heating and cooling systems, and all future units will incorporate these technologies.
"Our unique business structure and financial independence enable us to make choices and invest for decades to come," says Juvencio. "This makes us more resilient to global and economic events, allowing us to remain focused on our business and our customers for the long term."
Balancing profits with purpose
Ingka Group’s ownership model allows for a reinvestment of 85% of net profits into the business, while the remaining 15% is channelled to Stichting INGKA Foundation, which funds the philanthropic IKEA Foundation. This dual-purpose structure underscores the company’s commitment to combining commercial success with societal impact.
The IKEA Foundation focuses on combating climate change and poverty, with US$2.1bn granted to partners addressing these issues by the end of 2023. "Our profit is very meaningful: it gives us the resources necessary to make us a better company, both now and in the future," says Juvencio.
In addition to renewable energy, Ingka is advancing sustainable forestry practices and exploring circular business models. These efforts align with IKEA’s overarching aim to source all wood from sustainable origins and create a more circular product lifecycle.
Long-serving CEO Jesper Brodin is also very outspoke on this subject. "Our everyday purpose is to deliver to the vision of IKEA – creating a better everyday life for the many people," he explains.
"We have invested US$2.2bn in lowering our prices to make IKEA more affordable and accessible for people with big dreams and needs in life at home, no matter the size of the wallet."
Diversifying growth through investments and innovation
Beyond its retail operations, Ingka Group’s diversified model continues to strengthen its resilience. Ingka Centres, which manages shopping destinations in 13 markets, expanded with notable acquisitions like the Churchill Square complex in Brighton, UK. It also launched new concepts, including Saluhall, a plant-forward food hall in San Francisco, and Livat, a meeting place in Xi’an, China.
Simultaneously, Ingka invested US$3.7bn in enhancing customer experiences, fulfilment capabilities and real estate development. These measures reflect its commitment to future-proofing the IKEA brand, ensuring its relevance and competitiveness in an evolving marketplace.
"Our profit allows us to create a better life at home in ways that go beyond affordable, sustainable, and functional furnishings," says Juvencio.
Explore the latest edition of Sustainability Magazine and be part of the conversation at our global conference series, Sustainability LIVE.
Discover all our upcoming events and secure your tickets today.
Sustainability Magazine is a BizClik brand
