What: Ingka Group plans 20 smaller stores across Europe and North America as IKEA adds design-led collections, planning services and resale to its low-price flat-pack model.

Why it is important: IKEA is adopting levers familiar to department stores (smaller footprints, advisory services, shop-in-shops, resale) while testing how far a value brand can move upmarket without eroding its price positioning.

IKEA built its success on vast stores, room sets and flat-pack products, but is now adjusting its model with smaller stores, kitchen design services, second-hand furniture, designer collaborations and local manufacturing. The company describes market conditions as challenging, citing inflation and weak consumer confidence. IKEA U.S. reported $5.3 billion in 2025 sales, including $1.9 billion online, and its Family loyalty programme reached 25 million members, up 17%.

Design collaborations lift perceived value without luxury prices: Ilse Crawford's Halgatt lamps, the 96-product Stockholm collection and the revived Sontenas armchair. The new small stores carry over 2,000 products with planning services and in-store online ordering. Kitchens are among the most lucrative upselling opportunities, supported by planning shop-in-shops inside Best Buy, where IKEA designs the space and Best Buy supplies appliances.

In the U.S., Buyback & Resell gives Family members store credit for eligible furniture, resold in As-Is departments, while the IKEA Preowned marketplace drew more than 300,000 people and 95,700 listings between June 2024 and August 2026. Tariffs are pushing more U.S. sourcing, including SBA Home's $70 million North Carolina factory. The limit is the brand itself: premium ranges or costly services risk diluting its affordability promise.

IADS Notes: Ikea's move to smaller formats has been under way throughout 2026, starting with its first U.S. small-format store in Dallas, which offers more than 3,000 items for immediate purchase alongside online order pickup (Dallas News, March 2026). In Europe, seven smaller in-town stores opened from the start of the year as part of a €1.2 billion price-cut programme launched after two consecutive years of declining revenue (Reuters, September 2026). The store-in-store model works in both directions: Ikea kitchen and laundry planning shops operate inside 10 Best Buy stores in Texas and Florida (Chainstore Age CSA, November 2025), while Decathlon is hosted inside Ikea's Croydon store to lift footfall and better monetise the retailer's store network (Fashion Network, February 2026). On resale, Ingka extended its Ikea Family secondhand marketplace to the UK, Ireland and Germany, with preowned products selling on average 60% below new prices and a buy-back service under test in Portugal and Spain (Retail Week, October 2026).

IKEA opts for smaller stores