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IKEA purchases US logistics tech company Locus to boost online growth

IKEA acquired U.S. logistic technology firm Locus on Tuesday. The Swedish furniture retailer claimed that the deal would improve its delivery to customers, as it expands online sales.

This acquisition is part of a $2.2billion push by Ingka Group - the largest global IKEA franchisee - in the U.S., where it is competing with Wayfair and Walmart, and also has to contend with increased tariffs on imported goods that increase its costs.

IKEA refused to reveal the value of the transaction. Locus' most recent funding round, in 2021 was reported to have valued the company at $300 million.

IKEA claimed that acquiring Locus will simplify its logistics, and reduce its global delivery costs by approximately 100 million euros ($117.41) per year.

Locus is a software that uses artificial intelligence (AI) to group orders, predict routes, and minimize the time that delivery vehicles are stuck in traffic. This planning process, which was previously done manually by IKEA employees, has been automated, Parag Parekh told Ingka Group's chief digital officer in an interview.

Parekh said that Locus would also allow IKEA customers to have more options and delivery windows, receive live updates about their packages, and get them faster. The technology will be tested in the U.S., UK and possibly other countries before being used globally.

He said, "Speed is an important aspect, but for us it's the flexibility and the ability to track... And more importantly, all of this will help drive a more positive customer experience."

Locus shareholders included Singapore sovereign wealth fund GIC, private equity firms Alpha Wave and Tiger Global and Qualcomm Ventures before the acquisition of all shares by Ingka, the retailer’s investment arm.

Locus, as part of the agreement, will continue to serve clients outside IKEA.

IKEA DOUBLES DOWN ON U.S. MARKET DESPITE TARIFFS

IKEA, best known for its big, bright-blue suburban stores that display sofas, beds, and bookcases labyrinthinely, has focused on its online business in the last five years, and has invested in smaller, city-centre shops to target younger, more urban consumers.

In 2024, online sales represented 28% of IKEA's total retail sales, up from just 11% in 2019.

The purchase comes just one week after Ingka Investments purchased a Manhattan building for $213 millions, continuing to expand in the U.S. despite President Donald Trump's higher tariffs on imported furniture.

Parekh stated that "in terms of macroeconomics, there is probably uncertainty in the quarters to come." "As a company, we remain committed to America."

(source: Reuters)